Hortonworks Eats IBM — And Loves It

Big announcement at Dataworks today — IBM is transitioning Big Insights into a partnership with Hortonworks. This seems not unexpected and only mildly interesting until you think deeply about it. Then it hits you: Hortonworks, after digesting Microsoft, is now eating IBM. It’s a total reversal from the past, when big fish like IBM would eat little fish like Hortonworks. See my blog post from yesterday for more on this.

The tables are turned. Let me explain:

  • Working on distributed open source is new and complex. The young developers with the new skills and energy to work on this stuff don’t go generally to work for IBM or Microsoft. They go to work for valley startups who are challenging the big boys. This has been a problem for enterprise software vendors who have had issues developing and building a business around their open source work. Need proof? Microsoft got out of the Hadoop business first, then EMC did the same (through Pivotal, which then gave up), then Intel, and today IBM with their announced partnership with Hortonworks at Data Works 2017.
  • Proprietary data analytics tools are where the growth is. IBM isn’t  growing Infosphere; Teradata cut its prices in half to boost sales; and Oracle doesn’t even want to talk about Exadata in favor of “all cloud, all the time.” The future of these software giants is tied to how well they can navigate the disruption to their legacy business model, which is on-premises, scale-up, and centers on enterprise deals.
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Why Open Source Is Really Disrupting Enterprise Software

I had an epiphany today about a major reason open source is disrupting enterprise software. This is perhaps one of those things that you have heard so much, you've gone numb to it. All the big giants are still alive and kicking, however; so is this really happening? The answer is yes, however the mechanics are not what you think. It is not simply just a cost play. The acquisition - one of the main weapons that big software vendors had to fight disruptors - is losing effectiveness.  And that changes everything. Allow me to explain:

In the past, big vendors bought the smaller potential disruptors and got the code and customers. Cash disrupted the disruptor; investors got paid, and customers got the new technology as part of the big vendor's larger suite. Everyone was happy. 

In the open source model, the code is, well.....open source. The value is the people; and you can't keep most people from leaving, which they will. Cool, talented open source developers don't generally want to work for big, stoggie software vendors. Furthermore, customers bought into open source to avoid vendor lock in, so buying for the customers is not all that attractive either. This makes Hortonworks and Cloudera, for example, unattractive acquisition targets for the likes of IBM or Oracle. Hmmm...are you starting to see it?

Allow me to bring it all together: Open source is indeed erroding big software's vendor's profit; sure they are selling stuff, but open source disrupted sectors are not growing at the rate their stock price needs to keep investors happy. Investors will grow increasingly unhappy, cash will become scarce and big vendors will cut costs to prop up the bottom line and free up cash... for what - acquisitions? That doesn't work like it used to.  It's is a downward spiral.

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Why You Are Getting Disrupted

The overriding theme of every disruption story I’ve ever heard is that firms thought they had more time than they did. So, I’ve been pondering the why. We can see disruption happening all around us, but why is it so difficult to get out in front of it?

Then I slogged my way through Ray Kurzweil’s Law Of Accelerating Returns and it hit me. Digital disruption is about the clash between exponential change and our brain’s wanting things to be linear. Here is what I mean:

  • The law of accelerating returns says that evolutionary systems, like information technology, produce exponential changes. This happens because one generation of technology builds on and accelerates the returns of past generations. Think of how the Internet led to cloud, accelerating mobile apps, which build on broadband wireless, etc.
  • Accelerating returns produce exponential curves in a system’s fundamental measures. This is what Ray proved mathematically in his law. In information technology that means the measures of power and speed tend to double at consistent intervals, while costs are cut in half. Think Moore’s law.
  • The law of accelerating returns implies that Moore’s law is not the exception, it's the rule. So, we should expect many Moore’s laws, and if fact, that is what we have seen — look up Gilder’s Law, Metcalf’s Law, Kryder’s Law, etc.
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The Cloud Is Disrupting Hadoop

Forrester has seen unprecedented adoption of Hadoop in the last three years. We estimate that firms will spend $800 million in Hadoop software and related services in 2017. Not surprisingly, Hadoop vendors have capitalized on this — Cloudera, Hortonworks, and MapR have gone from a “Who?” to “household” brands in the same period of time.

But like any good run, times change. And the major force exerting pressure on Hadoop is the cloud. In a recent report, The Cloudy Future Of Hadoop, Mike Gualtieri and I examine the impact the cloud is having on Hadoop. Here are a few highlights:

●     Firms want to use more public cloud for big data, and Hadoop seems like a natural fit. We cover the reasons in the report, but the match seems made in heaven. Until you look deeper . . .

●     Hadoop wasn’t designed for the cloud, so vendors are scurrying to make it relevant. In the words of one insider, “Had we really understood cloud, we would not have designed Hadoop the way we did.” As a result, all the Hadoop vendors have strategies, and very different ones, to make Hadoop relevant in the cloud, where object stores and abstract “services” rule.

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I'm Starting An Insight Platforms-as-a-service Wave - Who Should Be Included?

Technology buyers have made it clear to us they want platforms for building data analytics applications. I call these insight platforms, and they were the No. 1 emerging technology of interest for enterprise architects in 2016.  Understanding why is easy — insight platforms provide a common toolset and a place to run what you have built. They accelerate both time-to-value and agility, which are crucially important for keeping up with markets and customers. See Tame The Beast: Forrester's Insight Platform Vendor Landscape and Want To Create Action From Big Data? Look At Enterprise Insight Platform Suites for more information.

Since using more public cloud is the No .1 big data priority, according to our 2016 survey of 3,000+ data and analytics decision makers, Insight Platforms-as-a-Service are next on my Forrester Wave™ agenda. We define Insight Platforms-as-a-service at multitenant platform-as-a-service cloud offerings that include tools for data management, several types of analytics and technology that help firms operationalize insight in other software and processes.

I already know the biggest players - Google, Amazon, Microsoft, IBM and Oracle - but I’m also looking for other providers who want to give them a run for their money. Who else I should look at? For example, should I include:

  • Business service providers like FICO? They can lay claim to having an insight PaaS, and they definitely want a piece of Amazon’s cloud business.
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Want To Create Action From Big Data? Look At Enterprise Insight Platform Suites

By now firms are deep into their big data investments — and frustrated. Too many new and rapidly evolving technologies are built on an open source and named after a bunch of zoo animals. The term insight platform has struck a chord with technology buyers exactly because it offers a path out of this mess. In fact, insight platform was the number-one emerging technology in terms of investment and interest in Forrester’s Q3 2016 Global State Of Enterprise Architecture And Portfolio Management Online Survey.

What exactly is an insight platform though? I introduced the term in my May blog post Insight Platforms Have Arrived and then refined it and explained the vendor landscape in my August post Tame The Beast: Forrester’s Insight Platform Vendor Landscape. Over the last few months, we have been conducting a Forrester Wave™ evaluation of the most mature segment of the market, enterprise insight platform suites, which are:

“…Integrated or partially integrated suites of data management, analytics, and insight execution components that require some integration and configuration to form a platform.”

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Emerging Technologies To Power Your Systems Of Insight

In 2014, I recognized something was a bit off with all the big data excitement and I started interviewing companies to get to the bottom of it. In 2015, Ted Schadler and I published the first of my ideas in the report Digital Insights Are The New Currency Of Business. In that report, we pointed out what was wrong - big data only focused on how to turn more data into more insight. It didn’t say anything about how to turn that insight into more action. In that report we defined a system of insight, which focused big data energy on implementing insights in software using closed loops that create action and continous learning. In this year’s Top Emerging Technologies To Watch report, we evaluated sytems of insight technologies that were creating the most change, and we found many. For example:

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Forrester's Top Emerging Technologies To Watch: 2017-2021

Think back just a few years — social, mobile, cloud, and big data ruled the emerging technology landscape. Business and technology management executives wondered what big data meant, when the cloud would disrupt their companies, and how to engage effectively on social channels. In 2016, Hadoop turned 10, the cloud has been around even longer, and social has become a way of business and life. So what's next?

As a refresh to my 2014 blog and report, here are the next 15 emerging technologies Forrester thinks you need to follow closely. We organize this year's list into three groups — systems of engagement technologies will help you become customer-led, systems of insight technologies will help you become insights-driven, and supporting technologies will help you become fast and connected.

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Tame The Beast: Forrester's Insight Platform Vendor Landscape

The mix of analysts who showed up to a recent Cambridge Semantics briefing illustrates a big problem data and analytics technology buyers have - too many data and analytics solutions and a ton of overlap. For example, of the five analysts who came:

  • One saw Cambridge Semantics as a text analytics tool — and that is true.

  • Another saw it as a search tool — and that too is true.

  • A third viewed it as a cognitive analytics tool — and that is true as well.

  • A fourth came because it was a "BI" tool . . . see my point?

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Insights-Driven Businesses Are Stealing Your Customers

Is your business digital? Like Domino’s Pizza, do you realize that you are not a product or service business, rather you are a software and data business that provides products or services? Do you exploit all of your customers' data to know them inside-out? Are customers flocking to you because you are driving every engagement with insight about them? If the answer to any of these questions is not a resounding, “Yes!”, then you are losing revenue and shareholder value.

In Forrester’s new report, The Insight Driven Business, my colleagues Ted Schadler, James McCormick and I identify a type of business that ignores the "data driven" hype. Instead, insights-driven businesses focus on implementing insights - that is actionable knowledge in the context of a process or decision - in the software that drives every aspect of their business. This is a big shift from most firms that fret over big data and technology. Instead insights-driven businesses focus on turning insights into action. The big data and technology pieces come along naturally as a consequence.

To gauge the economic impact of insights-driven businesses, Forrester built a revenue model that conservatively forecasts insights-driven businesses will earn about $400 billion in 2016; however, by 2020 they will be making over $1.2 trillion a year due to an astonishing compound annual growth rate between 27% and 40%. Given that global growth is less than 4%, how will they pull this off? Plain and simple, they’ll do this by understanding customers more deeply and using that insight to steal them from their competition. 

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