Five of the top 10 companies in the latest Forbes Global 2000 company list (published in May) are from China, and four of them are commercial banks. If you think this is only due to China’s massive consumer base, and that you can easily apply your global innovation strategy to the Chinese market, you’re almost certainly wrong. Enterprise architecture (EA) professionals at companies doing business in China should take a look at what the country’s banking and financial services industry (BFSI) is doing to enable customer-centric innovation.
I recently published two reports focusing on China’s BFSI. In these reports, I analyzed the Chinese banking landscape and the business challenges banks face, described a systematic approach to innovation that EA pros should consider when planning their transformations, and shed light on how they use both mainstream and emerging technologies to unleash the power of innovation around products, operations, and the organization. Some of the key takeaways:
Chinese banks suffer from their own customer experience issues. As a longtime monopoly, China’s BFSI has suffered from inefficiency, quality problems, and an uncompetitive ROI — and thus can no longer meet the high bar for customer satisfaction in the age of the customer. EA pros must find innovative ways to resolve these issues.
Internet companies and regulatory changes are challenging BFSI players. Visionary Internet companies like Alibaba and Tencent have launched financial services products, including innovative products like Yuebao, that are disrupting China’s BFSI with higher profits, lower barriers to entry, and better flexibility. The government is also making regulatory changes that will open up the market and intensify competition.
But with these questions comes a recognition that the once-imagined future is less distant than we may think. A digitally enabled household no longer means simply maintaining a personal Internet connection or even syncing portable devices to a home network. Now, the digital home is becoming a conscious home — one that adapts and responds according to our behavior.
Cutting-edge devices like the smart thermostat might be low on the adoption curve today, but consumer appetite is evident. Forrester’s Consumer Technographics® data shows that more than a third of US online adults are interested in using technology to remotely control their home’s lighting, energy, and security:
The classic work of Chinese historical fiction “Romance Of Three Kingdoms” describes the history of China after the Han dynasty. This work focuses on three power blocks that fought against each other in an attempt to be the dominant kingdom. After my discussions with many users and vendors at the OpenStack Summit 2013, I see an analogy between these three kingdoms and the evolution of the IaaS market in China as I described it in my report “PaaS Market Dynamics In China, 2012 To 2017” early this year.
Three categories of players are emerging in public cloud market in China, and similar to the Three Kingdoms, these players will fight against each other and collaborate at the same time, accelerating both the adoption and the maturing of cloud solutions in Chinese market.
State of Shu: Amazon Web Services. The king of Shu was the descendant of Han dynasty before the era of the Three Kingdoms; because of his “royal blood,” he had many supporters and followers to fight against the other two kingdoms.
Amazon.com is in a similar situation: It has very good reputation among architects and developers in China. However, Amazon’s promotion activities are lagging. Amazon is trying to expand its cloud territory into Chinese market by building a data center in Beijing and recruiting local personnel. However, its relationship with the government is not as good as Microsoft’s, and Amazon’s ambition to launch AWS in China has been slowed down due to local regulations.
State of Wu: Microsoft Windows Azure and its alliances. The state of Wu is competitive because it has the natural advantage of the Yangtze River, helping it defend against invasion and expand its territory.
Our advertising forecast shows that online video for marketing is big business and is only going to get bigger. In Europe, the CAGR for total ad spend from 2013 to 2018 is 2.19%, but for online video ad spend, it is a staggering 18.83%. The US shows a similar (albeit smaller) skew, with total ad spend CAGR of 4.49% and video at 22.39%.
Video, then, is a big deal, but most marketers aren't realizing the full potential of the medium. Approaches to video online are broader than simply grabbing 30 seconds from your TV commercial and sticking it on an online display network. Broadly speaking, there are three approaches to video:
Linear video — static. Pre-rendered content, where the video plays from beginning to end. It's just like TV adverts or the majority of video content marketing on the Web.
Linear video — dynamic. Where video content is customized per user or segment, often at run time. This approach interacts with consumers' data (e.g., social profile information) and/or context (e.g., location) but does not allow users to directly interact with the material when playing. A great example of this is one directed by Jason Zada and Jason Nickel from production company Tool and is called “Lost In The Echo,” which pulls in pictures from a user’s Facebook page, superimposing those snaps with photos that characters in the video mourn over.
For the past ten years, the major IT initiative within Chinese organizations has been service oriented and/or process driven architecture. The pace of change has been slow for two reasons: 1) From an end user perspective, related business requirements are not clear or of high priority; 2) more importantly, solutions providers have not been ready to embrace technology innovation and meet emerging technology requirements through new business models.
