During the past few months, telecom service providers including AT&T, Sprint and Verizon have highlighted their roadmaps and deployment plans for 4G network technologies. These 4G technologies include Long-Term Evolution (LTE) and WiMax networks. Enterprises in North America and Europe are in the early stages of 4G network adoption based on results from Forrester’s SMB and Enterprise Networks and Telecommunication survey. Approximately 4% of surveyed enterprises currently implement or are expanding their implementation of fixed or mobile WiMax networks, and 3% of firms are implementing or expanding their implementation of LTE networks. These implementation percentages are expected to increase as the service providers pursue their 4G deployment initiatives.
I am starting to see signs of important changes in technology and IT organizations. The increased complexity of IT and business services forces the industry down a new path. In this context, there are signs reminiscent of what happened to the mainframe vendors in the late 80s and early 90s, when the transition from proprietary to open systems was usually not very successful. In fact, the major players of today (with the exception of IBM) were small potatoes in the 80s, while the major players of that time are either gone or dying. And some vendors today seem to be following the same recipe for eventual disaster.
What’s happening, in the case of a major change of market direction in a company with revenue based on old technology, is what I would call a “sales force failure.” This is the inability of the sales force to get out of its base of usual customers and compete head to head with new vendors in the new market.
Usually these organizations are technically capable of building up-to-date products, but the sales results often don’t meet expectations. Since the new product created internally does not sell, the company management may be tempted to fix the problem (i.e., satisfy the shareholders in the short term) by cutting the cost center, that is the engineering organization making this new product. With R&D gone, the marketing group may license another product to replace the one that it killed. Of course, the margins are not the same, but the cost is almost nonexistent. Eventually, this product does not sell either (the sales force is still in the same condition), and, when the old legacy products are finally dead, the company is no more than a value-added reseller.
One of the great revolutions in manufacturing of the past decades is just-in-time inventory management. The basic idea is to provision only what is needed for a certain level of operation and to put in place a number of management functions that will trigger the provisioning of inventory. This is one the key elements that allowed the manufacturing of goods to contain production costs. We have been trying to adapt the concept to IT for years with little success. But a combination of the latest technologies is finally bringing the concept to a working level. IT operations often faces unpredictable workloads or large variations of workloads during peak periods. Typically, the solution is to over-provision infrastructure capacity and use a number of potential corrective measures: load balancing, traffic shaping, fast reconfiguration and provisioning of servers, etc.
While it may have taken humans thousands of years to progress from oral to written to audio and then to video communications, in the past five years, the Internet has accelerated at a breakneck pace through all of these different communication transmission stages. It started as a way to post and communicate text and still pictures, then moved to digital voice and music, and then took a giant step to video delivery, bringing you news, sports, movies, whenever and wherever you wanted to view them. The Internet is now the prime platform for distributing video content, effectively replacing your video store and your cable or broadcast distribution.
Among critical industrial processes, IT is probably the only one where control and management come as an afterthought. Blame it on product vendors or on immature clients, but it seems that IT management always takes a second seat to application functionalities.
IT operation is seen as a purely tactical activity, but this should not occult the need for a management strategy. Acquiring products on a whim and hastily putting together an ad hoc process to use them is a recipe for chaos. When infrastructure management, which is supposed to bring order and control in IT, leads the way to anarchy, a meltdown is a forgone conclusion.
Most infrastructure management products present a high level of usefulness and innovation. One should be, however, conscious of the vendor’s limitations. Vendors spend a lot of time talking about the mythical customer needs, while most of them have no experience of IT operations. Consequently, their horizon is limited to the technology they have, and that tree does hide the forest. Clients should carefully select products for the role they play in the overall infrastructure management strategy, not solely on the basis of immediate relief. As the world of IT Operations is becoming more complex every day, the value of an IT management product lies not only with its capability to resolve an immediate issue, but also in its ability to participate future management solutions. The tactical and strategic constraints should not be mutually exclusive.
Each year, Forrester analysts field over 20,000 inquiries on a variety of topics, which provide insight into the key issues and challenges facing our clients in a variety of roles, including CIOs, enterprise architects, vendor strategists, and marketing professionals. Forrester defines enterprise mobility as the ability of an enterprise to communicate with suppliers, partners, employees, assets, and customers irrespective of location. During 2009, analysts fielded nearly 700 inquiries related to enterprise mobility issues, jumping from 550+ inquiries in 2008 and 360+ inquiries in 2007. What are these inquiries asking about? The key focus of these inquiries is on mobile applications, mobile devices, and mobile employee segmentation.
Questions about mobile applications accounted for over 20% of all enterprise mobility inquiries in 2009. The majority of these application inquiries were focused on vertical applications, including fleet management solutions in the transportation industry that enable more efficient, real-time routing of vehicles. Today, email and calendaring mobile applications are mainstream in most enterprises, so many companies are broadening their mobile application initiatives to address the needs of particular types of line-of-business workers in their industry (e.g., retail, healthcare, transportation, financial services.) We expect continued growth in the number of mobile application inquiries during the coming year.
