Is the US Bureau of Economic Analysis Undermeasuring the Tech Economy?

 

When I do my US tech market sizing and forecasting, I start with the data on business investment in computer equipment, communications equipment, and software in the quarterly National Accounts of the US Bureau of Economic Analysis (BEA).  As Forrester’s recently published report on the US tech market noted (see September 28, 2012, "US Tech Market Outlook Dims For 2012 To 2013 -- US Tech Market Spending Will Maintain A Mediocre 4% to 5% Pace"), the BEA in July revised the historic data on these categories of business investment going back to 2009, significantly reducing the size of tech investment in this period and lowering the growth rate of business tech investment to a pace not appreciably faster than the growth rate in the US economy.

While I adjusted my tech market sizings and forecasts to these lower numbers from the BEA, I have been wondering whether the BEA in their data collection is missing key segments of new technology, and thus understating the level of tech buying that is actually going on.  We have no good way of answering this question since the BEA has not publicly indicated that there have been any changes in data sources and aggregation methods that would signs of undermeasurement.  Still, here are the questions I would ask BEA if I had the chance.

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US Tech Market Growth Slows As Election And Political Uncertainties Dampen Economic Growth And Tech Buying

Earlier in 2012, I was fairly bullish about the US tech market, expecting growth of 7% to 7.5% for the near depending on whether or not telecommunications services was included (see April 24, 2012, "US Tech Market Outlook For 2012 And 2013 -- Improving Economic Prospects Create Upside Potential") .  But economic growth has been weaker than I assumed, coming in at 1.3% in Q2 2012 compared to my expectation that real GDP would grow by around 2-1/2%. In addition, the US Bureau of Economic Analysis revised downward its estimates for growth in business investment in computer equipment, communications equipment, and software.  These revisions eliminated the evidence for my thesis that the US was in a new cycle of tech innovation and investment that was causing tech investment to grow twice as fast as the economy.  Instead, the revised data showed that tech investment was growing at about the same rate as the US economy in 2010 and 2011, not faster as earlier data had shown.  Tech innovation is clearly going on, but at least in the official data tech investment has not responded in kind.  So, with nominal GDP growth for 2012 shaping up to be about 4%, our tech market growth outlook for 2012 in our latest US tech market forecast report (see September 28, 2012, "US Tech Market Outlook Dims For 2012 And 2013") is about the same, that is to say, in the 4.5% to 5% range.  

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What Keeps CIOs Up At Night?

We’d like to know what job responsibilities give CIOs insomnia, either by responding to this blog or by contacting us directly to be interviewed. The interviews will take less than an hour and go over this question as well as others including:

  1. What decisions do you regularly make?
  2. What sources of information do you use?
  3. What IT decisions are made by IT versus the business?

We are in the early stages of interviews, but the initial responses to the question of what keeps CIOs up at night were very interesting. Some, as expected, focused on tactical and immediate problems. They included:

  • Security: “I don’t ever want to see [my company’s] name in the paper for a security problem.”
  • Small mistakes: “A tiny piece of code could have brought the organization to its knees.”
  • Turnover: “We have two people maintaining one of our ancient core systems, and both could retire soon.”

But there were unexpected responses in that they focused on the long term. Some of these long-term insomnia inducers were:

  • Investments: “Does the money I’m putting in now make sense for the future?”
  • Staff leadership: “Do I have the right mix of outsourced and internal staff?”
  • Reality: “I’m struggling matching reality with where we’re heading.” 
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How Is Your IT Department Assisting The Organisation With Innovation?

Data from the Q2 2012 Forrsights Budgets And Priorities Tracker Survey shows that for nearly 70% of Australian and New Zealand organisations, the top IT management priority is to increase IT capacity or resources to drive business innovations. This focus on innovation has been reflected in numerous discussions I’ve been having with CIOs. At a panel session on innovation towards the beginning of 2012, the audience were pretty evenly split between those who believed IT has a key role to play in business innovation and those who thought innovation was not IT’s job. Now, however, innovation seems top of mind with most CIOs I speak to.

So what can your IT department do to help drive business innovation? Well – really there are lots of ways – but most importantly you can help by implementing processes that help drive “sustainable innovation”. Sustainable innovation is not small changes – and not the big changes – it is everything in the middle. I call it the “gut feel” innovation – i.e. “I have this idea and I think it could help improve the business. The thing is that I don’t have the stats to prove it can help – hence I can’t build a business case – hence we can’t put this idea through the traditional business investment process.” In a scenario like this, what you need is a process to quickly test and measure the idea to give you the data to put into the traditional business process to either move it forward or discard it as a bad idea. If fewer than 45% of your ideas move from ideation to reality you are probably testing too many “bad ideas” and you need to tighten your process to get rid of more bad ideas earlier – and on the flip side, if more than 70% of the ideas are being commercialised then you probably aren’t testing enough ideas.
 
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Your Company Is About To Get Tablet Fever -- How Will You Manage It?

