There has been a lot of press about IBM’s acquisition of BNT (Blade Network Technologies) focusing on the economics and market share of BNT as a competitor to Cisco and HP’s ProCurve/3Com franchise. But at its heart the acquisition is more about defending and expanding a position in the emerging converged server, networking, and storage infrastructure segment than it is about raw switch port market share. It is also a powerful vindication of the proposition that infrastructure convergence is driving major realignment in the vendor industry.
Starting with HP’s success with its c-Class blade servers and Virtual Connect technology, and escalating with Cisco’s entrance into the server market, IBM continued its investment in its Virtual Fabric and Open Fabric Manager technology, heavily leveraging BNT’s switch platforms. At some point it became clear that BNT was a critical element of IBM’s convergence strategy, with IBM’s plans now heavily dependent on a vendor with whom they had an excellent, but non-exclusive relationship, and one whose acquisition by another player could severely compromise their product plans. Hence the acquisition. Now that it owns BNT, IBM can capitalize on its excellent edge network technology for further development of its converged infrastructure strategy without hesitation about further leveraging BNT’s technology.
Like many business executives and consumers, I have been paying a lot of attention to the economic indicators, looking for signs either of a stronger economic recovery or a potential renewed recession. As a technology market analyst, I track economic indicators because I’ve found that the growth in the economy is one of the best predictors of what the technology market growth will be -- far better than surveying CIOs to find out their spending plans, which tend to be backward looking.
Based on my reading of the economic indicators and the forecasts of professional economists, it looks to me that both the US economy and the global economy will fall between extremes of strong growth or recession, growing weakly but not slipping back into recession. As a result, in Forrester's latest forecast (US And Global IT Market Outlook: Q3 2010), we have trimmed our forecasts for the US tech market to a still-robust 8.1% growth for 2010 (down from our 9.9% forecast in July), with 7.4% growth in 2011. Globally, the tech market measured in US dollars will grow by 7%, compared with our July forecast of 7.8%, with the somewhat weaker outlook for the US tech market offsetting slightly better performance in Europe and strong growth in Latin America, the Middle East, Africa, and Asia/Pacific.
These forecasts include business and government purchases of computer equipment, communications equipment, software, IT consulting and systems integration services, and IT outsourcing. If we add telecommunications services (as we do for the first time in this report), US information and communications technology (ICT) market growth in 2010 will be 5.6% and 6.6% in 2011.
I recently spent a day with IBM’s x86 team, primarily to get back up to speed on their entire x86 product line, and partially to realign my views of them after spending almost five years as a direct competitor. All in all, time well spent, with some key takeaways:
IBM has fixed some major structural problems with the entire x86 program and it perception in the company – As recently as two years ago, it appeared to the outside world that IBM was not really serious about x86 servers. Between licensing its low-end server designs to Lenovo (although IBM continued to sell its own versions) and an apparent retreat to the upper-end of the segment, it appeared that IBM was not serious about x86 severs. New management, new alignment with sales, and a higher internal profile for x86 seems to have moved the division back into IBM’s mainstream.
Increased investment – It looks like IBM significantly ramped up investments in x86 products about three years ago. The result has been a relatively steady flow of new products into the marketplace, some of which, such as the HS22 blade, significantly reversed deficits versus equivalent HP products. Others followed in high-end servers, virtualization and systems management, and increased velocity of innovation in low-end systems.
Established leadership in new niches such as dense modular server deployments – IBM’s iDataplex, while representing a small footprint in terms of their total volume, gave them immediate visibility as an innovator in the rapidly growing niche for hyper scale dense deployments. Along the way, IBM has also apparently become the leader in GPU deployments as well, another low-volume but high-visibility niche.
Some of you may recognize the guy at the front as Fireman Sam, the eponymous "hero next door" of the BBC children’s program set in the fictional Welsh town of Pontypandy. What does he have to do with software licensing?
Yesterday I spoke about software licensing trends to a group of customers, prospects, and partners of licensing optimization vendor Flexera. One of my key messages was that software asset managers (SAMs) must move on from reactive firefighting via fire prevention (both of which I call "Fireman SAM") to a more proactive management of license needs (which I call "license optimization"). Fireman Sam uses traditional asset inventory and hard disk discovery tools to try to measure software usage, compare it with license entitlement, and rectify any shortfalls. Fireman Sam’s arch enemy is License Audit Bill.
In contrast, a more mature process adds analysis of what licenses you really need to the data on usage and ownership. This information enables software sourcing managers to cut expenditure on excess licenses and over-specified versions. For example, Flexera’s product for SAP enables customers to put users in the right categories, thereby minimizing the purchase of more expensive "full user" licenses.
Best Software License Management Considers Three Questions
Part of managing your brand is making sure that your customer service experience is consistent across all touchpoints that you use to interact with a company – traditional ones such as voice, email, chat, web self-service and now the social interaction channels.
What does a "consistency of experience" mean? It means that:
The knowledge a customer or agent has access to must convey the same message across all touchpoints. The voice will understandably be different for, for example, a chat session and an email session.
The agent must have a full view of the customer’s interactions across all touchpoints — traditional and social ones. Another way of saying this is that customer data should not live in independent technology silos.
The processes that an agent follows must be the same for interactions coming in across all touchpoints — traditional and social.
KANA Software, most well known for its suite of enterprise-class multichannel customer service software (email, knowledge) released last year a new type of solution: Service Experience Management (SEM). This product allows the extension of business process management to the front office and is poised to compete with solutions offered by Pegasystems and Sword Ciboodle. BPM coupled with customer service is a trend that Forrester is seeing, as it enforces agent consistency, productivity, and compliance with policy; we have just published a research paper about this trend.
KANA announced today that it has reached a definitive agreement to purchase a company called Lagan, which is a leader in case management solutions for government, specifically local governments. Lagan has solutions for Web self-service and case management that are used in cities like Toronto, Boston, and Vancouver for 311 (informational) calls.
This acquisition holds geographic coverage promise — it will allow KANA to increase its European footprint, which has recently been very small, and Lagan to gain a good foothold in the US and compete in larger government opportunities.
In a rather unsurprising move, Oracle acquired its longtime OEM partner of eSSO solutions, Passlogix. The sale has closed after a relatively long courtship – the eSSO market has been consolidating for a long time: Novell’s OEM agreement with ActivIdentity, IBM’s acquisition of Encentuate all signal IAM stack consolidation. Beyond the obvious — 1) eSSO integration with Oracle Access Manager and Oracle Adaptive Access Manager to integrate with web single sign on, 2) a multitude of second factor and adaptive authentication mechanisms using v-GO User Access Manager, and 3) using v-GO SSO’s screenscraping technology to create Oracle Identity Manager connectors to arcane, no-CLI systems — large tasks remain for Oracle: a) providing access management for mobile devices and b) getting to be a credible player in Privileged User Management (where Passlogix’s v-GO Shared Accounts Manager is a second-tier player).
CityOne, IBM's new Smarter City Simulation game, is interesting. But who will really play?
IBM introduced a new Smarter City Simulation game yesterday. I took a few minutes to play around with it. I love the idea. It is SimCity meets Smarter City, and together they make CityOne. Players are presented with challenges faced by decision-makers in Retail, Banking, Energy and Water industries within a city. They start with a budget for each industry. And, for each challenge, they are provided with a list of recommended actions and must choose among them. Each action has a cost and associated benefits. Some are more “right” than others, earning bonus credits and increasing customer satisfaction and other key performance indicators, as well as earning special awards. A player likely knows not to pick the "Ignore the problem" option. Yet, when in doubt you can also query a consultant for additional advice.
My sense was that the “right” answers seemed pretty obvious. However, that said, I certainly didn’t get a high score. And, when I got to the end of my ten turns, I was feeling pretty overwhelmed by the issues across these industries.
A couple of days ago, global banking platform vendor Temenos announced that it has signed an agreement to acquire Odyssey Financial Technologies, which specializes in the private banking, private wealth management, and asset subverticals of financial services. The deal is expected to close around mid October: Temenos will pay more than 60 million euros and take on Odyssey’s existing debt obligations of more than 20 million euros. Here is my initial reaction to the planned acquisition.
On the asset side, Temenos will get the private banking platform Triple’A Plus, portfolio management and decision support solution WealthManager, plus clients such as Banque Cantonale Vaudoise, Delta Lloyd, and RBS Coutts Bank. This will help Temenos accomplish the necessary extension to its private banking footprint: In spite of prominent private banking clients such as EFG Bank, over the past few years Temenos’ T24 has not been as successful in the private banking/wealth management arena as, for example, ERI Bancaire, SunGard, or Tata Consultancy Services Financial Solutions as far as new named customers are concerned — not to mention the various regional private banking pure players.
At the same time, the Odyssey solutions will add additional technologies and architecture to Temenos’ already existing acquired portfolio: Not considering the two “classic” Temenos banking platforms T24 and TCB and the mobile solutions of recently acquired specialist vendor FE-Mobile, Temenos acquired multiple smaller banking platform vendors over the past few years, including Financial Objects in the UK and Viveo in France, plus further firms such as business intelligence and reporting vendor Lydian Associates.
My research team at Forrester helps tech vendor strategists anticipate and navigate in rapidly changing market environments. We can't take a siloed view on specific product and service categories, but rather broaden our perspective in order to trace cross-market dynamics around key issues such as sustainability, globalization, collaboration, mobility, and cloud. This puts tech vendors in better positions to act on emerging demand signals, competitive scenarios, and opportunities to select best-fit partner, channel, or acquisition targets.
The market for dedicated solutions and services that help companies manage their energy, emissions, and overall sustainability strategy is still nascent. The evolution of sustainability at larger software and IT service vendors started with their internal efforts, which is an important factor framing their portfolio and go-to-market strategies.
As a result, there are still a significant number of vendors that are converting their internal capabilities to analyze, define, and implement sustainability into customer-facing software and/or service portfolios. These portfolios of services go well beyond green IT, increasingly focused to serve clients wrestling with hot topics such as enterprise carbon and energy management (ECEM), green supply chain, and sustainability performance management.
My colleague, Daniel Krauss, and I have recently completed a comprehensive round of interviews and analysis with many different players offering sustainability consulting services, including software, IT and business services, hardware, and even industrial companies (see Figure 1).