Enterprises are deploying a wide range of horizontal and vertical mobile applications. Results from Forrester’s 2010 Network and Telecom survey of IT decision makers at North America and European firms show that horizontal mobile applications such wireless email, have been implemented or are being implemented by 86% of firms, and calendaring and personal information management applications have been deployed by 68% of firms. The next wave of mobile application deployment is focused on meeting the needs of line of business (LOB) workers such as sales force and field service professionals, or industry-specific requirements such as inventory management applications in retail, or location-based applications in the transportation arena. Survey data shows a persistent level of application implementation and planned deployment among 14% – 19% of enterprises for mobile sales force, field service and emergency response applications. We expect this mobile LOB application deployment to gain momentum in 2010.
The methods enterprises use to acquire and develop these mobile applications vary widely. Homegrown or in-house mobile application development is commonly used by 40% of North American and European enterprises. Approximately 30% of all enterprise organizations use a local, regional, or national external developer for mobile application development requirements. North American enterprises are significantly more likely to purchase mobile applications from a mobile service provider portal site or from a mobile application store. Between 24% and 29% of North American enterprises use these two types of mobile application development approaches, compared with only 11% to 15% of European firms.
On Monday, June 7th, AT&T will introduce two new smartphone data plans, which will replace the current $30/month unlimited data plan offer and will make smartphone data packages affordable to more customers. The DataPlus package does, indeed, lower the entry-level price for smartphone users. The DataPlus package costs $15 per month for 200 megabytes of data, with the option of purchasing an additional 200 megabytes of data for $15. Customers who are heavy data users can purchase the DataPro plan, which is a 2-gigabyte package for $25 per month. If customers go over this limit, an additional gigabyte of data costs $10. DataPro customers can also use their mobile devices as wireless modems to connect other devices (e.g., laptops) to the network for an additional $20 per month.
The net-net of these new packages is that customers using the DataPlus plan get a voice and data plan for $55 per month and customers on the DataPro plan pay $65 per month, compared with the current price of $70 per month. These price cuts will benefit the increasing number of employees who are responsible for paying for their own voice and data plans. Results from Forrester’s 2010 Enterprise And SMB Networks And Telecommunications Survey show that approximately 30% of over 1,000 surveyed enterprises have already cut the number of employees who qualify for corporate-liable mobile data and voice services, and 17% plan to cut the number of employees on corporate-liable voice and data services this year.
The choice between different formats of cloud computing (IaaS, SaaS mostly) and their comparison to internal IT business service deployment must be based on objective criteria. But this is mostly uncharted territory in IT. Many organizations have difficulties implementing a realistic chargeback solution, and the real cost of business services is often an elusive target. We all agree that IT needs a better form of financial management, even though 80% of organizations will consider it primarily as a means for understanding where to cut costs rather than a strategy to drive a better IT organization.
Financial management will help IT understand better its cost structure in all dimensions, but this is not enough to make an informed choice between a business service internal or external deployment. I think that the problem of which deployment model to choose from requires a new methodology that will get data from financial management. As I often do, I turned to manufacturing to see how they deal with this type of analysis and cost optimization. The starting point is of course an architectural model of the “product”, and this effectively shows how valuable these models are in IT. The two types of analysis, FAST (Function Analysis System Technique) and QFD (Quality Function Deployment), combine into a “Value Analysis Matrix” that lists the customer requirements against the way these requirements are answered by the “product” (or business service) components. Each of these components has a weight (derived from its correlation with the customer requirements) and a cost associated to it. Analyzing several models (for example a SaaS model against an internal deployment) would lead to not only an informed decision but also would open the door to an optimization of the service cost.
I think that such a methodology would complement a financial management product and help IT become more efficient.
Earlier this week SAP acquired Sybase for $5.8 billion. Blogs from my colleagues Stefan Ried and Holger Kisker primarily address the database and business analytics components of the acquisition. However, it is important to recognize how prominently SAP emphasized Sybase’s success as a mobile middleware platform and solution provider as a key driver of the acquisition. SAP highlighted the importance of extending mobile applications to billions of mobile users worldwide over any device as a strategic imperative. Forrester’s 2010 survey of IT decision makers in nearly 2,000 North American and European enterprises highlights the critical role of mobile applications and smartphone devices in corporate strategic initiatives. When it comes to mobile applications, 45% of enterprises prioritize supporting more mobile applications for out of office users as a critical or high priority in the coming year, and 33% state that supporting more mobile applications for employees who work in the office is an important or critical priority. In addition, supporting the use of more smartphones is an important or critical priority for 44% of enterprises.
The Sybase acquisition will enable SAP to deliver mobile applications to the growing number of individuals using mobile devices and smartphones. Sybase has a suite of mobile solutions including the Sybase Unwired Platform, a mobile client development platform which supports device platforms including RIM, Google Android, and Apple iPhone. The Sybase 365 mobile messaging platform supports messages for over 700 enterprise customers, including many leading communication service providers. Mobile assets account for about one third of Sybase’s $1.2 billion revenues, and are the fastest growing segment of the business.