Oracle Continues to Make Cloud Progress

Well if you're going to make a dramatic about face from total dismissal of cloud computing, this is a relatively credible way to do it. Following up on its announcement of a serious cloud future at Oracle Open World 2011, the company delivered new cloud services with some credibility at this last week's show. It's a strategy with laser focus on selling to Oracle's own installed base and all guns aimed at Salesforce.com. While the promise from last year was a homegrown cloud strategy, most of this year's execution has been bought. The strategy is essentially to deliver enterprise-class applications and middleware any way you want it - on-premise, hosted and managed or true cloud. A quick look at where they are and how they got here:

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Slowed Growth In China's 2012 IT Spending Won't Carry Through Into The New Year

Ongoing global economic uncertainty has affected the Chinese economy by reducing demand for exports and shrinking domestic investments, resulting in turbulence in China’s tech market. My latest report, “China Tech Market Outlook: 2012 To 2013,” describes how Forrester has revised its 2012 growth forecast for this market from an original forecast of 13% in January 2012 down to 10% (measured in local currency). Major technology vendors, including both local and MNC vendors, have seen the growth of their China operations slow down.

However, the Chinese tech market is still one of the fastest-growing IT markets in the world. China’s $105 billion of annual technology spending ranks third in the world after the US and Japan. However, per-capita IT spending in China is only 4% of Japan’s and 3% of the US’s — highlighting the long-term potential in the country.

 

Some of the key findings for the tech market trends in China in 2012 and 2013 include:

  • Computer equipment and peripherals, as the largest segment for tech spending in China, will grow 8% in 2012 and 13% in 2013. Chinese customers continue spend on more hardware. Strong cloud momentum in China will drive significant new data center investments from telecom operators and local governments, with a positive impact on technology vendors selling servers, storage, networking, and other relevant technologies.
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Seeking The Elusive Zone Of Disruption

As I analyzed examples of digital disruption I’ll be highlighting at the upcoming CIO Forum — “Leading Digital Disruption” — I was struck by the way in which every example could be tied to a shift in customer experience along two dimensions: pleasure and time.

Along the pleasure dimension, disruptive technologies significantly increase the pleasure (or reduce the frustration) derived from the customer experience. For example the iPad significantly increased my pleasure in browsing the web and engaging with brands I like through tailored apps.

And on the time dimension, disruptive technologies save customers significant amounts of time; time being the most precious commodity in the world. My iPad allows me to do many things much faster than I could before because it is easy-to-use and contains many apps which connect my lifestyle together.

So I began to explore how CIOs might use this understanding to help shape the analysis of prospective disruptive strategies. What I came up with is the customer experience zone of disruption (or CxZOD for short — see illustration).

In the zone of disruption, the impact on pleasure and/or time is so great as to cause a disruptive force in the marketplace. When coupled with an assessment of potential market impact, this becomes an easy-to-understand visual model for comparing potential disruptive initiatives.

In my session at the forum, I’ll be exploring this model and showing how to use it to better understand existing technologies, such as mobile apps, and their potential to become disruptive.

What disruptive digital technologies would you place in the CxZOD? Post your comments below or Tweet #CXZOD

2012 EA Award Winners: Business-Focused, Strategic And Pragmatic

In Forrester’s EA Practice Playbook, we describe high-performance enterprise architecture programs as “business-focused, strategic, and pragmatic.” They are business-focused so that the direction and guidance EA provides has clear business relevance and value. They are strategic because the greatest value EA brings is to help its business to achieve its business strategies. They are pragmatic because, well, the path to strategy is never straight, and EA teams who aren’t agile in their approach get pushed aside.

This year’s InfoWorld/Forrester EA Awards program used this theme to find and recognize our 2012 winners:

  • National Grid, facing the enormous changes to the utility industry, developed an enterprisewide business capability model and made that the center of their joint business-IS planning. The result? All the way up to the C-level, EA is being recognized as a strategic change agent.
  • Scottish Widows Investment Partnership “reinvented” their EA program, centered on a business capability model developed over four weeks, and used to organize and link all the EA portfolios. They now have business managers as well as EA using their architecture planning tool.
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"Xerox this" Takes On A New Meaning: Business Transformation

I attended a Xerox analyst event last week in Grenoble, France, and was very impressed with both the setting and what I heard. Xerox is much more than the verb it was once associated with, and office workers no longer set off to get something “xeroxed.” As the CEO said in a recent interview, the younger generation doesn’t know Xerox as a verb. I mentioned having read this to a fellow analyst at lunch the first day of the event, and she looked at me quizzically. She didn’t know what it meant to “xerox” something. Indeed, there is hope for Xerox to recast itself as much more than a copier. However, there remains work to be done. 

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Digital Business Design Is The New Integration

If your organization is like nearly every other one I've talked to in the past 20+ years, you have a spaghetti chart of integration connections between all the siloed applications that run your business. Your customer is fractured across five applications. Your fulfillment process is broken across eight applications. Just try to pull together the data necessary to tell how profitable one of your products is. Or, as you implement mobile, external APIs, custom B2B connections, and more, how will you provide consistent, coherent access to your transactions and data?

Making sense of all the mess has been an important priority for years. The question is "how?" Forrester's latest research finds that it's time for a new kind of integration strategy. We call it "Digital Business Design":
A business-centered approach to solution architecture, implementation, and integration that brings business and technology design together by placing design priority on user roles, business transactions, processes, canonical information, events, and other business aspects that embody a complete definition of a business. 
 
Here's what we mean:
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NPR’s ‘Car Talk,’ Auto Parts, And The Price Of Your Web Content Management Project

What’s the correct ratio of web content management software license price to implementation cost?

Clients frequently ask us some variation of the ratio question. As they try to do more with digital, they realize this stuff gets complex and costly pretty quickly.

The answer to their ratio question is: It depends. I can’t endorse a standard ratio of software to services because I don’t believe one exists. For very modest projects, might you expect to spend two dollars on services for every one dollar in software? It’s possible. But I’ve seen it more commonly grow to five-, six-, or ten-fold (occasionally more), as projects like these have long tentacles that reach beyond just software. The cost of software? That’s table stakes. WCM vendors may whisper sweet nothings in your ear about how easy it is to implement; I say ask someone who’s done it before with that product – and get them to be specific about ‘what’ was done as part of their project. 

The more urgent question is whether you can keep your eye on the prize, focusing perceptions at your organization on the value of the total solution you’re trying to create. Although WCM technology may occupy the spotlight and serve as an integral part of the total solution, there’s usually a lot more to consider. The scope and cost estimate of your initiative may make executives’ eyebrows pop up. But what really should make their eyes pop is fairly assessing the opportunity cost of not tackling the initiative in a way that reflects the importance of the digital channel to your business.

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Deutsche Telekom in arranged marriage for T-Mobile USA through reverse acquisition by MetroPCS

 

Deutsche Telekom is leading its daughter T-Mobile USA down the aisle for a second time in less than two years after the previous marriage attempt with AT&T collapsed in light of regulatory objections (see http://goo.gl/hgCrm). But T-Mobile USA will not leave the house altogether. Should the deal go through, Deutsche Telekom will own 74% in the NewCo. The NewCo will operate as one company with two brands, similar to how Everything Everywhere was run. MetroPCS Shareholders will own the remaining 26%.

The financial plan is that scale effects will translate into $6-7 billion of cost synergies from enhanced scale and scope. Deutsche Telekom pitches the deal as creating a wireless value leader in the non-contract (pre-paid) segment, with the goal of targeting a growing market segment. The ambition for the NewCo is to generate compound annual growth rates of 3-5% for revenues, 7-10% for EBITDA and 15-20% for free cash flow over the next five years.

The deal raises several issues for me:

  • Targeting a market opportunity requires ongoing investments. In my view, the goal for growth looks ambitious based on the proposed value proposition. Whilst I do see a market opportunity for unlimited data plans (i.e. NewCo’s value proposition), I believe that ongoing investments beyond the existing ones are required to ensure QoS and customer experience. The completed network modernization to the tune of US$4 billion LTE investment including site upgrades and spectrum re-farming provides a good starting point. But more capex is required in the years ahead as data traffic continues to explode. In turn, this could undermine free cash flow growth ambitions.
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Five Lessons From Dreamforce 2012

DreamforceIt’s been a couple of weeks since Dreamforce ended, and in between client engagements and research I’ve had some time to digest the event — so I’d like to share some lessons from Dreamforce 2012:

1. If you build it they will come (no, really)

Setting a record for attendance at a vendor-led technology conference, Dreamforce 2012 was BIG. With over 90,000 attendees, it was hard not to be impressed by the logistical efforts taking place behind the scenes. Think of it ... How do you feed 90,000 people in a couple of hours? Not to mention the enormous bandwidth issues for Wi-Fi and even 4G providers when you put this many social people together. Back when I was running marketing at a tech vendor, I was planning events based on how many square feet of conference space we would we need ... the Salesforce team plans on a scale of how many conference centers will they need. This was an amazingly large event with very few crowd control issues. And the mobile app for the conference made everything much easier, despite occasional Wi-Fi outages. My hat's off to the conference team at Salesforce for pulling this off.

2. Salesforce.com has adopted a business strategy which embraces social business

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IBM Raises The CPU Technology Bar With POWER7+

Nathan Bedford Forrest, a Confederate general of despicable ideology and consummate tactics, spoke of “keepin up the skeer,” applying continued pressure to opponents to prevent them from regrouping and counterattacking. POWER7+, the most recent version of IBM’s POWER architecture, anticipated as a follow-up to the POWER7 for almost a year, was finally announced this week, and appears to be “keepin up the skeer” in terms of its competitive potential for IBM POWER-based systems. In short, it is a hot piece of technology that will keep existing IBM users happy and should help IBM maintain its impressive momentum in the Unix systems segment.

For the chip heads, the CPU is implemented in a 32 NM process, the same as Intel’s upcoming Poulson, and embodies some interesting evolutions in high-end chip design, including:

  • Use of DRAM instead of SRAM — IBM has pioneered the use of embedded DRAM (eDRAM) as embedded L3 cache instead of the more standard and faster SRAM. In exchange for the loss of speed, eDRAM requires fewer transistors and lower power, allowing IBM to pack a total of 80 MB (a lot) of shared L3 cache, far more than any other product has ever sported.
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