To quote Forrester’s CEO and Founder, George Colony, during his keynote at Forrester’s IT Forum EMEA event: “CEOs only care about two things: revenue growth and profitability.” How should we interpret this? CEOs do care about green if it is able to drive revenues, reduce costs and mitigate risks — all of which are essential ingredients in delivering long-term profits and shareholder value.
Evidence is mounting around CEOs' rising interest in corporate sustainability initiatives. For example, the United Nations Global Compact-Accenture CEO Survey 2010 published in June finds that 54% of CEOs globally view sustainability as “very important” to the future success of their businesses. And the Economist Intelligence Unit backs this up by finding that companies that rated their green efforts most highly over the past three years "saw annual average profit increases of 16% and share price growth of 45%, whereas those that ranked themselves worst reported growth of 7% and 12% respectively."
So does your CEO care about green IT?
Not without some convincing. And here’s why: While your CEO might care about green, they may not necessarily care about IT. As an indicator of this, Forrester found that only 16% of the world’s largest companies mention green IT in their annual reports. And as a result, CEOs are most likely unaware of IT’s role in enabling their company's green ambitions. The good news, however, is that IT is playing an increasingly central role in planning and executing companywide green strategies which will lead to C-level visibility.
Recently on a cross-country flight, I was just waking up when the flight attendant asked me what I wanted for lunch. She was a little annoyed because I kept her waiting while I looked through the magazine for food choices, and gummed up the whole works. And who could blame her for being annoyed? She had a whole bunch of people to get serve. I made a hasty selection and mistakenly picked the healthy snack box (organic pumpkinflas granola and apple slices instead of pepperoni and a chocolate chip cookie).
About an hour later, I had some serious hunger pains and would have killed for one of those old-school gummy chicken casserole airline dinners.
What would have solved this? A proper online engagement architecture, naturally. I usually print my boarding passes out ahead of time. So why doesn’t an airline print out the food choices under the boarding pass, or distribute via mobile devices as people increasingly use them for check-in? The airlines could provide other information, too, like how full the flight is, and whether NBC in the Sky will show something good like “The Office” or something not-so-good like “The Marriage Ref”.
So, what’s the problem? Content management and delivery systems aren’t unified. There are all kinds of opportunities to present rich, consistent, engaging multichannel experiences by integrating technologies such as content management, customer relationship management, document output management, email campaign management, and others. But these are still siloed, due to legacy issues as well as market dynamics (there is no unified solution on the market).
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:
I'm on vacation this week, traveling with a small group of my extended family out on the Dingle peninsula of Ireland. I'm mostly focused on vacation, but have done a little checking in on work things. Trying to stay connected - and figuring out how to adjust my Internet habits while on vacation with a Dad and brother that are decidedly less interested in computing is interesting. Here are some random thoughts from the experience.
I'm using a temporary Forrester computer, so none of my files are on this computer. I'm putting new files in the Dropbox folder, so they'll automatically be synced out for access when I get back. And I'm using a SugarSync account to retrieve needed files from my main PC, when I can find a connection. Our B&B doesn't have Wi-Fi, and it is rare in Dingle, so I'm using an ice cream shop that hands you a code if you want to use their Wi-Fi. Which means I connect about every 2 days, because it is several hundred meters away - thankfully it still works when they're closed and they don't change the code!
The biggest pain is mobile phone roaming! I turned off mobile access on the iPad. I signed up for AT&T's roaming data plan, which is the only east option for data but expensive. Even with the international roaming, mobile voice is $1 a minute. And there's no plan for roaming texting, so it's something like 25 or 50 cents a shot. So I bought an Irish SIM at the Post Office - which offers voice and text. But for some reason the old BlackBerry I put the SIM in can't send text, only receive them. And even though it is supposedly only for in-country calls, my brother was able to call my mobile with the Irish SIM when his Guinness factory stop in Dublin didn't work out.
Applications development people can't stand the Luddites in the operations group, and ops people hate those prima donas in apps dev - at least that's what we are led to believe. To explore the issue, two of my colleagues who write to the infrastructure and operations (I&O) role - Glenn O'Donnell and Evelyn (Hubbert) Oehrlich - invited me to participate in an experiment of sorts. They arranged a joint session for the I&O Forrester Leadership Board (FLB) meeting, and I was the sole applications guy in the room - a conduit for I&O FLB members to vent their frustration at their apps dev peers. For those who aren't aware, FLBs are communities of like-minded folks in the same role who meet several times a year to network, share their experiences, guide research, and address the issues that affect their role.
We infused the session with equal parts education, calls for joint strategic planning across all IT work, and a bit of stand-up comedy - Glenn noted that as representatives of our respective roles, he and I were actually twin sons of different mothers. I noted that in that context that our parents must have been really ugly. Once we opened the session for discussion, the good folks in the room wasted no time in launching verbal stones my way. Now, I'm no IT neophyte: I've been in the industry since 1982, and I'm no stranger to conflict - I grew up with 3 older brothers, and we all exchanged our fair share of abuse as siblings will. Still, I wasn't quite prepared for the venting that followed. To summarize a few of the main points, I&O sees apps folks as:
TECH DYNAMICS: Last Friday, June 25th, the US House and Senate reached agreement on a financial reform bill, which is likely to pass and be signed into law.* At first glance, this legislation has nothing to do with the IT industry directly. But buried in this bill is a provision regarding debit card fees, which could serve as a model for how end users of software could bring about a change in something that is very important to the economics of the software industry — software maintenance fees.
Now, software maintenance fees have been one of the givens in the software industry in perpetual license deals. Typically set at 18% to 22% of initial license fees, they are fixed in stone. An enterprise software buyer can try to negotiate a discount on a license fee; a really smart one can negotiate a deal where the maintenance fee rate is applied against the discounted license fee, not against the list license fee. But software vendors rarely discount maintenance fees.
Why? Established software vendors depend heavily on maintenance fees for the bulk of their revenue. Almost half (49%) of SAP’s revenues and Oracle’s applications revenues in 2009 came from maintenance fees. Oracle’s middleware business earned 55% of its calendar 2009 revenues from maintenance fees.
And yet maintenance fees are one of the biggest sources of complaint from enterprise software buyers. Every so often this dissatisfaction breaks into the open. SAP faced massive client unrest when it raised maintenance fees for most customers during 2009. SAP tapped the biggest vein of resentment about maintenance fees: fees on old software. Old software is the crux of the problem with maintenance fees: It tends to be stable and therefore requires little support.
The Court found that the method by which Public Company Accounting Oversight Board (PCAOB) members are appointed does not grant the Executive branch sufficient oversight because of the restrictions on when members can be removed from their position. According to Chief Justice Roberts' opinion, "The consequence is that the Board may continue as before, but its members may be removed at will by the (Securities and Exchange) Commission." And for those arguing that SOX doesn't have a severability clause that maintains the act's legality even when a portion of it is overruled, Roberts clarifies that "the unconstitutional tenure provisions are severable from the remainder of the statute."
Two weeks ago, Forrester went to Brazil for Brasscom’s (the local IT and country promotion group) Global IT Forum in Sao Paulo and Rio. One of the most interesting and insightful presentations was by Jairo Avritchir, Brazil IT site director of Dell. Jairo talked about Dell’s experiences and how the firm’s utilization of the country and its rich IT talent pool had evolved. Initially, it was largely in support of the company’s local sales and manufacturing operations. Today, the center has emerged as a BI and analytics hub for the global organization. Given the 40% appreciation against the dollar over the past eight years, the COE strategy around higher-end BI skills was the only way the center could compete with India. The Dell example clearly points out how both clients and vendors need to think about and fully utilize their alternative geography investments. A blog post at Computer Weekly touches on this topic as well.
The recovery of IT spending late in 2009 and early in 2010 has sent the local players in India and multinationals scrambling for find talent. The fact that firms cut back hiring and reduced their bench to maintain margins has degraded suppliers’ ability to respond. As a result, vendors have turned to poaching talent from competitors. At its analyst day, Cognizant was honest that it had increased to 16% up from 12% for the trailing 12 months. One small vendor that Forrester spoke with said that it had peaked at almost 30% over the last quarter. Another said it was in the mid-20s for certain practices; yet another two multinationals said that it had seen a similar overall rise to Cognizant, but in some of the packaged application areas it was in the mid-20s.
The impact of this sudden increase attrition? Forrester believes that this spike coupled with the clients need to deploy more quickly and cost effectively will drive the much broader adoption of solution accelerators and other non-linear IP models. Today best practice is to get 5% to 7% of revenue. We expect that that percentage could easily double over the next 18 months as vendors deal with attrition and clients clamor for faster deployment of solutions.
On my current trip to India multiple Indian and multinational companies asked where we saw the future of a global delivery model headed. This caused me to reflect, and here is my formal answer: There are a number of areas where we expect to see changes that not only reflect the maturing of the market but also changes in buyer demand. Forrester expects that developments and investments will take place along four vectors.
A continued focus on building out domain and technology centers of excellence.To date, these activities have been fairly isolated to one or two technologies like SAP or the mainframe and one or two top verticals. That will continue to expand especially on the domain or industry side. The COEs will be required to support the greater focus on specific business process for application work and the need to build out a portfolio of solution accelerators with a high level of domain input.
Building out a network of centers with a new wrinkle.With every day, it is becoming clearer that no single country is going to match the scale and breadth of India. In many cases, expansion had been driven by one or more clients looking to expand in a particular market like Latin America or China. Forrester believes that there will be a greater focus over the next two to three years around turning each alternative geography center into a particular center of excellence to clearly differentiate its capabilities and cost structure from the India mother ship.
An extension of process investments into the multicenter world. The current process investments have been largely at a center-by-center level to improve an individual location’s consistency and predictability. The emphasis will now shift to the knowledge management, collaboration, and social networking tools to allow firms to tap into the COEs in the alternative geographies.