Business As Usual Not An Option For Customer-Obsessed CIOs

Steven Peltzman

As Forrester’s own Chief Business Technology Officer, I’m immersed in our strategic view that consumers and businesses alike demand outstanding customer experiences and expect them more than ever before. In fact, it’s so important to us that we are being measured against the Customer Experience Index (CX Index™) on delivering a great customer experience.

The trouble is I’m experiencing many of the same blockers that our client CIOs say they have: the over-customized legacy infrastructure that won’t go away, constrained budgets, and less resources than we wish we had. Sound familiar? Through it all, we’ve made great progress — an improved website, a great iPad app, cloud infrastructure, etc. — and there’s more to come.

That’s all good, but good is not good enough in the age of the customer. With the threat of Digital Disruption all around us, we feel a great urgency to do more and do it quickly.

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The Digital Bolt-On Conundrum

Nigel Fenwick
What’s the difference between a digital bolt-on and transformative digital disruption?
 
In the two years I’ve been on the road talking with executives around the world about digital business and delivering keynotes on digital transformation, I’ve been most frequently asked about bolt-on vs. transformation; what’s the difference? 
 
A digital bolt-on is a digital project that is added to the existing business model that might improve the customer experience in a small way, but doesn’t fundamentally change how value is created for, and/or delivered to, the customer. For example, when a company updates a website and provides customers an electronic ordering platform, they are not changing the existing business model; they are simply providing an alternative channel through which the customer can buy products. The value proposition remains the same: buy and experience our product and you’ll gain value from the experience. Digital (in this case an online sales channel) has been bolted to the existing business model in much the same way a teenager bolts a spoiler onto an old car to make it "go faster".
 
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Huawei Defends Its Pole Position In The Race Of Network Solutions Providers In Europe

Dan Bieler

Several Forrester analysts attended Huawei’s 12th global analyst summit in Shenzhen recently. This post will focus on the perspective of European CIOs; in our view, they should take note of Huawei due to the firm’s growing strength in the European enterprise segment. For Forrester’s global perspective on the event, please refer to our upcoming report. For European CIOs, the main takeaways of the analyst summit are that Huawei is:

  • Strengthening its financial performance. Huawei’s enterprise divisions — which the firm just announced in 2011 — impresses with its strong growth rates. Huawei grew its enterprise activities by 27% to $3.1 billion in 2014; two-thirds of that growth came from outside China, with Europe accounting for the largest share of that. Huawei’s goal is to grow its enterprise business to $10 billion by 2019. Outside of China — which still accounts for 38% of Huawei’s revenues — EMEA will continue to play a critical role for Huawei, as it accounts for 35% of revenues. In EMEA, Huawei reported revenue growth of 20%.
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Predicting A New Business Paradigm For Financial Services

Nigel Fenwick
How will digital disrupt the financial services industry over the next 10 years?
 
Over the past couple of days, I’ve been meeting with clients at Forrester’s Forum For Technology Leaders in Orlando. Clients mostly want to know how digital will impact their business. My approach in responding to this question is to think like the CEO of the company in question: First, understand the customer’s desires; then figure out how those desires can best be met profitably — I imagine how future technology changes might create new sources of customer value.
 
We’ve already seen massive change in the financial services sector: Technology is dramatically changing our customer experience and helping firms educate their customers. What more is yet to come? And what will companies need to do to win customers in the future?
 
While this is a complex question, it’s not hard to imagine a very different reality to the one that exists today:
 
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Digital Ecosystems Alter Value Creation And Process Landscapes

Dan Bieler

CIOs will be orchestrators of digital ecosystems to boost innovation, production, and go-to-market capabilities. In the age of the customer, every business needs to put the customer at the center of marketing, sales, service, and delivery in order to support the brand promise.

Business ecosystems comprise many market players, including suppliers, distributors, customers, competitors, and government agencies. People, processes, and technology are the fundamental building blocks of business ecosystems. They evolve as a form of collaboration between these market players as part of the process of developing and delivering products or services. Now business ecosystems are going digital.

The digital transformation is a huge challenge and opportunity for each individual business. Business processes are changing significantly as a result of real-time information exchange, the mobile mind shift, always connected and mobile devices, and the opportunity to collect and monitor structured and unstructured data. As a business enabler, no CIO can ignore the digital transformation. Digital ecosystem management is much more than a sourcing project: According to Capgemini, businesses with the digital maturity to build digital innovations and to drive enterprise-wide transformation are 26% more profitable than their average industry competitors on a range of measures including EBIT margin and net profit margin. The CIO must actively help the organization to deliver value in the emerging digital ecosystems.

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Google Will Not Crack The Wireless Market By Following Others Into The MVNO Arena

Dan Bieler

Source: DroidLife

Much has been written about Google’s foray into the wireless service provider arena. Now Google has announced its push into this market with its Project Fi offering, which is based on the mobile virtual network operator (MVNO) business model.

