Visionary Chinese Banks Show How Customer-Oriented Architectures Support Innovation

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.
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Docker Will Disrupt Virtualization And Drive Cloud Adoption

On June 9, Docker.com announced that it will release version 1.0 of Docker, an open source platform that could automate the deployment of various types of applications as lightweight, portable, self-sufficient containers and run them virtually on any infrastructure. This announcement indicates that the platform is ready for commercial use, including lightweight, portable runtime support and packaging via Docker Engine and cloud services for application sharing and process automation via Docker Hub.

We talked to some early adopters of Docker, including global ISVs and local solution providers. We believe that Docker-based solutions will disrupt the server virtualization market segment and further drive the adoption of cloud because of their:

  • Technology advantages. Today’s componentized applications often rely on other components, applications, or services. For instance, your Ruby on Rails applications might rely on MongoDB as a persistence layer while using nginx as a web server. Each component might also have its own set of dependencies, which could conflict with each other. Docker can easily package the necessary dependencies and separate them within their own containers.
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Cisco Is Transforming Its DNA Toward Customer Experience

In the Cisco Collaboration Connection event for Asia Pacific early this week, I had the opportunity to try newly designed Cisco collaboration products, as well has have in-depth discussions with senior executives from Cisco.  And  I was also able to observe the response from the partners and customers I met from across APAC, including China, India, Singapore and Indonesia, and exchange my thoughts with them as well. I feel that the DNA of Cisco is changing, from technology-centric toward customer experience focused, starting with the collaboration business. Here is evidence beyond slogans on their Power Point slides.

  • Design. When people talk about the design of Cisco’s collaboration products, usually it would be with words like high-tech, standardized or professional, but seldom about fashionable design, beauty, simplicity, or ease of use – attributes  typically used to describe the leading consumer electronic appliances from Apple or Samsung. Now, with the latest product announcements, it’s totally different, and Cisco has won several Red Dot industrial design awards in 2014.
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Microsoft Leads The China Cloud War Into Episode II

Microsoft is officially launching the commercial operations of its cloud offerings in China today. It’s been only nine months since Steve Ballmer, the former CEO of Microsoft, made the announcement in Shanghai that Windows Azure — now renamed Microsoft Azure — would be available for preview in the Chinese market.

I call that Episode I of the China Cloud War. In the report that I published at the time, “PaaS Market Dynamics in China, 2012 To 2017”, I made three predictions — predictions that are now being fulfilled. More global players are joining the war; customers have gotten familiar with cloud concepts and are planning hybrid cloud implementations for their businesses; and traditional IT service providers have started to transform themselves into cloud service providers.

I talked with Microsoft and Citrix last week, and I strongly believe that Episode I has ended and Episode II has just begun. In the battle for partner ecosystems and real customer business, here are the three major plots that enterprise architects and CIOs in China should watch unfold:

  • The thrree kingdoms will fight with the gloves off. In my blog post last year, I described three kingdoms of global vendors in Chinese cloud market: Microsoft, Amazon, and vendors behind open source technology like OpenStack and CloudStack.
    •  Microsoft is leading the market as the first company in China to provide unified solutions for public cloud, private cloud, and hybrid cloud across infrastructure (IaaS) and middleware (PaaS). This builds on its deep understanding of enterprise requirements, its massive developer base, and the ease of use on the Windows platform.
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The War Of Mission-Critical Applications In The Cloud Is Getting Hot In China

The entire cloud ecosystem in China is undergoing significant change. End users are getting more serious about adopting cloud solutions and ISVs are working with telecom carriers and partners to deliver mission-critical business applications in the cloud. My latest report, “Brief: Major Players Are Targeting The Chinese Cloud Market For Core Business Apps,” summarizes the overall trends of cloud adoption in China, looks at each vendor’s solution, and provides high-level suggestions. Specifically, I discuss:

  • General trends in SaaS adoption in China. Timing is very critical for market penetration. The survey results I share in this report show a dramatic increase in decision-maker interest in cloud-based offerings. This is probably the last chance for companies that want significant market share, but do not yet have it, to enter the Chinese SaaS market.
  • All of the major multinational vendors are moving. Global players have been closely watching the cloud market in China for years, and in 2013 they have made strategic moves. SAP, Oracle, Microsoft, and Infor have adopted different strategies in China based on the strengths and capabilities of their core product and solution offerings, technology stack, and partners. The report will tell you how each of these companies is working to address the Chinese market.
  • Local market leader practices. Large multinational vendors are not the only ones with skin in the game. Major local players in enterprise management software, such as Yonyou and Kingdee, are also working hard and have achieved significant progress in this space. The report will tell you what advantages their global peers need to have and which shortcomings they need to improve upon.
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The "Three Kingdoms" Of The Public Cloud Market In China

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.
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How Telstra drove global operations through business-led IT Transformation

IT complexity hurts business.  This is even more the case when a company has global markets and global operations.  Essential business needs such as a single integrated view of global customers, or consistent product or service portfolio become impossible to achieve. 

Managing IT complexity to support business strategy is a big challenge for enterprise architects at large companieswhen a company has global operations, as is the case for Telstra, an Asia-based telecommunications firm. However Telstra’s enterprise architecture (EA) team addressed its challenges by focusing on customer engagement, improved agility, and global business strategy enablement.  Because of their success, they were one of the six firms to win the InfoWorld/Forrester Enterprise Architecture Award  in 2012. 

In my recent report “Case Study: Telstra’s Business-Led IT Transformation Facilitates Global Operations”, I analyzed the key practices they made to support their business-driven transformation. These practices include
  • Build Capability Maps To Link Business Goals And Transformation Requirements. Business capability maps are a core tool that enterprise architects use to identify their organization’s strengths and gaps and support its business strategy. Architects should leverage industry standard frameworks like eTOM to build a custom map, overlay it with business goals, and use it to assess and prioritize needed changes.
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Take a forward thinking, while pragmatic approach to Windows migration

Many CIOs, technical architects as infrastructure and operations (I&O) professionals in Chinese companies are struggling with the pressures of all kinds of business and IT initiatives as well as daily maintenance of system applications. At the same time they are trying to figure out what should be right approach for the company to adapt technology waves like cloud, enterprise mobility, etc., to survive in highly competitive market landscape.   Among all the puzzles for the solution of strategic growth, Operating System (OS) migration might seem to have the lowest priority:  business application enhancements deliver explicit business value, but it’s hard to justify changing operating systems when they work today. OS is the most fundamental infrastructure software that all other systems depend on, so the complexity and uncertainty of migrations is daunting. As a result, IT organizations in China usually tend to live with the existing OS as much as possible.

Take Microsoft Windows for example. Windows XP and Windows Server 2003 have been widely used on client side and server side.  Very few companies have put Windows migration on its IT evolution roadmap. However, I believe the time is now for IT professionals in Chinese companies to seriously consider putting Windows upgrade into IT road map for the next 6 months for a couple of key reasons. 

Windows XP and pirated OS won’t be viable much longer to support your business.

  • Ending support. Extended support, which includes security patches, ends April 8, 2014. Beyond that point, we could expect that more malwares or security attacks toward Windows XP would occur.
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Visionary companies are driving next generation enterprise architecture in China – are you ready?

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.
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Enable business strategy through technology innovation

How is it possible for a local company to defeat global giants like Pepsi, Coca-Cola, and Watsons in your market segment and establish market leadership for more than a decade? The answer is given by Nongfu Spring, a Chinese company in manufacturing and retail industries. In my recent report “Case Study: Technology Innovation Enables Nongfu Spring To Strengthen Market Leadership”, I analyzed the key factors behind their success, and provide related best practice from enterprise architecture perspective. These factors include

  • Business strategy is enterprise architecture's top priority.  EA pros often need to be involved in project-level IT activities to resolve issues and help IT teams put out fires. But it's much more important that architects have a vision, clearly understand the business strategy, and thoroughly consider the appropriate road map that will support it in order to be able to address the root causes of challenges.
  • Agile infrastructure sets up the foundation for scalable business growth. Infrastructure scalability is the basis of business scalability. Infrastructure experts should consider not only the agility that virtualization and IaaS solutions will provide next-generation infrastructure, but also network-level load balancing among multiple telecom carriers. They should also refine the network topology for enterprise security.
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