We’re at the dawn of a new industrial revolution. And just as the steam engine and the spinning jenny transformed the world in the first industrial revolution, the new technology of this new industrial revolution will transform our world as we know it.
The seeds of revolution are all around us: More compute power now resides in each of our pockets than in the supercomputers of the eighties; we are rapidly approaching a point where each person on the planet is interconnected through a web of digital channels; billions of devices are capable of instantly uploading data about the device and its environment as an the internet of things; highly automated manufacturing plants will soon intelligently assemble custom products; and instant video communications now take place regularly around the world. All of these changes are already here.
With a weakening economy, skyrocketing food prices, and an attrition rate of around 14%, Indian CIOs’ biggest worry is increasing the salaries of their IT staff. Data from Forrester’s Forrsights Budgets And Priorities Survey, Q4 2013, indicates that 71% of Indian CIOs will increase their spending on IT staff salaries and benefits in 2014 — tops in the Asia Pacific region (figure below).
In return for the increase in staff salaries, Indian CIOs will face two challenges:
Increased pressure from CEOs to contribute to the company’s top line.By 2016, 70% of Indian CIOs will report to CEOs. As the boundary between IT and business blurs further, CEOs will get more directly involved in business-led technology discussions as a means to differentiate their organization and drive business growth. They’ll look for new technology capabilities to respond to customer needs better, faster, and cheaper — and won’t be satisfied with an IT organization that merely keeps the lights on.
The need to retool their IT teams. All too often, IT lacks business-oriented communication skills and team members rarely or never share business knowledge with each other. IT staff continue to be order-takers. The biggest challenge for CIOs today is how to make their technical people more business-savvy; this problem will only get more difficult as pressure from the business increases.
With Henry Dewing, Henning Dransfeld, Katyayan Gupta, Brownlee Thomas, and Michele Pelino
Vodafone hosted its annual global analyst event in London recently, and it was a good event. Vodafone’s CEO Vittorio Colao kicked it off with a passionate endorsement of Vodafone’s enterprise ambitions. But will Vodafone’s market position as a leading mobile telco give it a tangible advantage in the broader enterprise global telecoms marketplace? We believe there is a good chance it will because:
Vodafone’s integrated pitch is credible. Vodafone comes up in nearly every conversation with Forrester enterprise clients that want to consolidate vendors for multicountry or “global” mobility services. Increasingly, our clients also are asking about Vodafone’s wired services. And those based in the UK and Germany are the most interested in learning about what’s available and what’s coming with respect to fixed-mobile bundling. Vodafone made a big play on fixed-mobile integration, most notably with the acquisitions of Cable & Wireless and Kabel Deutschland. Its network now covers 140 countries, 28 of which support MPLS networks for mobile backhaul. Vodafone also has big plans for refreshing and expanding its international IP backbone network to more than 60 countries.
Michael Facemire, John McCarthy, and I recently published a clarion call to the technology industry: It's time for a new architecture! The aging Web isn't designed to handle mobile apps or sites. And it certainly can't handle the real-time demands of connected products.
Here's how we summarize it:
Mobile is pushing aging web architectures to the brink. The three-tier architecture built for a browser-led PC world can't flex, scale, or respond to the needs of a good mobile experience or the emerging requirements for connected products. Mobile's volatility and velocity of change require a distributed four-tier architecture that we call an "engagement platform." The engagement platform separates technical capabilities into four parts: client, delivery, aggregation, and services. The new requirements of modern apps will force content distribution networks, application server vendors, mobile middleware vendors, platform-as-a-service suppliers, a myriad of startups, and enterprises to coalesce around this four-tier architecture. CIOs need to start planning immediately for the migration from three tiers to four.
It's time to throw out the old notion of a three-tier architecture -- presentation, application, data -- and replace it with a four-tier engagement platform that can handle the new demands:
An engagement platform suppports a distributed, four-tier architecture natively engineered to deliver compelling experiences, excellent performance, and modular integration on any device over any network at Internet scale.
Figure 1 The Four-Tier Engagement Platform Makes Delivery Its Own Tier
Forrester’s team of Asia Pacific (AP) analysts released our top 10 predictions for the Asia Pacific tech market in 2014 this week. The most critical overarching trend for the region in 2014 will be the strengthening age of the customer, which we define as a 20-year business cycle in which the most successful enterprises will reinvent themselves to systematically understand and serve increasingly powerful customers.
The age of the customer will manifest itself in AP through 10 major trends that will fundamentally alter or disrupt regional tech markets in 2014. Here’s a preview of five of them:
Technology spending will remain flat. Forrester expects IT spending growth in AP to remain flat in 2014, with regionwide growth of 4%; the regional growth rate rises to 6% if we exclude Japan. We see China rebounding and generating healthy growth, but expect that local vendors will see more benefit than multinational brands. India is expected to rebound as well, in spite of an election in the first half of the year; once that’s over, we expect pent-up demand to be released. More details are offered in my colleague Fred Giron’s blog post.
CIOs’ IT spending will decline as the clout of the business grows. We’ve been writing about the growing clout of business buyers for more than a year now. But with continued business gains, we are now seeing CIO spending decline as business leaders and workforces take over more IT strategy and spending decisions. We expect to see this shift in spending power continue out to 2016 at a minimum.
What Benioff and his team at Salesforce do better than every other tech company at a customer conference is make an emotional connection between the audience and the brand.
