Reflections from the 10th Safer Internet Day Conference in Berlin, February 5th 2013
Earlier this month, I had the pleasure of speaking at the Safer Internet Day Conference in Berlin, organized by the Federal Ministry of Consumer Protection, Food and Agriculture and BITKOM, the German Association for Information Technology, Telecommunication and New Media. The conference title, ‘Big Data – Gold Mine or Dynamite?’ set the scene; after my little introductory speech on what big data really means and why this is a relevant topic for all of us (industry, consumers, and government), the follow-up presentations pretty much focused either on the ‘gold mine’ or the ‘dynamite’ aspect. To come straight to the point: I was very surprised, if not slightly shocked at how deep a gap became visible between the industry on the one side and the government (mainly the data protection authorities) on the other side.
While industry representatives, spearheaded by the BITKOM president Prof. Dieter Kempf and speakers from IBM, IMS Health, SAS, and others, highlighted interesting showcases and future opportunities for big data, Peter Schaar, the Federal Commissioner for Data Protection, seemed to be on a crusade to protect ‘innocent citizens’ from the ‘baddies’ in the industry.
Over the past three years, multinational companies’ (MNCs’) approach to outsourcing in China has steadily matured as they seek to leverage broader outsourcing models and source from a combination of global providers and local Chinese providers.
In my latest report, Lessons Learned From Outsourcing In China: Part 2, I analyze the key outsourcing trends and approaches to help sourcing and vendor management (SVM) professionals at MNCs select the right local outsourcing suppliers. As part of this analysis, I’ve highlighted the main service capabilities of local Chinese vendors broken down by service model and profile the different types of service providers that currently operate in China.
Key findings from the report include:
MNCs are adopting sophisticated outsourcing approaches in China. Many MNCs are shifting away from a pure global service provider approach to a broader shortlist that also includes Chinese providers. SVM professionals at MNCs appreciate local providers’ broader geographic coverage, lower outsourcing cost and more flexible service deliverables.
MNCs are also diversifying their outsourcing requirements. After signing the first wave of outsourcing contracts in the past five to 10 years, MNCs are becoming increasingly comfortable considering more sophisticated outsourcing contracts, such as best-of-breed selection, vertical outsourcing, etc.
Local outsourcing service providers are continually improving their capabilities. To approach more MNC clients in China, local providers have enhanced their geographic coverage in remote cities, accelerated consolidations, recruited senior talent for improved depth at key positions and aggressively recruited fresh graduates to manage costs.
I’m proud to announce that this week Forrester launched our Governance, Risk, and Compliance Playbook, a collection of in-depth reports covering the critical information you need to implement a successful GRC program… one that focuses on supporting business success, not getting in its way.
In business, it’s very rarely just about what you know, but also who knows you, that determines success or failure.
At their global analyst summit last week, Parallels’ CEO, Birger Steen, welcomed Cisco and IBM as new global systems integrator partners, joining the likes of Microsoft and Symantec. In fact, Cisco has even taken a small equity stake in the company, meaning they will jointly go to market to deliver cloud services. Parallels and Cisco also agreed to expand joint development, marketing, and industry initiatives. While there was no similar equity investment as part of the IBM deal, both companies will jointly engage with large telcos and service providers to offer an integrated IBM/Parallels solution.
Here are some other key takeaways from the event:
Parallels noted that the global SMB cloud services market grew to $45 billion in 2012 and will reach $95 billion by 2015, with a CAGR of 28% (see its SMB Cloud Insights research report). In fact, both Cisco and IBM view Parallels as a gateway to tap the growing SMB need for cloud services (see Tim Harmon’s report Opportunities In The SMB Cloud Services Market).
The momentum Parallels is gaining from expanded global SI partnerships is paralleled (pun intended) by its moves to better leverage the growing cloud investments being made by large telcos as they move from simply “getting into the cloud” to actively converting their customers from using on-premises apps to cloud apps. Already, companies like American Movil have started to offer SaaS and IaaS services to their Latin American users using the Parallels marketplace platform, thanks to a Cisco-led deal.
