Forrester attended Microsoft’s second annual Asia Pacific Analyst Summit in Singapore last week for an update on the company’s progress in transforming into a devices and services company. The event highlighted Microsoft’s strengths and exposed some obvious challenges, which I’ve shared below. Forrester clients can access further event-related analysis and implications here.
Day One: Impressive Capabilities And A Strong Understanding Of Customer Needs
Day one was well designed and delivered, with a clear focus on customer and partner case studies and go-to-market strategies based on three core imperatives:
Transforming IT. Focusing primarily on Cloud OS, Windows Azure, and Office 365, this imperative highlights Microsoft-enabled capabilities and resources to help IT organizations transform both internal data centers and IT delivery.
Engaging customers and employees. This imperative essentially combines mobility and social to help organizations thrive in the age of the customer by delivering improved customer service and customer and user experiences.
Accelerating customer insight and business process improvement. This imperative targets the changing needs and expectations for data and information access and real-time decision making via a combination of traditional analytics and big data.
Since joining CA Technologies as president of Asia Pacific (AP) in August 2010, Lionel Lim (formerly president of Sun’s AP business) has consistently stressed the need to re-establish CA as a leading enterprise IT provider across the region. Along with a mix of regional and global executives, Lim used the recent CA Expo 2013 in Melbourne as an opportunity to update analysts on the company’s progress.
Key messages at the event all centered on CA’s value in helping CIOs drive, manage, and optimize IT/business transformation. The company plans to achieve this goal by supporting open, heterogeneous management capabilities across all internal and cloud-based systems, from mainframes to mobile devices.
This is a major leap for CA, a company whose strength has always been IT performance management, particularly for mainframe platforms. The broader focus now involves providing key capabilities and solutions to help CIOs on the journey to private cloud enablement and “as-a-service” delivery of applications or application capabilities. CA has not been shy in making the case. As one executive stated, “CIOs not viewing themselves as service providers to their organizations are not adequately addressing the needs of the business.”
While I applaud the position, it also carries risk. CA is aligning itself with CIOs as change agents. In many parts of AP, CIOs are still more interested in maintaining the status quo, which typically means traditional on-premises data center-related investments and minimal disruption. By preaching so forcefully for change enablement, CA is positioning itself well for future strategic growth, but could be risking near-term opportunities in its more traditional, but still stronger, mainframe-centric IT performance management market.
In Q4 2012, Forrester interviewed over 2,800 senior IT and business decision-makers across Asia Pacific, including 250 senior IT decision-makers with budgetary authority in Australia and New Zealand (A/NZ). Respondents included a mix of small and medium-sized businesses (SMBs) and large organizations, with all major vertical market segments represented. On average, 6% of A/NZ respondents’ total budget is currently spent on IT (including both operating and capital budgets). Of that total IT budget, an average of 26% is targeted at new initiatives, versus 52% targeting ongoing operations and maintenance and 22% targeting capacity replacement & expansion.
While these findings are interesting, the expected spending on IT staff salaries is what really stands out. Our Forrsights data shows spending on IT salaries in A/NZ rising far faster than all other IT-related line items (see Figure 1). This is not an anomaly. In fact, it’s a sign of things to come.
There are several likely reasons for this dynamic:
I recently wrote about the need for IT organizations to embrace SaaS to maintain relevance and help drive business value. This quarter, I’ve set my sights on IaaS. In my forthcoming report, “IaaS Adoption Trends In Asia Pacific”, I explain in detail why my advice remains the same.
Internal IT resistance to expanding IaaS usage based on security, data management, and availability/performance concerns are certainly valid. But project-driven, opportunistic IaaS usage will continue to grow across the region as business decision-makers rationally seek out public cloud-based services that meet needs not met by internal IT.
IT decision-makers failing to consider all service-provisioning options will see their credibility wane and their control usurped by the inevitable emergence of shadow IT, driven by clear business demand. On the positive side, as usage expands internally, I’ve already seen Asia Pacific organizations begin viewing IaaS as a mechanism to fuel innovation based on easy access to cloud-based compute resources. Put another way, IaaS supply is beginning to fuel increased demand.
Some key recommendations for encouraging IaaS-related innovation while minimizing risks:
I recently hosted an Executive Roundtable in Singapore along with my colleagues Dane Anderson and Tim Sheedy. The theme of the session was “From Systems of Record to Systems of Engagement - Understanding the New Mobile Imperative for IT Leaders".
The discussion centered on the fact that mobility doesn’t simply mean another device for IT to support. Instead, mobility is driving a clear and permanent link between virtual services and physical activities. In other words, mobility is part of a broader set of technologies – including social, cloud, and advanced analytics – that are creating ubiquitous and information-rich Systems of Engagement.
The above broad themes made for great discussion. And there was general agreement among the CIOs present that mobility would drive significant business transformation. But there was also a common set of concerns that emerged among the group:
· Deploying new technology (including mobile apps) with limited budget or relevant skills. And more broadly, how to prioritize mobile strategies relative to other IT (and business) initiatives. Ultimately the challenge for CIOs is how to align business requirements with budget realities, particularly as user expectations continue to rise and change management becomes a critical issue due to condensed release cycles. A critical first step is to better define your mobile strategy using a simple framework for prioritizing mobile applications and features.
I’ve noticed a growing trend among Asia Pacific organizations over the past 6-12 months: complete IT resistance to SaaS has steadily given way to more pragmatic discussions, even if IT has come to the table grudgingly. Over the next two years I expect this trend to accelerate. In fact, I believe that many SaaS solutions, particularly those that cross business and functional boundaries, will be rapidly subsumed within the broader IT portfolio, even if they were originally sourced outside IT.
Many SaaS vendors report already seeing more IT involvement in procurement, requirements definition, RFP creation, and negotiations. The clear procurement guidelines published by the IT department of the Australian Government Information Management Office (AGIMO) is one high profile example. Don’t get me wrong, in most instances business decision-makers will still lead, particularly in identifying the required business processes and determining how best to consume SaaS-based services. But IT decision-makers are getting more involved, particularly around integration.
Some areas to consider as you look to work more closely with business decision-makers to evaluate and negotiate SaaS and other public cloud deals:
Some markets and industry sectors in Asia Pacific (AP) were clearly early adopters of big data initiatives, but interest has now spread to almost all subregions and verticals. The reason is simple: More and more organizations now understand the value of data for not only addressing customer demands and expectations but also for responding to changing market dynamics and improving operational efficiency.
The common link across all big data initiatives is an interest in using more types of data, from more sources, to enable timelier, better-informed insights. With that in mind, we’re seeing two common use cases driving big data awareness and investment across industries:
These initiatives are a response to increasing customer expectations for more personalized service. Typically centered on improved customer insight and engagement, organizations are seeking ways to better access and leverage customer data to improve understanding, more effectively personalize relationships, predict behavior, and ultimately deliver improved value via increased customer intimacy. Specifically, the sheer volume of readily available and increasingly accessible data that organizations can leverage — such as location data from mobile devices, apps and personal data on customer preferences and relationships from social networking sites — is driving big data initiatives. Early adopters typically include telcos, retailers, banks, insurance firms, and citizen-oriented eGovernment initiatives.
The Forrester team of Asia Pacific (AP) analysts has just published its 2013 IT industry predictions. Below is a sneak peek at some key regional trends I wanted to highlight.
2013 will be a transformative year for IT adoption in AP, as multiple IT trends converge to drive industry disruptions and help spur renewed growth in IT spending. Forrester expects IT spending in AP to rebound in 2013, with regionwide growth of 4% — rising to 8% when the large but slow-growing Japan market is excluded. While India IT spending growth will remain sluggish, the 2012 economic slowdown in China will be short-lived as government stimulus policies take effect in 2013. The Australia, New Zealand, and ASEAN markets will all remain resilient, with Vietnam, Indonesia, and the Philippines leading the way in IT spending growth.
Below are some other key predictions shaping the Asia Pacific IT industry in 2013:
End user computing strategies will be limited to mobile device management (MDM). AP organizations are feeling the pressure to deliver applications and services across multiple devices, including traditional desktops/laptops, smartphones, and tablets. But lack of skills will hinder bring-your-own-technology (BYOT) policies, which will remain limited to MDM, including basic device control and security/identity management.
Amazon Web Services (AWS) held its first global customer and partner conference, re:Invent, in late November in Las Vegas, attracting approximately 6,000 attendees. While aimed squarely at developers, AWS highlighted two key themes that will appeal directly to enterprise IT decision-makers:
Continued global expansion. AWS cites customers in 190 countries, but the company is clearly pushing for greater penetration into enterprise accounts via aggressive global expansion. AWS now has nine regions (each of which has at least one data center), including three in Asia Pacific: Tokyo, Singapore, and Sydney.
An expanded services footprint within customer accounts. The major announcement at re:Invent was a limited preview of a new data warehouse (DW) service called Amazon Redshift — a fully managed, cloud-based, petabyte-scale DW. As my colleague Stefan Ried tweeted during the event, with a limit of 1.6 petabytes, this is not just for testing and development — this is a serious production warehouse.
As John Brand and I recently wrote, business intelligence (BI) adoption drivers, technology understanding, and organizational process maturity continue to vary widely across Asia Pacific (AP). But there is one constant in this market: the regularity with which BI appears at or near the top of CIOs’ priority lists.
While the gap between global best practices and regional implementations is closing, social, cultural, economic, and underlying technology trends will continue to affect BI adoption in the region for the foreseeable future:
Social. The adoption of social computing is expanding rapidly across all AP markets, but is particularly strong in growth markets like China, Indonesia, and the Philippines. As in North America and Western Europe, this adoption is already having profound effects on how organizations identify, understand, and engage with customers and other market influencers. But the lack of significant BI investments means that organizations in these growth markets are far more likely to consider issues like sentiment analysis, predictive analytics, and near real-time data access when sourcing initial BI projects.