The opening 45 minutes of Dreamforce 2013, the annual gathering of Salesforce.com (SFDC) customers and industry influencers, focused less on the product and much more on how SFDC is helping transform the lives of those most in need of help. In many respects, this looked and felt more like the opening of a fundraising event than a software conference — I say "felt" because the message was designed to connect with feelings. The visuals and stories all help people connect to the Salesforce message at a deeply emotional level. The implication: By partnering with SFDC, you really do help change the world. This was a masterclass in marketing and leveraging corporate philanthropy.
Too many companies are so focused on their own growth that they fail to connect to something that really matters in the world: making a difference in the lives of people less fortunate than ourselves. By reinforcing this connection for both customers and employees, Benioff successfully gives a deeper meaning to the hours employees will spend to do their job slightly better each day. It's no wonder that SFDC is one of the most admired companies and a top place to work.
A weak global economic recovery and unstable domestic spending slowed economic and tech industry growth in China in 2013, affecting export-oriented economies in Asia Pacific. Combined with ongoing structural problems in India and dwindling foreign direct investment in ASEAN, IT spending growth slowed across the region in 2013. Japan was the only exception; IT spending growth there was faster than expected. Forrester expects overall IT spending growth in Asia Pacific to remain at 4% in 2014. In particular:
Japan’s IT purchasing growth will slow as stimulus effects fade. Government reforms and stimulus packages have had a positive effect on the macroeconomic environment. But those will wane in 2014; we expect Japan’s IT spending growth to slow to around 2% next year, propped up by large application modernization projects in banking, professional services, and retail.
Chinese growth will mostly benefit local vendors. Forrester estimates that China’s IT purchases will grow by 8% in 2014. Local vendors have recently strengthened their capabilities, primarily in the hardware space, while multinational vendors face challenges meeting Chinese government security requirements. As a result, we expect most of China’s 2014 growth to benefit local vendors; foreign vendors face dwindling market shares.
Australia/New Zealand’s shift to systems of engagement will continue its fast pace. Slowing economic growth in 2013 led to an acceleration of the move from capex to opex IT models in ANZ, driven by the need for improved agility in systems of engagement projects. The transformation of systems of record leveraging virtualization and automation approaches has started to erode a lot of the value of the overall IT market. So while the overall ANZ economy should improve, we don’t expect IT spending growth to exceed 3% in 2014.
Digitally empowered customers are forcing firms to redefine their engagement model to survive in the age of the customer. Data from Forrester’s Forrsights Budgets And Priorities Survey, Q4 2013, indicates that Indian CIOs’ top business priority is to address the rising expectations of customers and improve customer satisfaction; 87% of them told us that it is a high or critical priority.
Indian business leaders’ attitudes are changing; increasingly, they view IT as a means to better engage digitally enabled constituents, and this is fueling a fundamental shift in the way firms interact with customers. Business leaders expect their CIOs to contribute to business growth by winning and retaining customers. But targeting the customer experience requires IT organizations to radically shift focus. CIOs must alter governance processes, job descriptions, IT performance metrics, and even the culture of the technology management organization.
Forrester recently published Technology Management In The Age Of The Customer, which highlights how empowered customers are disrupting every industry and CIOs need to adapt tech management to these rapid changes. To meet this objective, CIOs must broaden their tech management priorities and carry two agendas:
Managing infrastructure management and internal operations, which we call “IT.”
What if you wanted an app on your phone or tablet and it wasn't available?
Sounds ludicrous given the million apps available in the app stores. But it's not ludicrous. It's commonplace. The world has 188 million active public Web sites and probably at least that many internal sites. And each one of those sites has (I'm betting) five or maybe 25 different tasks buried in it (each one of which could be an app). Let's do the math real conservative like:
(188 million public Web sites + 188 million internal Web sites) x 5 tasks per Web site = 1.9 billion potential smartphone and tablet apps
And we have 1 million apps today, a ratio of almost 2,000:1. We have a humongous app gap, defined as:
When people want applications on a mobile device but find those apps aren't available.
Entrepreneurs do their best to plug the app gap when established companies can't or won't see the opportunity. That's what's driving apps like Evernote, Dropbox, Flipboard, Uber, RoamBI, TripIt, and Expensify.
At home, the app gap might lead to a disruption in your market. If you're not serving your customer on a mobile device, maybe a digital disrupter will. (Yes, I know many Web designers are busily adapting some of the almost 400 million sites to work great on mobile devices. It hasn't plugged the app gap yet.)
In business, the app gap is challenging because employees are happy to plug the app gap at work themselves. That's why they bring their own apps. Here's what it looks like:
With Dane Anderson, John Brand, Tim Sheedy, Clement Teo, and Bryan Wang
During his keynote at Telstra’s recent annual analyst event in Sydney, the CEO compared Telstra’s customer advocacy strategy to a triathlon that the firm has just begun. We believe this is a fitting analogy for progress communicated at the event. Our main observations are:
Telstra’s transformation remains a work in progress. Telstra is not unique from other incumbent telcos that transform away from traditional — and declining — sources of revenue. Its strong domestic position seems secure for now. But its prospects in new market categories, both inside and outside of Australia, are less certain. Telstra is not particularly innovative compared with telcos in the US or Europe. Yet Telstra benefits from a credible transformation strategy, which it is gradually implementing. For instance, Telstra has built a large IP-based digital media file exchange platform to serve global broadcasters and content providers.
Telstra ought to use its Net Promoter Score to drive cultural change. Its strategic goal to push for world-class customer advocacy is a key differentiator and convincing. However, we believe Telstra needs to use the NPS also as a driver of internal cultural change. For instance, Telstra should analyse transactional processes of device purchasing from branded retail stores. Moreover, Forrester research indicates that NPS has limits when it comes to explaining the “how” and “why” of customer experience.