My analyst duties took me to a number of industry and tech-vendor events this fall; in fact, looking back at my calendar, I have been out of my home area in Boston for nine of the last 12 weeks. The upside of all that time in airplane seats is that I get to meet and interact with leaders across the technology industry, including supplier companies, large and small, and their customers and partners.
In the first 10 days of December I spent time with five important technology suppliers, each of which has very different views on the opportunity in the broad arena of IT-for-sustainability (i.e., how information technology products and services help corporations achieve their sustainability goals).
This past weekend, my wife wanted desperately to attend Jon Stewart’s “Rally to Restore Sanity and/or Fear,” to support the message of civility and moderation. An injured foot and problems with travel logistics kept her from attending, but we watched it on the Comedy Central network. It was, of course, a counterpoint to the “Restoring Honor” rally that Fox News’ Glen Beck held in August. However, there were two striking commonalities about the two rallies:
First, the ability of cable program show hosts to gather hundreds of thousands of people (estimates seem to be around 100,000 for the Beck rally and 200,000 for the Stewart rally) to travel to Washington for a rally. We’re not talking about rallies organized by a major political leader like President Obama or a media giant like Walter Cronkite with a TV audience of tens of millions of people. Instead, the TV personalities who hosted these events have cable audiences that on a good night may reach 3 to 5 million people.
Second, the absence of attention to substantive economic issues facing this country, such as persistent high unemployment, economic recovery strategies, education and competitiveness, global warming, or budget deficits and priorities. Instead, the rallies focused on culture, tone, and attitudes, with the Beck rally resembling a college homecoming event where the returning alumni complain about how the place has gone downhill since they left, while current seniors crack jokes and make fun of the old geezers wandering around the campus.
Like thousands of Oracle clients and a dozen or so Forrester analysts, I was at Oracle OpenWorld last week. One of the big news items was the announcement of the availability of Fusion Applications. The creation of these new applications has been a massive effort, involving many of Oracle’s top software designers and developers working for over five years. My preliminary opinion, along with my colleagues, is that Fusion apps do have some useful new features and a better user interface than prior Oracle products, as well as providing a more credible SaaS option than Oracle's prior On Demand offerings.
However, there seems to me to be a lack of clarity as to how Fusion apps fit in the evolution of the Oracle family of apps. To its credit, Oracle has stated that it is going to be responsive to clients, not forcing them to convert to Fusion nor make staying on existing apps unattractive by not supporting and enhancing those apps. Instead, it wants to make Fusion apps so attractive that clients will want to adopt them, either (rarely) as a whole suite or (more likely) as step-by-step replacement or additions to existing app products. Still, that leaves unclear what Oracle sees as the endgame for Fusion vs. its other app products.
As I see it, there are four scenarios for how Fusion apps will relate over time to the existing portfolio of apps that Oracle has acquired and continues to support through its Applications Unlimited position:
Fusion apps take over and replace the other applications over time.
Fusion apps become yet another app product line, which co-exists with the other apps.
Fusion app features and functions percolate into and are absorbed into the other apps, which persist indefinitely.
Fusion apps provide new categories of applications, which get brought into the other app families as add-ons.
My colleagues Ted Schadler and Josh Bernoff are preparing the launch of their coauthored new book, Empowered, after the success of Josh Bernoff’s Groundswell. Basically, Empowered’s message is: "If you want to succeed with empowered customers, you must empower your employees to solve their problems . . . . From working with many, many companies on social technology projects, we've found that the hard part is not just the strategy. The really hard part is running your organization in such a way that empowered employees can actually use technology to solve customer problems.” (Josh Bernoff, Groundswell blog post).
Coupled with Smart Computing — a new cycle of tech innovation and growth within the technology industry that Andrew Bartels described — this movement toward empowered employees represents what I consider to be Web 3.0: the next generation of Internet/intranet/extranet usage that will benefit the enterprise and employees. By adopting “Web 3.0,” enterprises can expect productivity improvements of 5% to 15% as well as improved customer satisfaction.
Enterprises should prepare themselves to benefit from Web 3.0 by:
Some days ago at Forrester’s IT Forum in Lisbon (June 9-11) I gave a presentation together with my colleague Andy Bartels on the IT market recovery (we predict a 9.3% IT market growth in 2010) after two economically challenging years in 2008/9. In fact, we were making the point that the market rebound we currently see is not simply a recovery but the beginning of a new IT hyper growth phase fueled by a new wave of innovation.
A strong driver of this innovation is what we call Smart Computing at Forrester: the integration of physical world information into intelligent IT-supported business processes in 4 steps: Awareness (via new sensor technology), Analysis (with advanced BI solutions), Alternatives (including rules and process engines) and Action (in industry business applications), plus a 5th feedback loop of Auditability for tracking and learning.
A well-known example of smart computing solutions is smart metering in the Utilities industry. In another presentation in Lisbon, a colleague asked the audience, a room full with all the leading IT service companies, who all had an initiative running with smart metering – everyone in the room raised their hands. Then he asked who actually had more than 1-3 (pilot) projects running – and almost no one raised their hand.
Is smart metering just hype that everyone is jumping on or what is the reality of the lighthouse example of smart computing at this point in time?
TECH DEVELOPMENTS: I have been re-reading Clayton M. Christensen’s The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail in preparation for a session that Chris Mines and I are running on adapting to the Next Big Thing at Forrester’s IT Forum 2010.* Last week, I attended SAP’s SAPPHIRE NOW conference in Orlando, listened to co-CEOs Bill McDermott and Jim Hagemann Snabe, and met with McDermott along with other Forrester colleagues. The juxtaposition of the book and the event caused me to wonder: is SAP like one of the highly successful companies in Christensen’s book that failed to adapt to disruptive technologies? As Christensen noted, “the managers of the companies studied here had a great track record in understanding customers’ future needs, identifying which technologies could best address those needs, and in investing to develop and implement them.”
