Welcome to the Connected World

The world is becoming more and more connected, whether we look at consumer products like thermostats, commercial assets like a fleet of trucks, or infrastructure systems as extensive as electricity grids or cities. By understanding the broad landscape of the connected world, business and technology leaders can ready their firm for the implications — positive and negative — of asset control, business model change, and deeper data-driven customer engagement.

In Forrester’s upcoming report, “Mapping The Connected World,” we map the broad landscape of the emerging connected world, assessing the attractiveness and readiness of different industries and use cases. This report draws from and synthesizes related research around smart products, the connected car, and smart cities, while setting the stage for upcoming reports like the connected home and embedded systems. Our focus is on analyzing the business impacts of increasing connectivity between physical devices and infrastructures, and digital computing and analytic systems.

The Connected World

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Where BI Falls Short: Taking A Singular Point Of View

There is a reason the phrase, “beauty is in the eye of the beholder,” has held significance and power in our society for so many generations. And in that phrase is a lesson for all of us about business analysis. The power of different points of view examining a given set of inputs is key to truly understanding what lies before us and seeing the new possibilities and different threats looming.

Sit silently in a museum listening to the patrons take in just a single painting and within a day you will hear a hundred different insights, many of which you didn’t see before. Insights that show you things in that artwork you never would have seen, such as the way greens and reds are mixed to create hues that don’t invoke their origins, the style of brushstrokes used that convey depth and how a pattern viewed up close can be very different than the whole. So much insight doesn’t stem from the painting but from the varied experiences, backgrounds, cultures and histories the observers bring with them. The same is true in data analysis. It’s through different points of view that something can be fully analyzed. Each person brings their varied experiences (their data) to the analysis.

As businesses we tend not to sit silently and take in what others see about ourselves and our data. We tend not to expose our data at all to our partners, trusted third parties or potential collaborators (like our customers) and by not doing so, they cannot combine their data with ours and uncover things we cannot see. As a result, we cannot see the broader picture. And this leads to bad business decisions based on a myopic point of view.

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Steve Ballmer Steps Down: My Take On The Forces In Play

I don't know Steve Ballmer. I've only met him once. (I've met with Bill Gates more often than that.) But let's face it, he had tremendous impact as a leader. And it's now a good time for him to step aside.

When Steve took over from Bill as CEO of Microsoft in 2000, the company's revenues were $21B and the business was led by desktop software. Under Steve's guidance, Microsoft made massive inroads into enterprise server software and tools while investing but not really winning in consumer services and certainly not in mobile devices. And in recent years, Steve listened to lieutenants like Ray Ozzie and Bob Muglia to turn the Redmond juggernaut towards cloud computing, mobile devices, and software+services.

At the same time, the world has moved faster than Microsoft's licensed software business model could respond. Apple, Google, and Amazon have become enterprise suppliers. Salesforce.com and Amazon are accelerating the shift to cloud computing. Dropbox has grown from zero to 175 million users in five years. So even as Microsoft's revenue more than tripled to $73B in 2012, things didn't feel good.

I think it's a good decision for Steve to step down and pass control to someone else, probably an outsider. Microsoft will then face its IBM or GE moment: Keep the company together or break it apart? Lou Gerstner kept IBM together and that decision had paid off handsomely. Then again, IBM relentlessly focused on a single enterprise market, shedding its PC and other low-margin businesses.

So what's next for Microsoft? I see three forces colliding to drive that decision:

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Q&A with Paul Cobban, Managing Director, COO, Technology and Operations, DBS Bank

In advance of Forrester's Summit for CIOs in Singapore on August 30, I had an opportunity to speak with Paul Cobban about his successful transformations at DBS Bank over the past few years. Based in Singapore, Paul oversees business transformation, operational excellence, customer experience, IT project office, procurement, real eastate, operational risk and business continuity management.  I've had a sneak peak at his event presentation and it is excellent.  Paul is a progressive CIO at the forefront of BT innovation and business engagement with a lot of valuable insight to share. 

1. What do you think IT departments are doing right and wrong these days?

In banking the IT departments have had to change enormously in recent years.  On top of the usual relentless advances in technology, security challenges have escalated, the war for talent has accelerated and regulation continues to evolve with the challenges. I believe that IT departments have had to adapt well to these changes. 

However, in most companies there is a lack of a truly customer centric design. Although there is some hype in the industry around service-oriented architecture (SOA), I believe that until budgets are allocated around customer processes rather than by functional units, systems will continue to be designed as applications for the department users rather than with the customer in mind. In addition, most companies fail to take usability seriously and have little concept of cross touchpoint consistency.

2. How do you measure ROI for IT? 

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Apply Customer Experience Methods And Technology To Workforce Experience Goals

In a recent blog post, I hypothesized that customer experience and workforce experience are two sides of the same coin. For me, it was captured perfectly during a recent research interview with Blair McHaney, Gold’s Gym franchise owner and user of Medallia customer experience management tools. He said, “Your customer experience will be less than or equal to your employee experience.”

So, I’m working with Sam Stern, an analyst on our Customer Experience research team, to examine how companies can better align employee behaviors with desired customer experience outcomes. Sam is looking at the types of rewards and recognition that fundamentally shift corporate culture towards customer-centricity. It  builds on Paul Hagen’s culture research, How to Build a Customer-Centric Culture and Nine Ways to Reward Employees to Reinforce Customer-Centric Behaviors. Paul highlighted a number of great examples of how companies reinforce customer-centric culture through employee incentives and perks. I’m looking at the technology underpinnings of customer experience management and how these technology solutions can be applied to the workforce.  

