Pop quiz: How many of your company’s top business leaders do you talk to on a daily basis? How many know your name? And finally, how many of them do you engage to brainstorm on how to leverage the latest technologies to drive up revenues and profits?
If that was an uncomfortable test, it's time to wake up to the changing realities in today’s corporate world. If you aren’t having these types of conversations and instead your day is filled with managing the systems of record in your company, you may be on a path to corporate irrelevancy.
For the past year Forrester has been talking ad nauseam about the Empowered employee and their self-directed embrace of technology. As Forrester’s esteemed analysts on our Application Development & Delivery team have so clearly pointed out, it is these empowered employees who are creating the new systems of engagement our companies are using to reach new customers, define new workflows, and generate new revenues. And these new systems they are building are pulling away from the old systems of record – the ones you are in charge of maintaining.
You know there are developers in your company using public cloud platforms, but do you really know what they are doing? You suspect it’s just test and development work, but are you sure? And if it is production workloads are they taking the steps necessary to protect the company? We have the answers to these questions and you may be surprised by how far they are going.
It’s tough being an infrastructure & operations professional these days. According to our ForrSight surveys, for every cloud project you know about there could be 3 to 6 others you don’t know about. Business unit leaders, marketing and sales professionals and Empowered developers are leading the charge. They aren’t circumventing I&O as a sign of rebellion – they simply are trying to move quickly to drive revenue and increase productivity. While every I&O professional should be concerned about this pattern of shadow IT and its implications on the role of I&O in the future, the more immediate concern is about whether these shadow efforts are putting the company at risk.
The bottom line: Cloud use isn’t just test and development. In fact, according to our ForrSight research there’s more production use of IaaS cloud platforms than test and development and broader use is coming (see Figure 1 below). The prominent uses are for training, product demonstration and other marketing purposes. Our research also shows that test and development projects in the cloud are just as likely to go to production in the cloud as they are to come back to your data center.
About five months ago, I “broke up” with T-Mobile in favor of AT&T. I was a T-Mobile customer for six years on a very competitive service plan. But none of that mattered; I wanted an iPhone, and T-Mobile couldn’t give it to me. 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.
I bring this up because it reminds me of the saying: “If we don’t take care of our customers, someone else will.” This is particularly important to remember in “The Age Of The Customer” where technology-led disruption is eroding traditional competitive barriers across all industries. Empowered buyers have information at their fingertips to check a price, read a product review, or ask for advice from a friend right from the screen of their smartphone.
This is affecting your IT just as much as your business: As an indicator, Forrester finds that 48% of information workers already buy whatever smartphone they want and use it for work purposes. In the new era, it is easier than ever for empowered employees and App Developers to circumvent traditional IT procurement and provisioning to take advantage of new desktop, mobile, and tablet devices as well as cloud-based software and infrastructure you don’t support. They’re “cheating” on you to get their jobs done better, faster, and cheaper.
To become more desirable to your customer – be it your Application Developers, workforce, or end buyers – IT Infrastructure and Operations leaders must become more customer-obsessed, which I talk about in this video:
We at Forrester have written a lot about the “empowered era” in the past year. We’re talking about the empowerment of customers and employees, the consumerization of technology, and grass-roots-based, tech-enabled innovation. There are lots of great case studies around illustrating these forces and how they can benefit the enterprise, but those success stories are only part of the picture. Behind the scenes, there is disruption and confusion about who’s planning the road ahead regarding the technology in our organizations’ future. It used to be that the CIO made sure that happened by making it the exclusive domain of strategic planners and enterprise architects. But isn’t centralized — and IT-based — tech planning the opposite of empowerment? Wouldn’t sticking with the old approach result in missing out on all this employee innovation that’s supposed to be so powerful? Should the CIO no longer establish the technology the enterprise will use? Does the empowerment era mean the end of tech planning as we know it?
Consider the following scenario: It’s a hot summer day and a prospective customer walks into your store to buy an air conditioner. He evaluates several models and then buys one — but not from you. It turns out your competitor located two miles away is offering the same model at a 20% discount. How did he know this? He scanned the product's bar code using the RedLaser app on his iPhone, which displayed several local retailers with lower prices than yours. If he had been willing to wait three days for shipping, he could have purchased the exact same model while standing in your store from an online retailer at a 30% discount.
This type of technology-fueled disruption is affecting all industries, not just retailers. Since the early 1900s, businesses relied on competitive barriers such as manufacturing strength, distribution power, and information mastery. But this is all changing in the age of the customer, where empowered buyers have information at their fingertips to check a price, read a product review, or ask for advice from a friend right from the screen of their smartphone.
To compete in the age of the customer, your business must become customer-obsessed. As Forrester’s Josh Bernoff (@jbernoff), SVP of Idea Development and author of Groundswelland Empowered, advocates in his latest research: “The only source of competitive advantage is the one that can survive technology-fueled disruption — an obsession with understanding, delighting, connecting with, and serving customers.”
