Business continuity is a top concern of global business and IT decision-makers. Headline news has made these concerns all the more acute – from the political unrest that characterized the “Arab Spring” and continues to plague certain countries in the Middle East to earthquakes, flooding, and other natural disasters across the globe. Those concerns become more acute as multinationals expand into new geographies such as Africa – a trend evidenced by recent announcements by HP and IBM.
Forrester’s Forrsights Budgets and Priorities Tracker Survey and Forrsights Business Decision-Makers Survey confirm that both IT and business decision-makers prioritize business continuity to ensure ongoing operations of their businesses. “Significantly upgrading disaster recovery and business continuity” was the third-highest IT priority of both IT and business decision-makers with 68% of each reporting it as a critical or high priority, behind only consolidation and greater use of analytics. That is to say, although cost controls through consolidation and better business intelligence came out ahead, keeping the lights on keeps corporate leaders up at night.
As a former investment analyst, I remember the feeling when stock market screens turn deep red. Such days turn one’s stomach upside down on a dealing floor. But even from the outside, such days are unnerving. The big question in the telecoms markets making the rounds at present is how the current market turmoil will affect the telcos. The 2008 financial crisis might provide some clues to what we could expect in 2011 and 2012, albeit in a less-pronounced fashion:
Consumer spending on communications will remain pretty stable. During the last financial crisis, spending on communications remained largely untouched by the consumer. We do expect a slight migration towards flat rates for customers with the desire for greater cost certainties and towards prepaid by customers with the desire to lower their communication expenditure. One obvious danger in times of turmoil are price wars between service providers. They can offer only short-term growth relief, but at a high cost. Resulting poor margins will be felt for a long time.
Businesses will put nonessential IT projects on hold or water them down. We have not yet seen evidence that COOs and IT departments have tapped the brakes on their tech buying, but they certainly have become more cautious. If the economies of the US or Europe go into recession — a possibility, but not our baseline forecast — that will hit IT budgets, as happened in 2008 and 2009. I am hearing from telecoms providers that their enterprise sales pipelines are already under pressure as customers slow their IT investments and look for ways to reduce their telecom services spending. Projects that support end-users with their sales efforts, e.g., sales force automation projects, are likely to be less affected than others.
There seems to be a renewed interest in Africa. Is it that those who follow emerging markets have tired of China and India? Is it the recent events in North Africa that have sparked interest and hope for the region? Or could it be that, as McKinsey Global Institute put it, at least some African countries “have turned a corner and are now on the path to sustainable growth and poverty alleviation?”
From a technology perspective, it is also likely that finally with recent developments in both undersea cable and satellite links, the Internet has arrived in a way that makes Africa a viable market for ICT. And by that I mean not just for low-cost, bottom-of-the-pyramid solutions and not just South Africa, both of which have long been on the radar of some technology vendors for some time.
I’ve been studying Africa on-and-off for over 20 years now. In 1989 I took a one-way ticket to Bujumbura, Burundi (yes, I did have to look it up on a map first), traveled to Bukavu, Zaire (now Democratic Republic of the Congo), where I spent the summer, and eventually settled in Bossangoa, Central African Republic, where I was a high school math teacher for two years. At that time there were no telephones in my city although it was the largest in the region, and only limited lines into and out of Bangui, the capital. I spoke to my parents three times in two years, which is very hard to imagine in these days of Skype and Facebook. Needless to say much has changed in Africa as well.
My first whirlwind trip to Brazil confirmed much of what I’d expected. Brazil is booming. Traffic in the cities is horrendous. The buzz of helicopters in Sao Paulo is incessant. And, there is huge opportunity for IT vendors and services providers. But contrary to what I had expected, IT preparation for the upcoming mega-events seems to be getting off to a slow start.
Russian IT decision-makers are optimistic about their prospects for the next 12 months, according to Forrester’s Global Budgets And Priorities Tracker Survey, Q4 2010 – and, surprisingly, much more so than those in other countries -- 67% reported that their prospects are good versus only 52% in the US and 35% in the UK. On my recent trip to Moscow to deliver the keynote speech at Cloud Russia 2012, I looked for that optimism, and the root sources of it. There are certain obvious sources. The price of oil is high, and Russia is an oil exporter. The 2014 Winter Olympics are bringing significant investment to the region. But most importantly the political dialogue is focused on innovation and technology. That, in Russia, counts for a lot.