Times are changing. IBM and other major ISV/SI in China (as well as end users) are driving momentum around emerging technology, such as cloud and enterprise mobility. I recently attended the IBM Technical Summit 2013 in Beijing from July 11 to 12. Here’s what I learned:
Telecom carriers supported by technology vendors will accelerate cloud adoption by SME. Contributing to more than 60% of total GDP in China, small and medium enterprises (SMEs) have always sought to simplify their IT operation as much as possible, and at the same time scale it up when business expands as quickly as possible. IaaS solutions appear to be a perfect match for SMEs; however IT professionals have concerns about the security and data privacy over the operations by other companies.
As the analyst covering all things emerging information technology, I spend a bit of time watching web and social feeds looking for interesting and potentially disruptive stuff. Fortunately, it’s a good time for me to be doing this, as there are all kinds of things going on. I’ve decided to pass some of the best on to my readers in periodic “What’s Cooking” posts.
Digital currency will turn retail and financial services on its head, eventually. Digital currency fascinates me, especially the enigmatic Bitcoin creator and its so far unbreakable code*. Also the way you have to mine for more coins is very interesting. Whether or not Bitcoin succeeds as the de facto standard, I think digital currency is inevitable and the more firms that accept is, the crazier things will get. Check out The Antisocial Network of Bitcoins.
A year and a half ago I broke up with Blackberry and started dating iPhone. It was a clean but cruel breakup: AT&T cancelled my T-Mobile contract on my behalf, the equivalent of getting dumped by your girlfriend’s new boyfriend.
This year I’ve been cheating on my laptop with my iPad. But it’s an on-again, off-again relationship. While I tell my iPad it’s the only one, I keep going back to my laptop. When I travel, my iPad is with me meeting clients. Meanwhile my laptop is in the hotel room surfing the online menu for a turkey club.
The iPad beats my laptop on size, weight, connectivity, and battery life. It also improves the human element when I’m having a face-to-face conversation but need to take notes. These are all critically important to me when I'm out of the office visiting clients or at an event.
But my laptop wins when I need to perform other important activities. For example, the larger screen really helps to write and edit research reports (John Rakowski, you’ll have your edits soon!). Or when I need to approve expenses behind the VPN or access files on my hard drive that I haven’t stored in Google Drive (yes, Forrester sanctioned).
Now that I've had a few months of compare both devices, I come back to outcomes . . .
The pace of technology-fueled business innovation is accelerating, and enterprise architects can take a leading role by helping their firms identify opportunities for shrewd investment. In our 2012 global state of EA online survey, we asked again what the most disruptive technologies would be; here’s what we found:
The results shouldn’t surprise anybody; however, if you are only looking at these, you are likely to get smacked in the face when you blink -- things are changing that fast. In the near future, new platforms built on today’s hot technologies will create more disruption. For example, by 2016 there will be 760 million tablets in use and almost one-third will be sold to business. Forrester currently has a rich body of research on mobility and other hot technologies, such as Forrester’s mobile eBusiness playbook and the CIO’s mobile engagement playbook. But by 2018, mobile will be the norm, so then what?
I just finished analyzing our Q3 2012 Global State Of Enterprise Architecture Online Survey, where we asked a number of questions at the end of the survey on how firms identify and introduce new technology – new technology that your firm is counting on for innovation and competitive advantage. The results underscore a conviction that is growing in me: IT’s “one-size-fits-all” approach to standardizing everything and general aversion to risk isn't cutting the mustard. Simply put, opportunities for competitive advantage through technology-fueled disruption get missed, and this means digital extinction. Some data from our survey of 207 enterprise architects:
58% reported that sales and marketing is among the top five most likely organizations to deliver technology innovations, and they are chasing windows of opportunity that close in months. IT typically takes at least a year to do anything.
52% say there is at least some business dissatisfaction with the level of new technology introduction. The top reason, given by 78% of respondents, is that IT is too slow.
70% of respondents admit their firms have trouble reacting to disruptions caused by emerging technology, and 60% admit to difficulty reacting to change in general.
In our Forrsights Business Decision-Makers Survey, Q4 2011, 79% of business executive respondents said that technology will be a key source of innovation for their company, while 71% said that it will be a competitive differentiator. So how well positioned is IT to help firms meet these expectations? Forty-six percent thought that their current IT organization was not well positioned to meet these needs, and 41% thought IT was overly bureaucratic.
I could go on with more data, but the message is clear — business is starving for technology to help it be more innovative, create market differentiation, and lower costs. In the midst of this, IT is mired in a technology mess created by years of underinvestment and business growth by acquisition. What’s going to happen?
The thing I want you to remember is something a client said to me not too long ago that stuck with me, “Starving people will find food.” So the question is: do we feed our starving business or tell them to stay on a diet? And if the latter, what will be the impact if they go scavenging the countryside? We think the answer involves flexibly and rapidly introducing new technology to take advantage of strategic opportunities, while still protecting data, mission-critical applications, and our most precious TCO reduction goals.