The battle over customer versus internal business processes requirements and priorities has been fought — and the internal processes lost. Game over. Customers are now empowered with mobile devices and ubiquitous cloud-based all-but-unlimited access to information about products, services, and prices. Customer stickiness is extremely difficult to achieve as customers demand instant gratification of their ever changing needs, tastes, and requirements, while switching vendors is just a matter of clicking a few keys on a mobile phone. Forrester calls this phenomenon the age of the customer. The age of the customer elevates business and technology priorities to achieve:
Business agility. Forrester consistently finds one common thread running through the profile of successful organizations — the ability to manage change. In the age of the customer, business agility often equals the ability to adopt, react, and succeed in the midst of an unending fountain of customer driven requirements. Forrester sees agile organizations making decisions differently by embracing a new, more grass-roots-based management approach. Employees down in the trenches, in individual business units, are the ones who are in close touch with customer problems, market shifts, and process inefficiencies. These workers are often in the best position to understand challenges and opportunities and to make decisions to improve the business. It is only when responses to change come from within, from these highly aware and empowered employees, that enterprises become agile, competitive, and successful.
There are a couple of announcements today at salesforce.com’s local marketing event in Munich. Definitely the most important one — and the one that customers have been eagerly awaiting — is the joint announcement from Salesforce and T-Systems, the systems integration branch of Deutsche Telekom (DT). Earlier, Salesforce announced that it’s planning to build a data center in Germany, which is definitely the best way to comply with German data privacy laws and the emotional concerns of German customers around privacy. But as a US-headquartered company, just operating a data center is not enough; companies need to create trust and have experience in fulfilling legal and regulatory compliance mandates. This makes T-Systems exactly the right partner for Salesforce: It’s big enough to compete with data center heavyweights like Fujitsu, HP, and IBM but local enough to understand German customers and law.
The picture shows DT CEO Timotheus Höttges and Salesforce’s Marc Benioff just a few minutes ago.
Let’s look into more details of T-Systems’ offering how it relates to salesforce.com. First of all, it will simply feel like any other Salesforce data center. Customers will see absolutely no difference, regardless of whether their “tenant” is running on the East Coast, West Coast, or the US-based data center dedicated to European customers. In the future, they can choose the Salesforce UK data center and, starting in 2015, a Salesforce Germany data center. All are fully managed by Salesforce, operate on the same code base, and will get new releases and upgrades at the “same” time.
Last week I presented an overview of cloud adoption trends in the banking sector in Asia to a panel of financial services regulators in Hong Kong. The presentation showcased a few cloud case studies including CBA, ING Direct, and NAB in Australia. I focused on the business value that these banks have realized through the adoption of cloud concepts, while remaining compliant with the local regulatory environments. These banks have also developed a strong competitive advantage: They know how to do cloud. Ultimately, I believe that cloud is a capability that banks will have to master in order to build an agility advantage. For instance, cloud is a key enabler of Yuebao, Alibaba’s new Internet finance business. 80 million users in less than 10 months? Only cloud architecture can enable that type of agility and scale (an idea that Hong Kong regulators clearly overlooked).
Businesses invest considerable sums of money with vendors like Box, Cisco, Google and Microsoft for a collection a technology we call collaboration tools. As an analyst, though, the question that has dogged me in watching this space is "why?" As in "what is the actual value a business gets from investing in collaboration technology?" The vendors' rationale for acquiring collaboration tools has shifted in emphasis over time, going from a conversation on cost savings to one on productivity gains. However, cost savings is an undifferentiated and limited message while "increasing productivity" can feel ephemeral because it is difficult to measure. Yet my inquiry queue remains full of companies trying to figure out how best to deploy these technologies and my briefings calendar is filled with startups and incumbents pitching new offerings in this space. This brings me back to my original question: Why?
Several events over the past few months in China will affect both the IT procurement strategy of Chinese organizations and the market position and development of local and foreign IT vendors, including:
A government-led push away from foreign IT vendors. Amid security concerns, the Chinese government has issued policies to discourage the use of technology from foreign IT vendors. As a result, many IT and business decision-makers at state-owned enterprises (SOEs) and government agencies have put their IT infrastructure plans — most of which involved products and solutions from foreign IT vendors — on hold. They’ve also begun to consider replacing some of their existing technology, such as servers and storage, with equivalents from domestic vendors. This is significant given that government agencies and SOEs are the key IT spenders in China.
A trend to get rid of IBM, Oracle, and EMC. Alibaba was an early mover, replacing its IBM Unix servers, Oracle databases, and EMC storage with x86 servers, open source databases like MySQL and MongoDB, and PCIe flash storage. This has evolved into replacing these foreign products and solutions with ones from local Chinese vendors. For example, Inspur launched the I2I project to stimulate customers to drop IBM Unix servers in favor of Inspur Linux servers to support business development. The Postal Savings Bank of China, China Construction Bank, and many city commercial banks have started deploying Inspur servers in their data centers. However, this only affects the x86 server and storage product market: While domestic vendors can provide x86 servers and storage, they still have no databases to replace Oracle’s.