It’s safe to say that the early adopters of Apple’s iPad didn’t go out and buy the device because they wanted a new gadget for work. They purchased the iPad because of what they could do in their everyday lives. But it didn’t take long for employees to bring their iPads to the office. If we mark the modern tablet era by Apple’s 2010 iPad launch then an astounding 84 million iPads and as many as 120 million tablets in total have flown off the shelves. Forrester’s global workforce and decision-maker surveys and client conversations show just how fast tablets are being adopted:

  • Three-quarters of a billion tablets will be in use by 2016. It took more than 20 years for the PC to reach an installed base of 750 million people. But tablets will surpass that mark in less than half the time. Global tablet sales will top 375 million in 2016 with about one-third of tablets acquired by businesses for employees. Back in 2007, we wrote that to reach the second billion users, the computer market would be driven by lower cost hardware, useful applications, and easy access to the Internet from anywhere. Tablets fit that bill to a tee.
  •  Some 82% of firms expect to support tablets for employees. Companies are getting tablet fever as 82% of firms report interest in using tablets. According to these IT decision makers, tablets will come into the enterprise via several doors, including employees bringing their own: Our latest survey of global information workers shows that 12% use tablets and 8% paid for it themselves. And more than half of the 1,004 firms we surveyed plan to increase their spending on mobile devices and apps by at least 10% next year.
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Microsoft Is Still The Biggest Brand Used For Work

When we asked 10,000 information workers globally what brands are on the devices, operating systems, and software they use for work, it came as no surprise that Microsoft dominates. More than 90% of employees rely on something Microsoft to get their jobs done (and we didn't even ask about office productivity suites). What's interesting and new, however, is the pervasiveness of other brands besides Microsoft in the workplace.

 

Note: We asked about desktop, laptop, smartphone, and tablet manufacturer; PC, tablet, and smartphone operating system; web browser, email, IM, and webconferencing  software.

 

Our data shows Apple and Google have joined tech stalwarts Dell and HP as the top five brands employees use at work. Google particularly has made major strides and is now second only to Microsoft in terms of pervasiveness in Asia Pacific and Latin American workplaces. The brand ecosystem differs outside of North America and Western Europe in other ways as well -- Lenovo is big in China, and Acer and Asus are big in Russia.

 

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Why Apple Had To Do Maps: A Mobile Engagement Analysis

I was pretty sure that the v1 (beta?) Apple Maps would have gaps and gaffs, and of course it does. Mapping is hard to do as this excellent analysis from Adrian Covert at Gizmodo makes clear. (If Apple had it to do over again, it might have pushed harder to keep the Google Map app in place while Apple launched a beta map alongside it. Maybe it still can.)

But Apple had to do maps. It had no choice, really. The reason is simple: maps are the place where mobile matters most. Here's the logic:

  • First, maps are where the physical context of our daily lives and reality intersects the digital intelligence we access online. It is precisely because maps are where the physical best intersects the digital that Apple had to offer maps. Maps are extremely valuable to customers, hence to Apple. It couldn't outsource it to Google forever if it wanted to develop a unique mobile engagment experience to customers. For that matter, Microsoft has to do (and is doing) exactly the same. It's also why Nokia purchased NAVTEQ in 2008  for $8.1 billion.
  • Second, developers are finding fabulous ways to exploit maps in their applications. Overlaying just about anything on a map makes the map more valuable. Shoppers benefit. Cyclists benefit. City planners benefit. Even the military benefits. Anybody dealing with physical locations needs maps in their app. And that means great APIs to access the map, a way to put layers over the map to show important things, and a way to crowdsource new information. Flickr's photos on maps in a great way to explore a vacation spot before getting on an airplane. All because of great map apps.
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IBM Bullish On Smarter City Opportunities In India

 

At last week’s India analyst briefing, IBM outlined urbanization as a key factor driving “Smarter Cities” initiatives in India.

IBM expects India to invest about $1.2 trillion over the next 20 years in areas like transportation, energy, and public security. The second phase of the Jawaharlal Nehru National Urban Renewal Mission (JnNURM), which covers $40 billion in infrastructure-related projects, will play a key role in improving the country’s infrastructure capacity to support urbanization over the next five years.  IBM is currently working on approximately 3,000 smart city projects globally; of those, about 30 pilot projects are from India.  

About a year ago, I published a report on how cities are undergoing rapid transformation and creating massive opportunities for ICT vendors across Asia Pacific. Although the urbanization rate still stands at about 30% in India, it is growing fast. Also, an increasingly Internet-savvy population is demanding better citizen services.  Indian state and city governments will make investments to build infrastructure on a large scale to meet the needs of their surging urban populations, creating opportunities for vendors. —

Despite the promise and opportunities that India provides for Smarter City initiatives, IBM has to deal with key challenges:

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Making Smart Cities Safe and Safe Cities Smart

I spent a lot of time last week thinking about public safety.  What is public safety?  How do you achieve it?  Well, it seems to me that it could be anything and everything; but that it’s contextual and different for all cities.   In fact, three different “public safety” articles jumped out at me as I was reading the International Herald Tribune one morning: 

  • City faces a growing threat from rising seas and floodingNew York is facing a combined threat of rising seas and increasingly severe storm flooding, putting streets and infrastructure along its waterfront at risk.
  • Traffic defies a revolution.  According to the article, there are about 2.2 million vehicles in Cairo, where licenses are generally awarded without a road test and drivers “often shrug off stoplights and traffic rules.”  Road accidents kill about 1,000 people in greater Cairo each year, with ½ of those pedestrians.
  • When lions roam the backyard. While North American cities have long dealt with “urban wildlife” such as coyotes, foxes, raccoons and badgers, fast growing cities in Africa increasingly face incidents such as that described in the story – a lioness and her cubs who crawled under a fence into a residential Nairobi neighborhood. 
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Company Career Sites Engage Candidates Early In The Recruiting Process

 

Today’s top career sites do more than list jobs available. The best ones give a glimpse of what it’s like to work at the company, communicate the company values, and introduce the company brand. These sites use multimedia to communicate messages about the company culture, the people, professional growth opportunities, and more.

Join me on Friday, September 21, 3012 at 11 am Eastern Time for the Forrester webinar, Create An Engaging Career Website To Pique Candidate Interest. In this session I will talk about the essential components to include in a career website, the effective use of video to communicate messages, and the important connections with social media sites. I’ll show many examples of effective websites.

Register now. Bring your best questions. I look forward to talking with you.