Given my own research agenda, I investigated the interest in public sector technology adoption and “smart city” initiatives. The answers were mixed. As elsewhere vendors are pushing solutions to improve transportation, energy efficiency and municipal administration. But many of those technology vendors did not share the optimism of the IT decision-makers for their own prospects in Russia. They did not see Russian cities as highly motivated, or incented, to get smart.
I've written about the World Bank's Doing Business Index in several blogs and reports. One of my favorite graphics from my "Where In The World?" report on market opportunity assessment looks at the BRICs (Brazil, Russia, India, and China) - relative to a selection of other emerging markets - in terms of population and then compares their rankings across three economic and political indicators: Doing Business, Economic Freedom, and eReadiness. The point is that "bigger is not always better" in terms of a potential market to enter.
Saudi Arabia has used the World Bank's Doing Business Index as a critical measure of its 10 x 10 initiative - a program of reforms launched with the objective of being in the top 10 countries for doing business by 2010. They missed the mark in 2010. But with the 2011 new rankings, we can congratulate Saudi Arabia's reformers for making it to 11 x 11.
One trend over the past year has been a growing interest in markets outside of North America and Europe. We're getting an increasing number of inquiries about markets in Asia-Pacific, Latin America and the Middle East - companies are anxious to map out their strategies for major eCommerce markets like Japan and China, as well as others such as Brazil and Russia. Retailers with an offline presence in affluent markets like the Gulf States are considering supplementing their traditional retail channels with an online one.
If you're looking to expand into any of these areas of the world, I wrote up some observations which were just published in Internet Retailer yesterday. Have a look if you're interested in emerging trends among online buyers in China, Japan, South Korea, Australia, Brazil and the UAE.
On September 15th between 11am-12pm EDT Forrester held an interactive TweetJam on the future of cloud computing including Forrester analysts Jennifer Belissent, Mike Cansfield, Pascal Matzke, Stefan Ried, Peter O’Neill , myself and many other experts and interested participants. Using the hashtag #cloudjam (use this tag to search for the results in Twitter), we asked a variety of questions.
We had a great turnout, with more than 400 tweets (at last count) from over 40 unique Tweeter’s. A high level overview of the key words and topics that were mentioned during the TweetJam is visualized in the attached graphic using the ManyEyes data visualization tool.
Below you will find a short summary of some key takeaways and quotes from the TweetJam:
1. What really is cloud computing? Let’s get rid of 'cloud washing!'
I will be joining Forrester's Tweet Jam on Cloud Computing today to add some commentary on the differences we're seeing in attitudes toward "cloud" as a delivery model and in adoption across countries. Interest and adoption differs significantly across countries. While in most countries the primary drivers of both Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS) are around speed and flexibility, in others the primary drivers are cost. Interestingly, in India and Russia, the No. 1 driver for IaaS is "improving disaster recovery and business continuity." IT decision-makers in those markets prefer to rely on those focused on delivering infrastructure than on their own datacenter, for certain projects.
As for inhibitors, the main concerns are pretty common across countries: security and privacy issues, integration with existing infrastructure and applications, and uncertainty around to total cost of ownership. While many are driven by the desire to move from fixed cost to rotating costs (capex to opex), they remain concerned about the total costs in the long-run.
Mature market telecom operators can learn from many of their fellow service providers in emerging markets. Recognizing that contexts differ – and they certainly do – there is still a sharp contrast in approaches to their markets. Ellen Daley and I just returned from India where we met with Indian telecom operators and services firms, and conducted an interactive session with telecom product and service providers – Forrester TelecomNext 2010. Both were an opportunity for us to listen and learn as well as share our observations on the industry.
With well over 500 million subscribers and a growth rate of more than 11% a quarter in 2009, the Indian mobile market is certainly attractive. But, Indian telecom operators face a tough competitive environment with some “circles” having upwards of a half dozen or more service providers (there are 23 telecom regions in India, known as “circles”), and the overall market packed with thirteen competitors. ARPUs are low and shrinking, with an average of about $2/month in March 2010. And, the price tag for 3G licenses in India added additional pain, with some vendors paying almost $3 billion in the spectrum auction. High costs and low revenues do not make for an easy road ahead.