Data from the Forrsights Budgets and Priorities Tracker Survey, Q4 2012 highlights the increasing gap between CIOs and business decision-makers (BDMs) in India — a gap that originates in misaligned perspectives. The rapid rise of social media, cloud computing, and mobility in India has started to significantly affect how organizations do business in the country. Business leaders’ use of consumer technology has changed their expectations of how enterprise IT should be harnessed. They increasingly seek to use technology in innovative ways in order to gain a competitive edge and drive business growth. However, most CIOs are still caught in the old world of focusing exclusively on IT budgets and project delivery performance issues:
I recently spoke with a few CIOs in India to explore their views on the reasons behind this misalignment. When I shared data from the chart above and asked their opinions on the insights, some interesting findings that came out:
There are many “heads of IT” and few “business technology (BT) CIOs” in India. One CIO from a large auto manufacturing firm mentioned that a majority of CIOs in India are actually “IT heads” who think and act mainly from an IT perspective. Even worse, their thinking is generally very hardware-centric. This CIO’s opinion is in sync with my recent report highlighting the fact that Indian CIOs are at risk of losing business credibility (and eventually their jobs) if they do not improve their understanding of BT.
Some markets and industry sectors in Asia Pacific (AP) were clearly early adopters of big data initiatives, but interest has now spread to almost all subregions and verticals. The reason is simple: More and more organizations now understand the value of data for not only addressing customer demands and expectations but also for responding to changing market dynamics and improving operational efficiency.
The common link across all big data initiatives is an interest in using more types of data, from more sources, to enable timelier, better-informed insights. With that in mind, we’re seeing two common use cases driving big data awareness and investment across industries:
These initiatives are a response to increasing customer expectations for more personalized service. Typically centered on improved customer insight and engagement, organizations are seeking ways to better access and leverage customer data to improve understanding, more effectively personalize relationships, predict behavior, and ultimately deliver improved value via increased customer intimacy. Specifically, the sheer volume of readily available and increasingly accessible data that organizations can leverage — such as location data from mobile devices, apps and personal data on customer preferences and relationships from social networking sites — is driving big data initiatives. Early adopters typically include telcos, retailers, banks, insurance firms, and citizen-oriented eGovernment initiatives.
We have started a new report series on Cyber Threat Intelligence. The first report, "Five Steps To Build An Effective Threat Intelligence Capability," is designed to help organizations understand what threat intelligence is and how to establish a program. If you're not a Forrester client and would like the report, Proofpoint is providing a complementary copy. On Thursday March 28th, I will be conducting a Forrester webinar on the report. Please join me if you'd like to get a deeper perspective on it. In the future, we will expand on sections of this intial report with additional research including:
A collaborative report with Ed Ferrara looking at the cyber threat intelligence vendor landscape
On Tuesday, President Obama issued a Cybersecurity Executive Order, which outlined policies to defend against cyber attacks and espionage on US companies and government agencies. The EO came nearly a year after the proposed and much-hated Cyber Intelligence Sharing and Protection Act (CISPA) got stalled in the Senate. The privacy community sees the CISPA as a great threat to Internet privacy. Many of them are encouraged by this executive order, which stayed away from suggesting changes to privacy laws and regulations.
The salient points of the EO are as follows:
The president acknowledged formally that information warfare, at the level of nation states, is ongoing and is a clear and present danger.
The government will build a “Cybersecurity framework” with the private sector to share information on cyber attacks and threats, with the goal to reduce Cyber risk to critical infrastructure.
The Cybersecurity framework will expand existing government programs to bring more private sector subject-matter experts into Federal service on a temporary basis.
Unlike the CISPA, the EO does not carry languages that will change or direct impact privacy laws and regulations.
The EO puts forth specific timelines on the publication of the Cybersecurity framework as well as an assessment report on its implication to privacy.
On Monday, SAP communicated that it will increase the price of standard support on new contracts by 5% from July 15, 2013, from 18% to 19%. SAP’s announcement claims that the increase is necessary: “In order to ensure the same high level of quality support in the future.” That justification is disingenuous, in my opinion. SAP already makes a very healthy profit on maintenance. (SAP does not report its margin on maintenance revenue. For 2012, it reported 81% gross profit on software licenses and maintenance combined.) Moreover, third-party support providers (3SP’s) like RiminiStreet can provide better support at half the price or less.
SAP’s other justification is equally unconvincing. It states that within the standard support package “there is ongoing expansion of value, for example a continuous flow of innovation through Enhancement Packs.” SAP reinvests 14% of its revenue in R&D, but I estimate that 90% of that goes on developing new products such as Hana that you have to pay again for if you want them. (SAP disputes this estimate but did not provide an alternative figure.) That would mean that Enhancement Pack development represents around 1% of revenue, insufficient to justify charging double what 3SP’s charge, let alone a 5% price increase.