Businesses invest considerable sums of money with vendors like Box, Cisco, Google and Microsoft for a collection a technology we call collaboration tools. As an analyst, though, the question that has dogged me in watching this space is "why?" As in "what is the actual value a business gets from investing in collaboration technology?" The vendors' rationale for acquiring collaboration tools has shifted in emphasis over time, going from a conversation on cost savings to one on productivity gains. However, cost savings is an undifferentiated and limited message while "increasing productivity" can feel ephemeral because it is difficult to measure. Yet my inquiry queue remains full of companies trying to figure out how best to deploy these technologies and my briefings calendar is filled with startups and incumbents pitching new offerings in this space. This brings me back to my original question: Why?
Several events over the past few months in China will affect both the IT procurement strategy of Chinese organizations and the market position and development of local and foreign IT vendors, including:
A government-led push away from foreign IT vendors. Amid security concerns, the Chinese government has issued policies to discourage the use of technology from foreign IT vendors. As a result, many IT and business decision-makers at state-owned enterprises (SOEs) and government agencies have put their IT infrastructure plans — most of which involved products and solutions from foreign IT vendors — on hold. They’ve also begun to consider replacing some of their existing technology, such as servers and storage, with equivalents from domestic vendors. This is significant given that government agencies and SOEs are the key IT spenders in China.
A trend to get rid of IBM, Oracle, and EMC. Alibaba was an early mover, replacing its IBM Unix servers, Oracle databases, and EMC storage with x86 servers, open source databases like MySQL and MongoDB, and PCIe flash storage. This has evolved into replacing these foreign products and solutions with ones from local Chinese vendors. For example, Inspur launched the I2I project to stimulate customers to drop IBM Unix servers in favor of Inspur Linux servers to support business development. The Postal Savings Bank of China, China Construction Bank, and many city commercial banks have started deploying Inspur servers in their data centers. However, this only affects the x86 server and storage product market: While domestic vendors can provide x86 servers and storage, they still have no databases to replace Oracle’s.
An IT mindset has dominated the way organizations view and manage their data. Even as issues of quality and consistency raise their ugly head, the solution has often been to turn to the tool and approach data governance in a project oriented manner. Sustainability has been a challenge, relegated often to IT managing and updating data management tools (MDM, data quality, metadata management, information lifecycle management, and security). Forrester research has shown that less than 15% of organizations have business lead data governance that is linked to business initiatives, objectives and outcomes. But, this is changing. More and more organizations are looking toward data governance as a strategic enterprise competence as they adopt a data driven culture.
This shift from project to strategic program requires more than basic workflow, collaboration, and data profiling capabilities to institutionalize data governance policies and rules. The conversation can't start with data management technology (MDM, data quality, information lifecycle management, security, and metadata management) that will apply the policies and rules. It has to begin with what is the organization trying to achieve with their data; this is a strategy discussion and process. The implication - governing data requires a rethink of your operating model. New roles, responsibilities, and processes emerge.
I was invited to speak at the Big Data and Business Analytics Forum in Hong Kong last week, and introduced our latest research on big data in Asia Pacific for both marketing and technology management professionals in the age of the customer. Listening to other speakers at the event who discussed Hadoop and explained the 4Vs of big data — volume, velocity, variety, and value — it dawned on me that there may be a significant gap in big data development between mainland China and Hong Kong. While Hong Kong is perceived as more technologically advanced, these terms were already buzzwords on the mainland 18 months ago. There are several constraints could have hindered big data adoption in Hong Kong:
Demographic limitations. With a total population of 7 million, Hong Kong doesn’t generate data volumes as gigantic as mainland China’s. This raises the unit cost of big data for Hong Kong businesses.
Budget to invest in new technologies. Hong Kong businesses are still struggling to recover from the 2008 financial crisis and maintain hiring freezes. It’s difficult for tech management to convince business leaders to invest over HK$1 million in a big data project and hire data scientists.
There are few local practices in unstructured data like social, location, and mobile. Hong Kong is open to global social platforms like Facebook or Twitter, meaning that multinationals can use global big data solutions to cover social in Hong Kong and keeping local adoption of big data technology for SoLoMo low.
Many of you know that Forrester has surveyed the global banking platform market since 2005. For 2013, we analyzed the deals of 29 vendors. Seven of these vendors – Infosys with Finacle, Misys, Polaris Financial Technology, SAP, SunGard, TCS with TCS BaNCS and Temenos – continuously participated since 2006. Earlier this year, we delivered a Forrester Webinar on some results of the survey analysis; and just recently Forrester published further results in a report.