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The Cost of PRISM Will Be Larger Than ITIF Projects

Earlier this month The Information Technology & Innovation Foundation (ITIF) published a prediction that the U.S. cloud computing industry stands to lose up to $35 billion by 2016 thanks to the National Security Agency (NSA) PRISM project, leaked to the media in June. We think this estimate is too low and could be as high as $180 billion or a 25% hit to overall IT service provider revenues in that same timeframe. That is, if you believe the assumption that government spying is more a concern than the business benefits of going cloud.

Having read through the thoughtful analysis by Daniel Castro at ITIF, we commend him and this think tank on their reasoning and cost estimates. However the analysis really limited the impact to the actions of non-US corporations. The high-end figure, assumes US-based cloud computing providers would lose 20% of the potential revenues available from the foreign market. However we believe there are two additional impacts that would further be felt from this revelation:

1. US customers would also bypass US cloud providers for their international and overseas business - costing these cloud providers up to 20% of this business as well.

2. Non-US cloud providers will lose as much as 20% of their available overseas and domestic opportunities due to other governments taking similar actions.

Let's examine these two cases in a bit more detail.

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Are Cloud Developers Really That Different? Yes.

To an IT leader a cloud developer can easily look like the enemy. They don't do what you say, they cause havoc by circumventing your IT rules and building new services and capabilities on public cloud platforms and seem to take orders not from you but from the business unit. Are these perceptions reality? Well, according to the 2013 Forrester ForrSights Developer Survey, yes. But they are also some of your most productive, happy and loyal developers too.

The survey shows that less than a quarter of all enterprise developers are using cloud platforms today. Examining the first movers, as self-identified in this survey, we found significant differences in the behavior, attitude and reporting structure of these members of your IT team. Cloud developers are risk takers who are empowered, more comfortable with open source technologies, building the new systems of engagement and tend to be happier in their work. They aren't just experimenting either; they are putting applications into production on the public cloud platforms and are doing so with traditional programming languages via agile, modern application designs. Forrester clients can now download a toolkit report providing a snapshot view of the data from this compelling survey (in Microsoft PowerPoint and PDF formats) that shows what distinguishes these developers from the pack.

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Mobile Engagement Providers Are A New $32.4 Billion Market By 2018

My colleague and friend John McCarthy and I have just published a new report on the emergence of a new category of vendors we call “mobile engagement providers” that help firms build excellent mobile experiences. I’ll unpack the report in a series of posts over the next few weeks. You can also read a lengthy post in the Wall Street Journal highlighting the report and Forrester clients can read the full report.
 
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Building and delivering great mobile experiences will be the beating heart of your customer engagement strategy for the next 10 years. The challenge of making a simple, intuitive app that fronts a complex system of engagement will stretch the abilities and swamp the resources of most firms. For help, firms increasingly turn to vendors that possess a connected portfolio of engagement competencies and management skills. 
 
The result will be a new market for mobile engagement providers that will grow to $32.4 billion by 2018 (see the Figure 1). No vendor can do all of this today, but suppliers from six categories — digital agencies, management consultancies, mobile specialists, product development specialists, systems integrators, and telcos — are chasing the prize. The payoff for vendors that make this investment will be to earn a seat at your table as a long-term partner in your engagement success.
 
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Wanted: Mobile Engagement Providers

Pal John McCarthy and I published a report on a new category of vendors that we call mobile engagement providers that have a "complete portfolio of engagement competencies and management skills to help you build and deliver great mobile experiences at global scale." This market will grow to $32.4 billion by 2018.

The Wall Street Journal's CIO Journal published this post from us today. It's long, but captures the key points.

I'll have more say later in the week. But for now, enjoy the post on WSJ!

Sharp Decline of The Indian Rupee Drives CIO Focus on Business Outcomes

On August 6, 2013, the Indian rupee plunged to a record low of INR61.80 to 1USD. In fact, since January 2013, the Indian rupee has depreciated by 10% against USD and is expected to slide further as India is challenged by political gridlock, serious infrastructure bottlenecks, and decreased investor confidence, all of which are contributing to a slowdown in economic growth. The declining rupee leads directly to increases in the cost of doing business, which has risen by 8-10% over the past year.

The difficult economic landscape has forced Indian firms to look for new and innovative ways to grow their businesses, create efficiencies, and improve responsiveness. This is driving changes in how Indian business leaders view technology – with many increasingly viewing technology as a far more critical means to differentiate their organizations and drive business growth. The pressure is now firmly on CIOs to deliver technology-led business outcomes for their organizations. To exploit this opportunity, CIOs should do the following:

Develop a ‘business outcomes’ matrix and map existing and planned technology projects against it to build credibility with business leaders: ROI templates are generally developed to gain approvals and are typically limited to cost savings, but very few CIOs actually link their IT spending to clearly defined business outcomes. Define what business outcome means to your organization (e.g., increase in sales, revenue, customer acquisition, customer satisfaction to name few) and map each of your projects against the matrix to prioritize those with greatest business outcomes. This will help CIOs win buy-in from business stakeholders on project funding and priorities, while ensuring that IT is viewed as an equal and capable business partner.

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