Everything that McDermott and Snabe said was consistent with these characteristics. They talked about how companies were facing a world of mobile, empowered customers; their need to be connected with each other to optimize the value chain through to the end consumer; the desire for new process flows; and the importance to them of fast decision-making. They identified a combination of on-premise, on-demand, and on-device solutions that SAP will be offering to meet these needs. They discussed SAP’s investments and new offerings in these areas, including its acquisition of Sybase for its mobile solutions and real-time analytics capabilities.
5:30am, the family sleeps and it’s time to prepare – today is Analyst Day in Frankfurt. I’m on the road 2h45min before the event starts (1h20min should be sufficient) but sometimes the traffic is terrible. Last week I missed a flight because the highway was completely closed after an accident and I had to give up after 3h driving for nothing. When the concern of missing an appointment slowly turns into certainty, these are the moments that cost me some of my (remaining) hair.
(Of course) I arrive much too early, but other analysts are already there (probably they don’t sleep at all). Plenty of time to look through my presentation again for some final adjustments and for some small talk with customers that arrived early.
1min before the kick-off, I make the last slide changes and load it to the presentation laptop. Another analyst colleague goes first. I have seen some of the slides a hundred times and look around at the faces of the attendees. For most, it’s the first time they see e.g. our market sizing and forecasting data, and they make hectic notes into their notebooks. They don’t know yet that we will distribute all slides after the event. I’m getting a bit nervous, but I’m used to it. When I'm not nervous any more before a presentation, it’ll get boring for me and the audience, and I should probably do something else.
As I predicted in January 2010 (see January 11, 2010, "US and Global IT Market Outlook: Q4 2009"), a tech recovery has started in the US and around the world. In my updated IT market forecast (see April 8, 2010, "US and Global IT Market Outlook: Q1 2010"), I point out that IT market indicators from Q4 2009 showed an end to declines, setting the stage for stronger growth in 2010. Since IT market trends are playing out as I expected, I have made only modest changes to my 2010 IT market forecasts. I now expect the US IT market to grow by 8.4%, a bit higher than my earlier forecast, because of better-than-expected performance in communications equipment. My forecast for the global IT market in US dollars is a bit lower at 7.7%, with the unexpected strength in the US dollar (due to the weaker Euro after the Greek debt crisis) dampening dollar-denominated growth. I continue to see computer equipment and software as the strongest product categories in 2010, with PCs, peripherals, and storage equipment leading the computer category and operating system software and applications setting the pace for software. Communications equipment purchases are looking up, especially for enterprise and SMB buying. IT services will lag a bit, with systems integration project work waiting for licensed software purchases to rise.
In this report, I provide our first look at 2010 IT purchases on an industry basis in the US. Confirming past research, the largest US industry market for tech products and services is the professional services industry ($103 billion), followed by financial services ($81 billion), and government ($71 billion). In terms of 2010 growth prospects, US manufacturers, financial services firms, utilities, and health care will see the strongest growth in 2010.
On the need to analyze, compare and rate partner eco-systems – please vote.
The world is becoming more and more complex and so are the business challenges and their related IT solutions. Today no single vendor can provide complete end-to-end solutions from physical assets to business process optimization. Some large vendors like IBM, Oracle or HP, have extended their solution footprint to cover more and more of the four IT core markets hardware, middleware software, business applications and services but still require complementary partner solutions to cover end-to-end processes. Two examples of emerging complex IT solutions include:
Smart Computing integrates the physical world with business process optimization via four steps: Awareness (sensors, tags etc.), Analysis (analytic solutions), Alternatives (business applications with decision support) and Action (feedback loop into the physical world). A few specialized vendors such as Savi Technology can cover the whole portfolio from sensors to business applications for selected scenarios. However, in general a complete solution requires many partners working closely together to enable an end-to-end process.
Cloud Computing includes different IT resources (typically infrastructure, middleware and applications) which are offered in pay-by-use, self-service models via the internet. The seamless consumption of these resources for the end user anytime and anywhere however requires multiple technologies, processes and a challenging governance model often with many different stakeholder involved, behind the scene.
With Forrester’s new blogging platform in place, I have the opportunity to launch a series of blogs about tech economics. What do I mean by tech economics? To me, tech economics first means how the larger economy and the tech sector interact. I am interested both in how economic conditions impact the demand for technology goods and services and how business and government purchases of these tech goods and services affect the economy as a whole and the industries and firms in the economy. Second, tech economics is about the revenue of tech vendors, both what they are reporting in the present and past and what we expect those revenues will be based on future purchases by their business and government customers.
My published research on the US and global IT market outlook, industry, regional, and country IT purchase trends, big trends like Smart Computing, and the ePurchasing software market (which I also cover) will continue to be my platform for addressing tech economics. However, I want to use this blog to talk about four focused aspects of the tech market: 1) tech data sources; 2) tech industry definitions; 3) tech market developments; and 4) tech market dynamics. Let’s call these the 4Ds of tech economics, and each will have its own strand of comments and observations.
D1: Tech data sources will be of most use to the data geeks like me in tech vendors. These are folks who use my numbers in their own forecasts of the market for their firm and its products. These blogs will talk about the data sources that I use in building my tech market sizing and forecasts, issues and questions about these data sources, and how the data geeks can leverage them. I will share some (but not all!) of our secret sauce for our forecasts, and I hope you will share some of yours so we can all get better.