The digital economy is different from the economy of our parents' generation: Everything moves faster; customer expectations evolve almost overnight; new digitally enabled products open new opportunities; companies can scale at a pace that would have been impossible twenty years ago; and data has tangible value.
Now that companies like Salesforce.com have proven the cloud-based software model, CIOs embrace software-as-a-service (SaaS) as a viable option. The idea of paying for only what you use entices CIOs as budgets are squeezed. With a SaaS model it is much easier for CIOs to pass along software costs to each business unit P&L or departmental budget.
But why would a rapidly growing company like HubSpot — a provider of inbound marketing tools to the SMB market — launch a new CRM solution as a “freemium” offering?
The answer lies in one of the key changes brought about by the digital economy: Customer acquisition trumps revenue generation when establishing a digital business — revenue generation will come later and not necessarily from traditional sources.
Clients tell us they are turning to SaaS not so much for cost savings but primarily for greater business results: greater business agility and improved collaboration inside and outside the enterprise. But, what can SaaS applications provide that traditional, single tenant applications cannot?
At last week’s Workday Technology Summit, we heard firsthand from some major brands about the unique benefits they are achieving from using a SaaS solution:
1.Continuous innovation. Workday customers talked about two components to this benefit: 1) seamless, frequent, automatic upgrades and 2) ability to deploy changes quickly into your live environment.
When I was in high school – and admittedly that was quite a while ago — my neighbor quit his job as an insurance salesman to go into the car phone business. My mother couldn’t understand why someone would give up a good, stable job to sell something that she couldn’t imagine anyone ever using. Who would use a car phone? Why would anyone talk on the phone in a car?
Fast forward a few years… (OK, a few more than a few)… and most of us can’t imagine not having our phone with us. We use our phone everywhere… And, yes, according to Forrester’s 2013 Consumer Technographics survey, 68% of US online adults use their phone in the car, and 48% even use their phone from the bathroom. Who’s guilty?! As for my mother, she has still never used an ATM card at a bank and still writes checks for cash at the grocery store, but she DOES have a cell phone and just might have used it in the car once or twice.
One of the developing trends in computing, relevant to both enterprise and service providers alike, is the notion of workload-specific or application-centric computing architectures. These architectures, optimized for specific workloads, promise improved efficiencies for running their targeted workloads, and by extension the services that they support. Earlier this year we covered the basics of this concept in “Optimize Scalable Workload-Specific Infrastructure for Customer Experiences”, and this week HP has announced a pair of server cartridges for their Moonshot system that exemplify this concept, as well as being representative of the next wave of ARM products that will emerge during the remainder of 2014 and into 2015 to tilt once more at the x86 windmill that currently dominates the computing landscape.
Specifically, HP has announced the ProLiant m400 Server Cartridge (m400) and the ProLiant m800 Server Cartridge (m800), both ARM-based servers packaged as cartridges for the HP Moonshot system, which can hold up to 45 of these cartridges in its approximately 4U enclosure. These servers are interesting from two perspectives – that they are both ARM-based products, one being the first tier-1 vendor offering of a 64-bit ARM CPU and that they are both being introduced with a specific workload target in mind for which they have been specifically optimized.
Early next month, Forrester will publish a report on the dynamics of China’s private cloud market. This research demonstrates that Chinese I&O pros have started to leverage the benefits of private cloud — including highly standardized and automated virtual pooling and metered pay-per-use chargeback — to support the digital transformation of traditional business. By using private cloud, Chinese I&O pros not only support their business units’ digital transformation, but also provide the cost transparency that the CFO’s office demands. In practical business terms, Chinese organizations use private cloud to:
Improve business agility. There is fierce market competition to give Chinese consumers more choices. To do this, Chinese organizations must shift their business operations to increase their product portfolio to win new customers and provide a better customer experience to serve and retain existing customers. Chinese I&O pros need to provide a cloud platform that also supports business units’ requirement to lower their capital and operating expenditures.
Avoid disruption by Internet companies. Chinese web-based companies have started to use high-quality service to disrupt traditional businesses. Chinese I&O pros need to provide more flexible computing to help the application development team to improve the development cycle and respond to customers more quickly, flexibly, and effectively.
Develop new business without adding redundancy. Chinese organizations want to scale up new business to offset declines in revenue. However, the existing IT infrastructure at these firms often cannot support new business models — and can even take a toll. Chinese I&O pros need to find a new way — such as private cloud — to support business development and reuse existing infrastructure.
KANA Software (a Verint Company) was kind enough to invite me to their user conference on September 19-20. The event was packed with product, strategy, and customer information. A good number of industry- and independent analysts attended, including Forrester's Ian Jacobs. Here are my thoughts:
Software categories are ripe for consolidation, and the KANA-Verint combination is well positioned: There are three main technology categories that comprise a contact center: queueing and routing technologies; CRM, or agent desktop technologies and workforce optimization technologies. We have predicted that these technology categories will converge because (1) these are mature markets and vendors will move into adjacent spaces to increase market share and (2) companies are looking to simplify their technology ecosystem in order to improve the quality of service. The user conference did a good job at articulating the value of consolidating these spaces.
Customers have an unprecedented voice in your organizations ability to succeed and thrive. And investments reflect the critical need to listen and respond to customers. Marketing spend on customer facing systems continues to rise as listening to and talking with customers at more intimate level becomes an imperative. At the same time, we continue to invest in enterprise social business and collaboration solutions to drive greater effectiveness and engagement for our employees. Sounds like we're doing the right things, right? Well, sort of. Each silo is doing the right thing. But, lacking a coordinated approach, marketing and technology management spend will never reach full potential. Only when these two come together, do we have a foundation for creating a Customer Activated Enterprise.
The good news is that we have a solid foundation, with some key investments in place. Today:
There are a lot of proven solutions to listen to customers—from training customer-facing employees to be more empathetic to installing social listening technology within your contact center. Having a good ear is only half the battle—what your company does with what it hears is equally important. Moving the “voice of the customer” through your firm more rapidly is the next step.
Companies gather product requirements and mash them together at the front end of new product development cycles. Companies test the “temperature” of their brand on social media and adjust marketing messages accordingly. Those are examples of actions taken directly from accumulated knowledge of customer needs. With the proper care, customer insights can be actionable, searchable, useful digital assets.
Alright, so far so good. So, where are we falling short?
I cannot believe it’s been a month already since the Forrester CIO Summit took place in Singapore. As usual, it was a great forum to exchange views with you, Singapore-based and other regional technology management leaders, on what is keeping CIOs busy these days: the digital transformation of their enterprises. Following these exchanges and my recent discussions with CIOs in Singapore and beyond, it is clear you understand that:
The power has shifted into the hands of your customers. Dane Anderson kicked off the Summit by making the case that the balance of power has shifted from institutions to always connected and technology empowered customers. To remain relevant as CIOs to your business stakeholders, you must shift your focus from the design and deployment of internal systems focused on process control to enabling digital products and services for more effectively engaging your customers.
The future of business is digital. My colleague John Brand then explained what makes a digital business. Companies like Alibaba and Burberry are digital businesses because they excel at integrating the two sides of digital strategy: creating leading digital customer experiences AND agile digital operations in service of customers.
Last month I wrote a short blog post introducing the new US Digital Services Playbook. I'm happy to announce that we're going to be publishing a series of short reports that take a closer look at the CIO's role in implementing the plays in the playbook.
The first of these client briefs, published today, summarizes why we believe CIOs should study the playbook and incorporate its plays into their team's standard operating practices.
The remaining briefs will take each of the four play categories and drill down into the implications for the CIO and their teams.