Today, 22% of employees say that they have used a non-IT-provisioned service over the Web to perform their job function —not to update their Facebook accounts, but to do real work.[i] Many employees are no longer relying on IT to provision, manage, and run their technology because they feel IT is too slow and puts unnecessary restrictions on their use of technology. Many customers expect on-demand information, customized user experiences, and mobile apps that IT is expected to deliver quickly, cheaply, and reliably. Some CIOs have reacted to this shift by vigorously defending their turf from these encroachments. Others have ceded control to third-party service providers and business managers who now make their own technology decisions.
I had the good fortune to work with Josh Bernoff, co-author of Groundswell and Empowered, on a groundbreaking new report. Along with colleagues from across Forrester, he has raised the red flag on a new era of competitive advantage that ties together what technology has brought us — information — with the end goal in mind — the customer — to define a new strategic focal point for companies that he and we now call the age of the customer. See his initial blog post here, or watch this video about the report:
Why is this so important? Because many companies have maximized the value of information that has dominated technology investment and decision-making since the early 1990s when the Internet boom began, computers got substantially cheaper and more powerful, and connectedness began to change the dynamic between people and companies. Over the next decade or more, the only way companies will truly stand apart from their competition will be a devotion to combining information, technology, and decision-making into a defensible and fundamentally stronger position — obsessing about the best customers that they have and demonstrating that value in terms of products, marketing, and service.
Do you think your company is customer obsessed already? Look at your customer systems and ask yourself some key questions:
Do you know the share of wallet you maintain with customers?
Do you engage customers when they are not in the buying cycle?
I'm not going to comment on the $8.5B purchase price, though I'm sure Marc Andreesen's investment company is happy with their return. And I'm not going to comment on the impact on Xbox, Hotmail, and Live.com. And I don't think this has anything to do with Windows Mobile.
But I am going to comment on the impact of the deal on the enterprise, and specifically on content and collaboration professionals responsible for workforce productivity and collaboration. When you strip it down to its essence -- Skype operating as a separate business unit reporting to Steve Ballmer -- here's what you need to know about the Skype deal:
First, Microsoft gets an important consumerization brand. Skype is a powerful consumer brand with a reported 600+ million subscribers. But it's also a "consumerization brand," meaning that it's a valuable brand for people who use Skype to get their jobs done. Consumerization of IT is just people using familiar consumer tools to get work done. It's a force of technology-based innovation as we wrote about in our book, Empowered: Unleash Your Employees, Energize Your Customers, Transform Your Business. Google and Apple and Skype have dominant consumerization brands. Microsoft does not. Until now. And as a bonus, Google doesn't get to buy Skype. And more importantly, neither does Cisco.
Is your cloud strategy centered on saving money or fueling revenue growth? Where you land on this question could determine a lot about your experience level with cloud services and what guidance you should be giving to your application developers and infrastructure & operations teams. According to our research the majority of CIOs would vote for the savings, seeing cloud computing as an evolution of outsourcing and hosting that can drive down capital and operations expenses. In some cases this is correct but in many the opposite will result. Using the cloud wrong may raise your costs.
But this isn’t a debate worth having because it’s the exploration of the use cases where it does save you money that bears the real fruit. And it’s through this experience that you can start shifting your thinking from cost savings to revenue opportunities. Forrester surveys show that the top reasons developers tap into cloud services (and the empowered non-developers in your business units) is to rapidly deploy new services and capabilities. And the drivers behind these efforts – new services, better customer experience and improved productivity. Translation: Revenues and profits.
If the cloud is bringing new money in the door, does it really matter if it’s the cheaper solution? Not at first. But over time using cloud as a revenue engine doesn’t necessarily mean high margins on that revenue. That’s where your experience with the cost advantaged uses of cloud come in.
As you may know, I recently was named the Research Director for our CIO team — a team of highly accomplished and experienced analysts at Forrester. One of our first tasks as a team was to define the current changes in the technology and business landscape and develop a cohesive view of what this means for the role of CIO. What will it mean to be a CIO in the “empowered” world? As you can imagine, this led to a healthy debate and many different perspectives on what the future CIO role would look like. Here are some highlights from our discussion so far.
What is changing for the CIO?
Technology plays an increasingly critical role in business success. In Forrester’s Forrsights Budgets And Priorities Tracker Survey, Q4 2010, 52% of the business decision-makers strongly agreed with the statement “Technology is fundamental element of our business model.” Many companies are starting to use technology as a business differentiator, and many businesses rely on technology to provide critical information for making strategic business decisions.
Empowered technologies make it easy to bypass IT. The empowered technologies — social, mobile, video, and cloud — are rapidly transforming the information landscape. Increasingly, these technologies are easy to acquire and bring into the corporate environment, and many can be sourced and managed outside of IT’s control — making it easy for the business and employees to bypass IT.