Today, I would like to highlight some of the key results:
2013 saw the second highest number of counted deals ever. The 29 vendors submitted more than 1,600 banking platform deals in 2013, making the number of counted deals the second highest we have yet recorded. New named deals decreased in number, while the amount of extended business deals grew.
Good customer relationship drove individual vendor success. In 2013, very successful vendors were those that were able to leverage good client relationships to extend deals and thus increase their market share. The number of combined new named and extended business deals grew by 4% from 2012 to 2013.
Customer-facing functionality drove 2013 banking platform deals. Banks signed for more functionality related to channel solutions, customer data/party management, and customer relationship management than in the past while more transactional functionality such as core banking and lending still grew, but reduced its footprint within the overall sold banking platform functionality. Banks refocused on customer-facing capabilities to win, serve, and retain customers and increase top-line growth.
Organizations fail to deliver a quality of service that customers expect. Our data shows that 67% of US online consumers say they've had unsatisfactory service interactions in the past 12 months. This parallels recent data from Accenture Global Consumer Pulse Research survey. This is because companies need a variety of queuing and routing, CRM and WFO software to support end-to-end operations - software procured from a number of different vendors. Today’s set of un-integrated components restricts contact center managers from obtaining a full, multichannel view of customer interactions, makes it difficult to configure more effective rules for contact flow, and ultimately impacts the quality of service delivered.
The last decade has seen continued consolidation and turmoil in each of the three software categories, as vendors have acquired direct competitors to fill in gaps in their offerings. More importantly, vendors have acquired companies in adjacent spaces to broaden their customer engagement management capabilities and offerings. Today, the leading vendors within each respecive category offer robust end-to-end solutions, and you have to dig deep to find feature differentiation between software solutions. This has left vendors focusing on different verticals, geographies and deployment sizes in order to grow their footprint. In addition, some vendors have made moves into developing capabilities or making acquisitions outside of their respective categories to increase market share. Many vendors offer a combination of 2 of the three foundational building blocks for the contact center - but no vendor has robust end-to-end offerings across all three categories.
No matter which vendor’s event you attend these days, the host will inevitably try to impress upon you how important it is to use social media, mobile, analytics, and the cloud (SMAC) to engage with your customers. In many cases, if you removed the vendor logo, you wouldn't be able to tell whose event you were attending.
On three separate occasions over the past two weeks, I’ve had to engage with companies — well-known global brands — because I had concerns about their services: an automobile manufacturer, a major consumer electronics firm, and one of the world’s largest telcos.
All three use SMAC to engage their customers. However, two providers were unable to respond to my concerns because they couldn’t access my records in their CRM solution or other system of engagement due to a back-end system failure. The third had no technology infrastructure problems and was aware that I wasn’t happy with its services. It responded by offering to send someone out to redo the job, but was smart enough to ensure that its CRM team didn’t call me to get feedback on its service (which it had always done in the past).
It’s more important than ever to serve customers 24x7x365 in the same consistent manner each and every time. When there are outages and situations where they have to redo a job, it’s important that companies first acknowledge that there is a problem, whether it’s in the way the tech infrastructure has been implemented (e.g., a CRM tool outage) or a lack of adherence to best practices when engaging with customers (e.g., skipping customer feedback when you know you messed up).
We all know how mobile apps and websites are changing the way we interact with services and products. Yesterday evening after watching England fulfill their expectations of being dumped out of the World Cup in the first round (technically we can still get through but need a miracle), I decided to do my grocery shopping. So I got out my smartphone, opened up the browser and within 30 minutes had created an online order which will be delivered this Saturday. I now take this service for granted. In fact, I can’t envisage a world in which I have to go to a supermarket and actually walk around with a trolley anymore and I wonder whether my 19 month old daughter will ever experience the ‘delight’ of walking around a busy supermarket.
In the age of the customer, companies need to drive a new business agenda around customer engagement- and to achieve that level of engagement, software becomes critical. Software has become a strategic asset which sits at the intersection between companies and their customers and has become vital in enriching companies’ brands. For example, how you interact with a travel agency or retailer today is often through their mobile app – and the experience of using that app has a direct impact on how you perceive the company.
However, developing software-enabled products requires sophisticated technology and architectural design skills which presents tremendous challenges — even more so for companies for whom technology is not in their DNA. Reflective of this, already in 2012, 38% of the business budget decision-makers who indicated that improving their firm's ability to innovate was a top priority, expressed an increasing willingness to partner with other firms to address their innovation challenges.
The recently published Forrester Wave on software product development services (PDS) evaluated the leading providers who can partner with companies to help develop these software-enabled products (EPAM Systems, GlobalLogic, HCL, Infosys, Mindtree, Ness Technologies, Pactera, Persistent Systems, Symphony Teleca, TCS, and Wipro).