There is nothing revolutionary about Google’s wireless offering. Rather than acting as a market disruptor, Google has opted to enter the wireless market by launching a package similar to the one that Republic Wireless has provided in the US since 2011. So why should anyone pay attention to Google Fi? Because Google is a very large and powerful player in the mobile market. My main observations are that Fi is:

  • Unlikely to disrupt pricing in the US wireless market significantly. Google Fi's pricing is a fixed $20 unlimited talk/text plan plus $10 per GB of data, plus tax; a 3GB data package will cost users about $55 per month. Interestingly, users don't pay for data that they don't use, and many Fi users will not use their full data packages: For instance, the average Republic Wireless user pays only $7.50 to $8 per month for data. Still, for penny pinchers, pure Wi-Fi plans are much cheaper. The most attractive part of the deal is the roaming aspect – but only for overseas travelers.
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China's Tech Market Will Reach $136 Billion In 2015

Frank Liu

Slower economic growth will become China’s “new normal.” To combat this, the Chinese government is launching a series of initiatives to drive tech market growth in 2015, including economic stimuli across industries, starting an Internet Plus project, and creating new free-trade zones. My latest report, China Tech Market Outlook: 2015, provides the drivers behind Forrester’s forecast that China’s tech market will reach $136 billion in 2015 — representing year-over-year growth of 9% in US dollars. What’s more, China’s share of total Asia Pacific tech spending is still growing; it increased to 25% in 2014 and will rise further to 27% in 2015.

Key tech market trends in China in 2015 include:

  • Purchases of computer equipment will remain the largest segment of China’s tech spending. The massive increase in the number of mobile consumers in recent months has led to an explosion in demand for digital content and personal cloud services. Online content and platform providers are investing heavily in cloud infrastructure to efficiently respond to this rising demand.
  • Communications equipment spending growth will be flat.The country’s three major telcos all started building nationwide 4G base stations in 2014. This momentum will continue in 2015, even though the growth in volume will be offset by the falling prices of communications hardware as technologies and markets mature.
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Is Your Business Ready For A Digital Acceleration Team?

Nigel Fenwick

Empowering a central team to set digital strategy, provide common platforms, and provide specialist resources can help business units develop their digital maturity by embracing a set of common standards while still tailoring their customer experience to their specific market needs. Yet many central teams run into difficulty. They fail to clearly communicate their purpose and remit, they struggle to navigate the realities of corporate politics, and they forget to demonstrate their successes through clear metrics. CIOs looking to accelerate their firm's digital journey by building a digital acceleration team should first assess their organization's readiness and appetite (see Figure).

Digital accelerator checklist

For more on establishing a digital acceleration team, see my latest research: Your Company Needs A Digital Acceleration Team.

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Nokia Takes Over Alcatel-Lucent: Get Ready For A Shift In The Global Network Solutions Vendor Landscape

Dan Bieler

Nokia and Alcatel-Lucent have entered into a memorandum of understanding under which Nokia will make an offer for Alcatel-Lucent in an all-share transaction. The deal values Alcatel-Lucent at €15.6 billion: Alcatel-Lucent shareholders will own 33.5%, with Nokia shareholders owning 66.5%.

Is this a “marriage of desperation” or two network solution vendors coming together to work on a broader vision for an increasingly connected world? The combination of two relatively small network solutions vendors won’t automatically translate into the formation of a new network solutions powerhouse. Most importantly, will the new Nokia truly differ from its main rivals Huawei and Ericsson as an end-to-end carrier network solution provider? Nokia’s competitors will not only face a larger new competitor but also experience the formation of a different one. This deal will mean that:

  • Nokia joins the small club of converged network solutions vendors. Customers expect experiences that support multiple screens and applications; equipment vendors must deliver solutions for the Internet of Things (IoT) and industrial Internet requirements by offering next-generation network technology and services. Nokia can’t cater to this market demand alone.
  • Nokia rejoins the premier league of network solutions providers. The deal means that Nokia’s total pro-forma 2014 revenues will more than double to €25.9 billion. The new Nokia will be the second-largest provider of carrier-grade telecoms networking solutions, with revenues in this segment of €25.0 billion, just behind Ericsson (€25.1 billion) but ahead of Huawei (€23.5 billion). With its newfound size, Nokia will gain access to scale benefits.
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Four Strategy Tips In The Age Of The Customer

Nigel Fenwick

Blog word cloudI just concluded six months of research looking at how firms plan strategy in the age of the customer. Perhaps unsurprisingly, I concluded that companies that fail to adapt to increasingly powerful customers, and disruptive competition, will not simply face near-term disruption — they risk their long-term viability.

I also found evidence of firms making changes in how they plan business strategy. High-performing companies look at strategic planning as a continuous process with a focus on customer value and loyalty.

In my latest report on strategy, I identify new responsibilities for CIOs, CMOs, and business-unit leaders in strategic planning. The report focuses on three ways CIOs and CMOs must step up and serve as a shaper of customer-obsessed business strategy that generates greater loyalty and drives better performance.

To succeed in the future, CIOs need to collaborate effectively with peers across the C-suite, especially the CMO and business-unit leaders, to build strategies and a shared business technology agenda, focused on customer outcomes.

Here are four tips from the research:

1.     It's time to separate strategic planning from the annual budget cycle. Annual strategic plans hold firms back from quickly reacting to fast-evolving markets. While strategies must be funded, continuous test-and-learn approaches will more quickly reveal opportunities and weaknesses.

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