An IT mindset has dominated the way organizations view and manage their data. Even as issues of quality and consistency raise their ugly head, the solution has often been to turn to the tool and approach data governance in a project oriented manner. Sustainability has been a challenge, relegated often to IT managing and updating data management tools (MDM, data quality, metadata management, information lifecycle management, and security). Forrester research has shown that less than 15% of organizations have business lead data governance that is linked to business initiatives, objectives and outcomes. But, this is changing. More and more organizations are looking toward data governance as a strategic enterprise competence as they adopt a data driven culture.
This shift from project to strategic program requires more than basic workflow, collaboration, and data profiling capabilities to institutionalize data governance policies and rules. The conversation can't start with data management technology (MDM, data quality, information lifecycle management, security, and metadata management) that will apply the policies and rules. It has to begin with what is the organization trying to achieve with their data; this is a strategy discussion and process. The implication - governing data requires a rethink of your operating model. New roles, responsibilities, and processes emerge.
I was invited to speak at the Big Data and Business Analytics Forum in Hong Kong last week, and introduced our latest research on big data in Asia Pacific for both marketing and technology management professionals in the age of the customer. Listening to other speakers at the event who discussed Hadoop and explained the 4Vs of big data — volume, velocity, variety, and value — it dawned on me that there may be a significant gap in big data development between mainland China and Hong Kong. While Hong Kong is perceived as more technologically advanced, these terms were already buzzwords on the mainland 18 months ago. There are several constraints could have hindered big data adoption in Hong Kong:
Demographic limitations. With a total population of 7 million, Hong Kong doesn’t generate data volumes as gigantic as mainland China’s. This raises the unit cost of big data for Hong Kong businesses.
Budget to invest in new technologies. Hong Kong businesses are still struggling to recover from the 2008 financial crisis and maintain hiring freezes. It’s difficult for tech management to convince business leaders to invest over HK$1 million in a big data project and hire data scientists.
There are few local practices in unstructured data like social, location, and mobile. Hong Kong is open to global social platforms like Facebook or Twitter, meaning that multinationals can use global big data solutions to cover social in Hong Kong and keeping local adoption of big data technology for SoLoMo low.
Many of you know that Forrester has surveyed the global banking platform market since 2005. For 2013, we analyzed the deals of 29 vendors. Seven of these vendors – Infosys with Finacle, Misys, Polaris Financial Technology, SAP, SunGard, TCS with TCS BaNCS and Temenos – continuously participated since 2006. Earlier this year, we delivered a Forrester Webinar on some results of the survey analysis; and just recently Forrester published further results in a report.
Today, I would like to highlight some of the key results:
2013 saw the second highest number of counted deals ever. The 29 vendors submitted more than 1,600 banking platform deals in 2013, making the number of counted deals the second highest we have yet recorded. New named deals decreased in number, while the amount of extended business deals grew.
Good customer relationship drove individual vendor success. In 2013, very successful vendors were those that were able to leverage good client relationships to extend deals and thus increase their market share. The number of combined new named and extended business deals grew by 4% from 2012 to 2013.
Customer-facing functionality drove 2013 banking platform deals. Banks signed for more functionality related to channel solutions, customer data/party management, and customer relationship management than in the past while more transactional functionality such as core banking and lending still grew, but reduced its footprint within the overall sold banking platform functionality. Banks refocused on customer-facing capabilities to win, serve, and retain customers and increase top-line growth.
Organizations fail to deliver a quality of service that customers expect. Our data shows that 67% of US online consumers say they've had unsatisfactory service interactions in the past 12 months. This parallels recent data from Accenture Global Consumer Pulse Research survey. This is because companies need a variety of queuing and routing, CRM and WFO software to support end-to-end operations - software procured from a number of different vendors. Today’s set of un-integrated components restricts contact center managers from obtaining a full, multichannel view of customer interactions, makes it difficult to configure more effective rules for contact flow, and ultimately impacts the quality of service delivered.
The last decade has seen continued consolidation and turmoil in each of the three software categories, as vendors have acquired direct competitors to fill in gaps in their offerings. More importantly, vendors have acquired companies in adjacent spaces to broaden their customer engagement management capabilities and offerings. Today, the leading vendors within each respecive category offer robust end-to-end solutions, and you have to dig deep to find feature differentiation between software solutions. This has left vendors focusing on different verticals, geographies and deployment sizes in order to grow their footprint. In addition, some vendors have made moves into developing capabilities or making acquisitions outside of their respective categories to increase market share. Many vendors offer a combination of 2 of the three foundational building blocks for the contact center - but no vendor has robust end-to-end offerings across all three categories.