Your business model is under attack. And it’s not by your competitors. It’s under attack from your customers. Three years ago, Forrester identified a major shift in the market, ushering in the age of the customer. Power has shifted away from companies and towards digitally-savvy, technology-empowered customers. They now decide winners and losers: Our Empowered Customer Segmentation shows that more than a third all US online adults want new and engaging digital experiences. They will switch companies to find these experiences. In this environment, being customer-obsessed can be your only competitive strategy.
In Forrester’s 2017 Prediction Reports, we are tracking firms’ progress on their customer-obsessed journeys. In our annual collection of predictions, we look at business strategy, leadership, customer experience, and technology dynamics to examine progress and predict the key events, changes, and trends that will occur in 2017.
Here are three key findings from our 16 prediction reports:
The next wave of Customer Experience will have a profound impact on firms’ P&L: The shift to a customer-led market represents an immediate and prolonged threat to company survival. Our research shows a clear correlation between the quality of customer experiences and revenue growth; it also affirms that emotion is a core driver of customer loyalty and spending. The next wave of CX will connect these dots, blending analytics, technology, and design to evoke emotions to drive affinity and directly impact revenue.
Technology has become the foundation for nearly every customer experience, enabling companies to provide new sources of value to customers with each interaction. It’s no surprise, then, that business leaders are shifting their mindset and their approach to technology.
Specifically, tech-empowered customers and their rising expectations have led to changes in:
Business priorities and areas for improvement.
Who is involved in the decision-making process for tech purchases.
Overall budgets for technology investments.
The infographic below dives deeper into these new purchasing trends:
As business leaders begin to play a larger role in tech investments, it’s important to know the kinds of decisions they’re making and what they expect from you along the way. A deep understanding of your changing tech buyers will help you succeed in an era where technology underpins everything we do.
For years, technology purchasing has been moving away from a central IT approach and into the business. Forrester Data shows that in North American enterprises, 73% of technology spending is either business-led or the business provides significant input into IT’s purchase — up from 71% last year.
Clearly times have changed when it comes to technology purchasing, and business decision-makers (BDMs) are more critical to the process than ever. For example, North American enterprise BDMs reserve 41% of their respective budgets for technology purchases and expect to increase their total spend by 5% over the next year.
When asked why they are spending more of their business budget on technology, North American enterprise BDMs cited three critical reasons. First and foremost, technology is too important for the business not to be involved:
Second, the rising expectations of customers require the business to push IT to keep technology current. And finally, business executives’ understanding of technology is increasing; so, they can interact more effectively with IT.
Thirty-nine percent of North American enterprise BDMs believe that “software is the key enabler for their business,” and helps them to engage with customers. This trend is even more prevalent in Europe and Asia Pacific, where 51% and 58% of BDMs, respectively, believe the same thing. This significant attitudinal shift will continue to shape how software is acquired, deployed, and used to drive business success.
So how can you capitalize on the widespread and significant changes to the B2B technology landscape?
I joined Forrester recently as a senior forecast analyst on the ForecastView team focusing on business technology (BT) topics. What is ForecastView you ask? It’s a Forrester product that puts the numbers around our research reports by publishing a five-year quantitative outlook. To learn how our forecasts can help you with your investment decisions, read our ForecastView overview.
Our BT forecast team takes a look at cloud, security, IoT, business intelligence, marketing ad technology, Big Data, and other hot topics in the BT space. We launched our ForecastView BT bundle in 2015. In case you missed it, our three 2015 forecasts examined eCommerce platforms, cloud security, and API management. Some highlights:
Sizing The Cloud Security Market: Companies will spend $2 billion over the next five years to protect data in the cloud. We expect the market to grow at a staggering 40%+ CAGR over the next five years.
In addition to highlighting the importance of the BT agenda, these data also show the difference between BT-Leaders -- companies that embrace a BT agenda -- compared to BT-Laggards – companies that are entrenched in the traditional IT mentality vis-a-vis Business Technology needs.
Specifically, we found that businesses with IT departments that help accelerate business success are more likely to:
Have had double-digit growth in 2014. The bottom line is important. We found that 30% of companies that BT-Leaders grew at 10% or more in 2014 compared to 2013, compared to 26% of BT-Laggards.
Survey data from Forrester Research indicates that Internet of Things (IoT) solutions may finally be ready for ‘prime time.’ Business Decision Makers (BDMs) report that IoT has become a top business priority and they are assessing solution feasibility and, in some cases, already investing. IoT will be driven by the business side of the house, but a close collaboration between business and technology management stakeholders is a prerequisite for success. Forrester believes that IoT will ultimately serve as a driving force for the Business Tehcnology (BT) Agenda by changing processes, skills, and the mindset of technology management organizations.
Forrester Business Technographics® runs a series of annual surveys with business and technology decision-makers measuring technology adoption plans, drivers, barriers and buyer behaviors. Let’s take a closer look at how adoption plans for IoT have evolved over the past year.
Compared with 2014, BDMs surveyed in 2015 were more than twice as likely to report they would begin IoT investment within the next 12 months, 50% more likely to report they were currently implementing or piloting IoT and dramatically less likely to be unfamiliar with IoT adoption plans or report they were not familiar with the technology. In 2015, 49% of BDMs reported that the expansion of IoT initiatives was a “high” or “critical” organizational priority over the coming 12 months.
In 2013 I wanted to help executives understand some of the fundamental changes that are happening in business because of the digital revolution. Big names capture the attention of the media – who in the USA could have failed to hear about the collapse of Blockbuster or Borders? Who in the UK could have failed to hear of the demise of HMV? When writing about these failures, most analysts highlight the disruptive companies that put them out of business; companies like Netflix, Amazon and Apple. But I wanted to know if there was something more fundamental going on that impacts the ability of an incumbent to defend against digital disruptors. So in 2013 I set out to research digital business successes and failures in an effort to uncover the secrets of digital mastery.
I captured insights from my research in reports published in 2014. Here’s my pick of the top four you should read to gain a deeper understanding of digital business (these reports are available to existing Forrester clients, non-clients can purchase them individually or download a summary from this page):
#1 The Future Of Business Is Digital - The results of 18 months of research into what lies behind successful digital businesses were first published in March in this report. Originally published for CMOs and CEOs, the report was subsequently republished for CIOs as “Unleash your Digital Business”. This report highlights how digital business differs from traditional business; provides an overview of the customer’s dynamic ecosystems of value; and offers six strategies to help transform any business into a digital business.
In “Unleash Your Digital Business”, I highlight the need for all companies to embrace digital business as a new business model – one in which the nature of the value exchange with customers is fundamentally changed. Since then, CIOs frequently asked me what they should be doing to help their firms become a digital business.
The answers lies in the difference between Business Technology (BT) and Information Technology (IT). BT focuses on the systems, technologies, and processes to win, serve, and retain customers. Whereas IT focuses on the systems, technologies, and processes to support and transform an organization’s internal operations. To become a digital business CIOs must adopt the BT agenda.
Our research on digital business highlights the need for the organization to focus on six core digital strategies that drive digital customer experience and digital operational excellencein support of customers. Each of these strategies is an integral component of the CIOs BT agenda:
Digitize the end-to-end customer experience
Digitize products and services inside the customer’s value ecosystem
Create trusted machines
Digitize for agility over efficiency
Drive rapid customer centric innovation
Source enhanced operational capabilities within a dynamic ecosystem
The Infrastructure and Operations (I&O) role is changing significantly: I&O pros are increasingly helping to drive business strategies with the technologies they choose and implement. Business leaders tell Forrester that technology is too important to leave to technology managers alone; they are pushing their I&O colleagues to explore the business value associated with the technologies they choose, implement, and manage. I&O pros, in turn, tell us that their jobs are changing. As one I&O pro put it, “I’ve been an infrastructure manager for 15 years, but only in the past 3 have I been asked to construct a business plan and be part of the business planning team.”
Figure: Burberry's Technology-Powered Flagship Store In London
For I&O pros in retail and related verticals like hospitality (or for anyone involved in creating in-person experiences), we’ve just released a report to help aid this transition. Along with my co-author Michele Pelino, we’ve just released the report “Infrastructure Will Drive The Retail Store Experiences Of The Future.” The report asserts that I&O pros have an important role to play in helping their companies engage shoppers in experiences that will drive loyalty and spending.
Over the past few months I have spoken with a lot of CIOs, customer experience professionals, marketing professionals, and BT strategists in both the public and private sectors in Australia about their organization’s or department’s mobile strategy. This culminated in a number of meetings in Canberra last week, where I got a great feel for how mobile strategies are playing out within the Australian federal government.
While there is a broad spectrum of maturity when it comes to embracing the mobile mind shift, the good news is that everyone I spoke with recognized not only how important mobility is to existing business processes, but also that mobile will transform their customer base and their organization.
It was interesting to note that the conversations I’ve been having with private-sector organizations about mobility usually involve both someone from the CIO’s department and someone from marketing (sometimes CX, sometimes management, sometimes channels). Mobile initiatives are generally partnerships; while the business side leads these initiatives, they also involve the technology department. In contrast, in the public sector the mobile initiative is often led by the technology department — and often by the CIO herself.