Microsoft CEO Steve Ballmer announced today that he will be retiring within 12 months. My Forrester colleague Ted Schadler laid out some of the strategic challenges his successor will face in coming years. Here, I add to Ted's analysis.
Microsoft remains one of the great global technology companies, a solid member of theFortune 50. Although it no longer enjoys the reputation for innovation it did in the 1990s, it’s a critical player in every aspect of end user computing (including devices, software, browsers, development platforms, and services) and of other technology product and service markets.
As CEO, Steve Ballmer solidified Microsoft’s stronghold in enterprise solutions. Microsoft built and maintained — or built and made itself into a key challenger — in several enterprise markets. Microsoft Office remains a titanic success, even as it faces lower-cost competition from Google and others. Windows Azure has been cultivated into a full-fledged contender in the cloud services market. Exchange remains entrenched in enterprises, as do many of Microsoft’s Server and Tools offerings. Microsoft remains the company to beat in some of these markets, and has become a formidable challenger (e.g. as Azure takes on Amazon Web Services) in others.
In Forrester’s latest report, “Tracking The Renegade Technology Buyer,” we uncover the motivations and technology spending priorities of over 1,000 North American and European business executives. The data from the Forrsights Business Decision-Makers Survey was collected in Q4, 2012. Of the 891 respondents that had a budget over US$1 million, 824 spent their own money on hardware, software, telecom or services. Twenty-four percent of the 891 spent over 21% of their budget on technology, accounting for over $US 31 billion in expenditures. Senior management and sales and marketing were the top spending business functions and financial services/insurance and telecom/utilities lead the pack from a vertical perspective.
So why are business leaders carving out part of their own budgets for technology? It’s contrary to what you think. The high business spenders are not doing it because it is faster or cheaper than central IT – they are doing it because they see technology as too important to their success not to be involved. In parallel, senior management is more relaxed in dealing with the technology – 33% of the high spenders say there technology IQ has increased and they are more comfortable working with IT. Another 20% say that their use of consumer technology has changed their expectations of how technology should be used. The consumerization of IT is not just about younger Gen Y staff wanting to bring their own Macs and iPhones to the office; just as or more importantly, it’s also changing the way senior managers drive business and technology strategy.
Jason Hurd is the son of an Idaho backcountry bush pilot, stands about 6' 5" tall and runs an aircraft maintenance shop at the Erie Municipal Airport in Colorado - about a mile as the crow flies from my office. Airplanes are in his blood, and you'd be hard-pressed to find a more interesting character or competent mechanic anywhere. His shop is not the cheapest around, but pilots who value their lives know that Jason's is the place to go if they want a thorough inspection and the work done right the first time. When an aircraft breaks down, the pilot can't just pull over to the side of the road, hop out and fix it. In fact, aircraft maintenance is about as mission-critical as it gets. Oh, and it's heavily regulated and operates on razor-thin margins, too.
His mechanics are all first-rate - Jason sees to that with high standards and expectations for both hiring and conduct. The shop is spotless and his employees are both competent and courteous. He runs a tight ship. What I find most fascinating when I visit his shop though is the incredible amount of money that his employees have spent on their tools. The rolling tool boxes ($8,500 each…without the tools) are painted with blazing yellow paint, and festooned with chrome Snap-On logos. But the real money is inside; the value of the tools can easily reach $50,000 or more - all paid for by the mechanics themselves, and each mechanic earns maybe $45,000 per year in salary - much less when they're fresh out of aviation school. And…when they're new to the job and making the least money is when they have to start building their tool inventories.
Employees that use smart devices — PCs or mobile devices — for work have expanded their use of technology more than most people realize. How many devices do you think a typical information worker uses for work? If you only ask the IT staff, the answer will be that most use just a PC, some use a smartphone, and a few use a tablet. But our latest Forrsights workforce employee survey asked more than 9,900 information workers in 17 countries about all of the devices they use for work, including personal devices they use for work purposes. It turns out that they use an average of about 2.3 devices.
About 74% of the information workers in our survey used two or more devices for work — and 52% used three or more! This means that the typical information worker has to figure out how to manage their information from more than one device. So they’ll be increasingly interested in work systems and personal cloud services that enable easy multidevice access, such as Dropbox, Box, SugarSync, Google Docs/Apps, Windows Live, and Apple iCloud.
When you dig into the data, the mix of devices info workers use for work is different than what IT provides. About 25% are mobile devices, not PCs, and 33% use operating systems other than Microsoft.
Have you noticed an increased presence of Apple products in public spaces and workspaces in the last few years? Turns out that 21% of information workers are using one or more Apple products for work. Almost half of enterprises (1000 employees or more) are issuing Macs to at least some employees – and they plan a 52% increase in the number of Macs they issue in 2012.
Sure iPhones and iPods are ubiquitous in public spaces, but Macs weren’t common, especially in the workplace. I started seeing lots of Macs in startups I visit such as Box and Evernote in Silicon Valley, and Backupify here in Cambridge, Massachusetts. But it got really interesting when I started seeing a few employees at large established tech vendors using Macs, where corporate IT usually doesn’t support them and seeing a disproportionate number of Macs among Starbucks loungers. The clincher was the behavior of CTOs at two large infrastructure software companies that have a group of CTOs that work across the company. In both cases, almost all of them were using Macs – and they were making fun of the remaining Windows holdout for using a “typewriter.” Of course, the iPad added to this phenomena, which is visible when you walk down the aisle of long haul flights in the US – there are lots of iPads, especially in first class.