With Dan Bieler, Henry Dewing, Henning Dransfeld, 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.
Forrester attended Microsoft’s second annual Asia Pacific Analyst Summit in Singapore last week for an update on the company’s progress in transforming into a devices and services company. The event highlighted Microsoft’s strengths and exposed some obvious challenges, which I’ve shared below. Forrester clients can access further event-related analysis and implications here.
Day One: Impressive Capabilities And A Strong Understanding Of Customer Needs
Day one was well designed and delivered, with a clear focus on customer and partner case studies and go-to-market strategies based on three core imperatives:
Transforming IT. Focusing primarily on Cloud OS, Windows Azure, and Office 365, this imperative highlights Microsoft-enabled capabilities and resources to help IT organizations transform both internal data centers and IT delivery.
Engaging customers and employees. This imperative essentially combines mobility and social to help organizations thrive in the age of the customer by delivering improved customer service and customer and user experiences.
Accelerating customer insight and business process improvement. This imperative targets the changing needs and expectations for data and information access and real-time decision making via a combination of traditional analytics and big data.
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.
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.
Over the past few years, IBM has certainly copped its fair share of criticism in the Asian media, particularly in Australia. Whether this criticism is deserved or not is beside the point. Perception is reality — and it’s led some companies and governments to exclude IBM from project bids and longer-term sourcing deals. On top of this, the firm’s recent earnings in Asia Pacific have disappointed.
But I’ve had the chance to spend some quality time with IBM at analyst events across Asia Pacific over the past 12 months, and it’s clear that the company does some things well — in fact, IBM is sometimes years ahead of the pack. For this reason, I advise clients that it would be detrimental to exclude IBM from a deal that may play to one of these strengths.
IBM’s value lies in the innovation and global best practices it can bring to deals; the capabilities coming out of IBM Labs and the resulting products, services, and capabilities continue to lead the industry. IBM is one of the few IT vendors whose R&D has struck the right balance between shorter-term business returns and longer-term big bets.
Telstra hosted its annual analyst event in Sydney on October 23 and 24. In his keynote address, CEO David Thodey compared Telstra’s customer advocacy journey to a triathlon that the firm has just begun, which we believe it a fitting analogy for Telstra’s progress on the path it has set for itself. The company is clearly in the race and making progress, but still has many miles to go.
While the company shared a broad spectrum of initiatives, our main observations are that Telstra:
Has made clear progress since our check-in last year, but its transformation remains a work in progress. Telstra is no different than other incumbent telcos working to transform beyond traditional — and declining — sources of revenue. Its dominant position in Australia is secure, but its prospects in new market categories inside and outside of Australia are less certain. We do not believe that Telstra is particularly innovative compared with service providers in the US or Europe, but we do believe that it has a viable transformation strategy and is making progress. Its progress in the Australian media and entertainment industry, including its Foxtel investments, is impressive — it has built a large IP-based digital media file exchange platform to serve global broadcasters and content providers.
Carrier Ethernet aims to provide users with a wide-area service to connect sites, in the same way that asynchronous transfer mode (ATM), Frame Relay, and X.25 services from carriers have done in the past. While end user demand for carrier Ethernet services in Asia is relatively small, it’s growing year over year and is having an impact on service providers’ bottom lines: Carrier Ethernet services currently account for 8% to 10% of service providers’ total connectivity revenues in the region.
From June to August 2013, Forrester invited large and medium-size organizations in India to share details about their live enterprise mobility applications. Our objective was to understand how Indian organizations are leveraging mobile applications to better connect with customers, partners, and employees. In total, we received details of 59 mobile application projects from 41 organizations with more than 500 employees in India. These organizations are spread across verticals like manufacturing, financial services, automotive, media, healthcare, professional services, telecommunications, and utilities. Our research provided some interesting findings:
Mobile application development is skewed toward internal, employee-facing projects. Among the projects reviewed, 59% of the enterprise mobility applications have been developed for internal employees, 23% target customers, and the remaining 18% are for business partners. Most organizations in India are first developing applications for employees, because calculating the ROI is easier and more tangible for employee-centric applications as compared with customer- or business partner -centric applications. For instance, sales force/field force automation is currently the most commonly developed mobile application by Indian organizations.
The majority of projects are co-owned by IT and business. 71% of the enterprise mobility application projects we covered are jointly owned by the IT team and the relevant business stakeholders. Business inputs, especially on user interface and experience, are key to ensuring adoption of mobile application post-launch.
Information workers in India are increasingly using their personal devices, applications, and web services to accomplish both personal and work-related activities. Results from Forrester’s Forrsights Workforce Employee Survey, Q4 2012 indicate that at least 85% of employees use phone/tablet applications and web-based services for both purposes which is putting corporate information security under serious threat.
My interactions with numerous infrastructure and operations (I&O) professionals from large enterprises in India over the past six months have revealed that there is a high degree of awareness of the need to develop a bring-your-own-technology (BYOT) policy. However, actual implementations aren’t yet common, as I&O professionals are unable to address management’s three key concerns. These are, in order of priority:
How can we ensure that information on employee-owned hardware and software is secure?
Telstra’s recent FY13 earnings announcement recorded a strong showing of its Network Application and Services (NAS) division, which saw a 17.7 per cent increase in revenue to A$1.5 billion from the previous year. Its international business delivered a combined Global Connectivity and NAS revenue of A$566 million, or a growth of 11.4 per cent from the previous year. Telstra also plans to continue to build out its NAS division, particularly in Asia.
What It Means
A beneficiary of the NAS investment is Telstra Global, nestled under its International division, offering network connectivity and services to enterprises in Asia. In my recent report, I argued that Telstra Global is a well-placed partner for medium-size to large companies in sectors like transportation and logistics, shipping, manufacturing, and professional services looking to expand their operations out from Hong Kong, Australia, and Singapore into Southeast Asia and China. While this looks rosy, there are areas that require closer attention: