Chief information officers (CIOs) are dedicating more of their budgets to what we call “systems of engagement” (technologies that help win, serve, and retain customers) rather than “systems of record” (back-office technologies). According to research here at Forrester, new business investment in the former will be eight times that of the latter in 2014. All of which means CIOs are re-examining their back-office legacy spend to see what savings can be made to fund new front-office innovations.
But releasing back-office spend is not easy. For many companies, most of the ‘easy’ savings have already been achieved - so squeezing even more savings has become a tougher game. For example, you can only try to re-negotiate legacy support costs a few times before the vendors say ‘enough is enough’. While such comments may have discouraged negotiators in past, the advent of third party software support in the last five years has, for Oracle and SAP users at least, kicked the cost savings door back open and given fresh impetus to procurement people seeking to reduce software support costs.
I am sure that many of you have read some of my previous comments on the emergence of the third party software support market over the past number of years. Companies like Rimini Street, Spinnaker Support and Alui have saved some Oracle and SAP clients a lot of money. For companies who have moved to third party support, or who have simply used the threat of moving to third party support in order to drive the vendor’s costs lower, the savings they are enjoying have freed up cash to spend on new innovations and front-office client engaging stuff.
When Clippy, Microsoft’s paper-clip assistant, disappeared in 1998, it was hardly missed; it was both annoying and offered little value to users. Zip forward 16 years: Microsoft has just introduced Cortana, a new personal digital assistant that the firm will launch on Windows Phone in the coming months. Powered by Bing, and about two years in the making, Cortana will be important if Microsoft gets it right. Here’s why it’s an exciting development:
Mobile-first is a growing enterprise strategy. The whole idea of creating a mobile-first enterprise strategy has taken root in many enterprises, as they recognize that users now expect any information or service they desire to be available to them, in context and at their moment of need. Users are cognitively and behaviorally ready to embrace wearable technology as an extension of mobility — and to weave it into their business processes. My colleague JP Gownder shares his views on wearables here.
Oracle has missed revenue expectations for three quarters in a row now as its Q3 results fell short of market expectations. The company blamed currency fluctuations and the strength of the US dollar for this latest miss.
The company reported third quarter earnings of $2.6 billion on revenue of $9.3 billion. Wall Street expected to Oracle to report fiscal third quarter revenue of $9.36 billion.
To be fair, Oracle did deliver some good data points. For instance, hardware system product revenue for the third quarter was $725 million, up 8 percent from a year ago. Software license and support revenue was up 5 percent to $4.6 billion and new software licenses and cloud subscriptions were up 4 percent from a year ago to $2.4 billion. Oracle says its outlook for the fourth quarter was solid. Safra Catz, Oracle co-president, said revenue growth in the fourth quarter will be between 3 percent and 7 percent.
Oracle won’t want to miss Quarterly earnings expectations again and will expect their sales teams to outperform in the next couple of months. All of which bodes well for an exciting run up to Oracle’s fiscal year end on May 31st.
Here are three quick tips to bear in mind as you prepare to negotiate with Oracle:
1. If you have an Oracle contract up for negotiation this quarter, then you should leverage the pressure Oracle sales are under to hit market expectations by squeezing an extra point or two of discount in return for a signed contract.
2. If you have a support renewal coming up, remember you have a choice now and third parties like Rimini Street, Spinnaker Support and Alui can give you real leverage at the negotiating table.
I attended an NG Telecom summit in Hong Kong recently; at the event, I chaired a discussion on how telcos need to improve the customer experience.
Consumers now have powerful mobile devices in their hands, speedy access to social platforms, and the ability to call up information on the go. More importantly, customers today can choose to easily switch to a competitor if they don’t like the customer experience they are receiving. As a result, telcos no longer “own” customers — it’s the other way around.
The discussion participants all agreed that telcos must do the following to meet customer-centric needs:
Simplify systems and processes. The debate on how to simplify complex telco business support systems (BSS) to make it easy for customers to consume services is an ongoing one. When BSS cannot provide a single, unified view of the customer, it’s difficult to provide a consistent customer experience. This happens with CRM systems: Call center agents struggle through five or six screens just to get a complete customer profile while irate customers spend time repeating their personal details or waiting for a resolution. Telcos must be like OTT players, which have very complicated businesses, systems, and processes on the back end but present a simple front-end interface to the customer.
IBM recently kicked off its big data market planning for 2014 and released a white paper that discusses how analytics create new business value for end user organizations. The major differences compared with last year’s event:
Organizational change. IBM has assigned a new big data practice leader for China, similar to what it’s done for other new technologies including mobile, social, and cloud. IBM can integrate resources from infrastructure (IBM STG), software (IBM SWG), and services (IBM GBS/GTS) teams, although the team members do not report directly to them.
A new analytics platform powered by Watson technology. The Watson Foundation platform has three new functions. It can be deployed on SoftLayer; it extends IBM’s big data analysis capabilities to social, mobile, and cloud; and it offers enterprises the power and ease of use of Watson analysis.
Measurable benefits from customer insights analysis. Chinese organizations have started to buy into the value of analytics and would like to invest in technology tools to optimize customer insights. AmorePacific, a Hong Kong-based skin care and cosmetics company, is using IBM’s SPSS predictive analytics solution to craft tailored messages to its customers and has improved its response rate by more than 30%. It primarily analyzes point-of-sale data, demographic information from its loyalty program, and market data such as property values in the neighborhoods where customers live.
At Mobile World Congress 2014 in Barcelona, SingTel CEO Chua Sock Koong was reported as “call[ing] on Australian regulators to give carriers like Optus the right to charge rivals WhatsApp and Skype for use of their networks or risk a major decline in network investment.”
With the telecommunications industry unable to monetize over-the-top (OTT) traffic, telcos will struggle to find the funding they need to improve their infrastructure — meaning that network quality could deteriorate. Chua did concede that telcos should work toward partnering with OTT players.
What It Means
SingTel’s argument runs over familiar ground, similar to the ongoing net neutrality debate in the US. My colleagues suggest that telcos will offer tiered access at tiered pricing to OTT players in the future, charging higher prices for better connection speeds and greater data traffic. While I don’t doubt this, price-sensitive Asia may be a harder nut to crack; telcos here run the risk of customer churn by raising service prices.
Aside from speeding up its rate of service innovation, SingTel should:
Despite an increasingly crowded market of cloud applications, salesforce.com is still very much the “darling” of the SaaS world. Some evidence of the provider’s continued fast-paced growth?
1) Strong stock market performance. On June 12, 2013, when salesforce.com announced the completion of its acquisition of ExactTarget, salesforce.com stock (CRM) was trading at $37.58. On February 19, 2014, it closed at just over $63, a gain of 67.7% over that period (for reference the NASDAQ Composite did roughly 25% over the same period).
2) External accolades for its ability to innovate. In August, salesforce.com was names by Forbes as the world’s most innovative company for the third year running.
3) Steady flow of new products and editions. In November, salesforce.com announced its new Salesforce1 Service Cloud – a platform to be used for cloud-based application development. This product represents a significant improvement in the mobile salesforce.com experience which will ideally aid them in meeting their aggressive financial predictions. Not long before that, salesforce.com had announced Social.com, in April 2013.
4) Revenue growth. Salesforce.com’s recent fiscal results (Q3 2013) conservatively project revenue growth of more than $1 billion for both this year and next ($4.05 billion for FY 2014 and $5.15 billion for FY 2015, compared to $3.05 billion in FY 2103).
So, it is no surprise then (in light of salesforce.com’s massive scale and continued expansion) that we continue to receive a heavy volume of Inquiries into Forrester about how to negotiate with salesforce.com.
Microsoft retires support for various older products in 2014 and 2015. This means there will be no more free updates or security patches. While it’s a common occurrence to see support for older products retired by software vendors, it’s annoying if either the old stuff is still running perfectly well or if the upgrade option is financially onerous, will significantly disrupt the business or offers little in the way of real added benefit.
So in April we’ll be finally bidding farewell to support for the likes of Windows XP, Office 2003, Exchange Server 2003, and in July 2015 we’ll say adieu to support for Windows Server 2003. In addition, some more recent products will be transitioning to extended support in July 2014 - namely SQL Server 2008 and SQL Server 2008 R2 – which puts them next on the path to software heaven.
On April 8, 2014, Windows XP will reach the end of its support lifecycle and Microsoft will no longer provide security or online updates.
As a part of the Microsoft Support Lifecycle Policy, Office 2003 products receive five years of Mainstream Support and five years of Extended Support. April 8, 2014 marks the end of this 10-year support period. Running Office 2003 after the end-of-support date may expose your company to security risks and technology limitations.
Exchange Server 2003
While Exchange Server 2003 was a leader in the messaging space, after 10 years of technology progression it will reach End of Support effective April 8, 2014.
IBM is making a big push into the SaaS space – boasting 100+ SaaS offerings and $1 billion plus in targeted investments. The good news for buyers is that the strategy is broad, flexible, and open. But, the downside is that the current landscape is fragmented and inconsistent across its different offerings; buyers do not today have a simple “cloud store” where they can go and download all of these different solutions with instant provisioning and pre-built integration. So, what should buyers expect?
The government of Singapore has released its 2014 budget, which includes S$500 million (US$400 million) to help drive economic changes at small and medium-size businesses (SMBs). This spending will focus on: