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Posts from the ‘APIs’ Category

How Cloud Computing Is Accelerating Context-Aware Coupons, Offers and Promotions

Retailers and marketers often face the challenge of getting coupons, offers and promotions delivered at the perfect time and in the right context to their customers.

The rapid advances in cyber foragingcontextual computing and cloud computing platforms are succeeding at revolutionizing this aspect of the retail shopping experience.  Context-aware advertising platforms and strategies can also provide precise audience and segment-based messaging directly to customers while they are in the store or retail outlet.

What makes context-aware advertising so unique and well adapted to the cloud is the real-time data integration and contextual intelligence they use for tailoring and transmitting offers to customers.  When a customer opts in to retailer’s contextually-based advertising system, they are periodically sent alerts, coupons, and offers on products of interest once they are in or near the store.  Real-time offer engines chose which alerts, coupons or offers to send, when, and in which context.  Cloud-based analytics and predictive modeling applications will be used for further fine-tuning of alerts, coupons and offers as well.  The ROI of each campaign, even to a very specific audience, will be measurable.  Companies investing in cloud-based contextual advertising systems include Apple, Google, Greystripe, Jumptap, Microsoft, Millennial Media, Velti and Yahoo.

Exploring the Framework of Me Marketing and Context-Aware Offers

A few years ago, a student in one of my MBA courses in international marketing did their dissertation on cyber foraging and contextual mobile applications’ potential use for streamlining business travel throughout Europe.  As a network engineer for Cisco at the time, he viewed the world very systemically; instead of getting frustrated with long waits he would dissect the problem and look at the challenges from a system-centric view.  The result was a great dissertation on cyber foraging and the potential use of Near Field Communications (NFC) and Radio Frequency Identification (RFID) as sensors to define contextual location and make business travel easier.  One of the greatest benefits of teaching, even part-time, is the opportunity to learn so much from students.

I’ve been following this area since, and when Gartner published Me Marketing: Get Ready for the Promise of Real-Time, Context-Aware Offers in Consumer Goods this month I immediately read it.  Gartner is defining Me Marketing as real-time, context-aware offers in grocery stores. Given the abundance of data on transactions that occur in grocery stores, Gartner is predicting this will be the most popular and fastest-growing area of context-aware offers.  The formula for Me Marketing is shown below:

The four steps of the Me Marketing formula are briefly described as follows:

Me marketing framework for contextual coupons

 

  • Consumer Insight and Permission – The first step of the framework and the most difficult from a change management standpoint, this requires customers to opt in to receiving alerts, coupons, offers and promotions.  The best retailers also have invested heavily in security and authentication technologies here too.
  • Delivery Mechanism and In-the-Moment Context – The real-time offer engine is used to determining which coupons, offers and promotions are best suited for a specific customer based on their shopping patterns, preferences and locations.
  • Select Best Offer – Next, the real-time offer engine next defines a very specific product or service offer based on location, previous purchase history, social media analysis, predictive and behavioral analysis, and previous learned patterns of purchasing.
  • Redemption – The purchase of the item offered.  Initial pilots have shown that less frequent yet highly relevant, targeted offers have a higher redemption rate.  It is encouraging to see that early tests of these systems show that spamming customers leads to immediate opt-outs and in some cases shopping competitors.

A Short Overview of Contextual Advertising and the Cloud

Cloud-based systems and applications are necessary for retailers to gain the full value that contextual advertising can provide.  This includes the social context, with specific focus on aggregation and analysis of Social CRM, CRM, and social media content, in addition to behavioral analytics and sentiment analysis.  It also includes the previous browsing, purchasing, returns and prices paid by product for each customer.  Cloud-based integration architectures are necessary for making contextual advertising a reality in several hundred or even thousands of retail stores at the same time.

Geographical data and analysis is also essential.  RFID has often been included in cyber foraging and contextual advertising pilots, in addition to NFC.  As Global Positioning System (GPS) chip sets have dropped in price and become more accurate, companies including Google, Microsoft and Yahoo are basing their contextual advertising platforms on them.  Finally the activity or task also needs to have a contextual definition.

Combining all three of these elements gives the context of the customer in the retail store.  The figure below is from Three-Dimensional Context-Aware Tailoring of Information.  This study also took into account how personas are used by companies building cloud-based contextual advertising systems.  The taxonomies shown in the figure are used for building personas of customers.

context aware technology

There are many pilot projects and enterprise-wide system tests going on right now in the area of cloud-based contextual advertising.  One of the more interesting is an application suite created entirely on Google App Engine, Android, and Cloud Services.  The pilot is explained in the study Exploring Solutions for Mobile Companionship: A Design Research Approach to Context-Aware Management.  The following figure shows a diagram of the suite.  This pilot uses Cloud to Device Messaging (C2DM) which is part of the Android API to link the Google App Engine server and Android client.  Google will most likely add more depth of support for C2DM as it plays a critical role in contextual system development.

context aware Google Ad Platform

Benefits of a Cloud-based Contextual Advertising Platform

For the customer, cloud-based advertising systems over time will learn their preferences and eventually impact the demand planning and forecasting systems of retailers.  This translates into the customer-centric benefits of products being out of stock less.  In addition, customers will receive more relevant offers.  The entire shopping experience will be more pleasant with expectations being met more often.

For the retailer, better management of product categories and more effective gross margin growth will be possible. Having real-time analytics of each coupon, offer and promotion will also give them immediate insights into which of their selling strategies are working or not.

For the manufacturer, the opportunity to finally understand how customers respond at the store level to promotions, programs including the results of co-op funds investment and pricing strategies will be known.  The manufacturers who partner with retailers using these systems will also have the chance at attaining greater product differentiation as their coupons, offers and promotions will only go to the most relevant customers.

References:

Me Marketing: Get Ready for the Promise of Real-Time, Context-Aware Offers in Consumer Goods Published: 24 December 2012 Analyst(s): Don Scheibenreif, Dale Hagemeyer

Tor-Morten Grønli, Ghinea, G., & Bygstad, B. (2013). Exploring Solutions for Mobile Companionship: A Design Research Approach to Context-Aware Management. International Journal of Information Management, 33(1), 227. http://www.sciencedirect.com/science/article/pii/S0268401212001259

Tor-Morten Grønli, & Ghinea, G. (2010). Three-Dimensional Context-Aware Tailoring of Information. Online Information Review, 34(6), 892-906. http://www.emeraldinsight.com/journals.htm?articleid=1896452

Roundup of CRM Forecasts and Market Estimates, 2012

CShowing signs of growth through 2013 and beyond, the latest round of CRM forecasts illustrate how quickly behavioral and predictive analytics, greater usability, integration with social media and mobility are transforming this market.

Even with the most usable, easily learned CRM systems, enterprises at times struggle with adoption rates however.  That problem has venture capitalists very interested in finding the next Salesforce.com, which a few have told me will look more like Facebook than a traditional CRM application.

Facebook’s future is going to be defined by how well they manage their migration to mobility, and the same holds true for CRM.  Today there are 110 CRM applications in the Apple App Store and 47 in the Android App Store.  Gartner predicts an exceptional growth rate of 500% by 2014 for mobile CRM.  For CRM vendors to get there from here, they need to make usability and streamlined user experience a high priority.

Key take-aways from the latest CRM forecasts and market estimates are provided below:

  • According to Gartner, Salesforce.com’s worldwide CRM market share was 16.7% in 2011, second only to SAP.  Gartner is predicting Salesforce.com will be the leading CRM vendor worldwide by 2013.
  • SAP continues to be the worldwide leader in CRM software sales, with Salesforce.com ascending to second place according to the latest available data. Oracle was displaced by Salesforce.com in 2011, a trend Gartner and independent analysts have predicted will accelerate through 2013.  The latest market share analysis of the CRM worldwide market is shown below from the latest available report on market share.  Source: Predicts 2013: CRM Goes More Cloud, Becomes an App, Has a New Leader and Changes Name.  The following table provides the most recent CRM worldwide market share analysis from Gartner.

Table A Market Share Analysis

  • The role of CMOs relative to CIOs are changing with respect to who is responsible for defining the needs of an enterprise in the areas of CRM, pricing and channel management strategies.  Gartner did a survey on this earlier in the year and found that 72% of the companies have a Chief Marketing Technologist, growing to 87% by 2014.  A slide showing how the differences in marketing-led versus IT-led is shown below.  You can download the entire slide deck from this location for no charge:  High-Tech Tuesday Webinar:  Profile of Marketing as a Technology Buyer.

responsibility in buying cycle for CRM

  • The much-hyped area of social CRM will attain $1B in worldwide sales by the end of 2012, achieving 8% of all CRM spending this year, as Gartner has predicted often this year.  Gartner sees the revenue breakout of this market as follows: Bazaarvoice generating $130M; Salesforce (BuddyMedia, Radian6, Chatter, Jigsaw), $120M; Oracle (Vitrue, Collective Intellect, RightNow and Involver), approximately $45M; Lithium, $45M; Jive, $40M and the revenues of approximately 250 smaller vendors with revenues of less than $2M in 2012 comprising the remainder of the market size. Predicts 2013: CRM Goes More Cloud, Becomes an App, Has a New Leader and Changes Name.
  • Gartner, Forrester and IDC have predicted that cloud adoption rates by CRM subcategory will vary through 2016.  All agree Sales applications will see the majority of net new sales on the SaaS platform.  Of these research firms, Gartner has the most aggressive forecast of CRM SaaS adoption, projecting 50% of all CRM applications will be Web-based by 2016.  Gartner is also predicting 95% of Web analytics applications will be delivered via the Web by 2016, an uplift from the 40% of sales applications delivered via the cloud today.  Source: Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications
  • 30% of sales organizations will issue iPads and tablets as the primary device standard issue for salespeople by 2014. From a personal computing device standpoint, tablets will be the fastest-growing segment, with average annual spending growth of 25% through 2016.  Despite this rapid growth, Gartner predicts that by 2015, only 20% of organizations will have launched dedicated mobile applications for customer service use however.  Source: Gartner CRM Vendor Guide, 2013.
  • Gartner predicts that by 2014, public social media networks will be in use by 80% of sales professionals with only 2% adoption rate of social CRM applications in the same time period. Source: Predicts 2013: CRM Sales.
  • Marketing automation will lead CRM application segment growth with a 10.7% compound annual growth (CAGR) through 2016, reaching a total market value of $4.6B.  Sales will continue to be the majority of CRM software revenue reaching $7.9B in 2016.  The following table provides an overview of the CRM Worldwide Software Revenue Forecast from 2009 to 2016.  Source: Gartner CRM Vendor Guide, 2013.

CRM Software Revenue Forecast

  • Throughout 2013, Microsoft will quickly integrate Yammer throughout the entire Office Suite and demonstrate the value of using social graph databases to increase collaboration.  Many have questioned the decision by Microsoft to spend $1.2B for Yammer.  To see the full value of the acquisition, it’s necessary to get beyond SharePoint and look at the architectural elements of Office itself.  Like Facebook, Yammer relies on a social graph database.  For Microsoft, this architectural approach means they will move very quickly to the cloud in 2013, and also be forced to modify the Office architecture as well.  You can find a presentation from 2011 Yammer produced on their integration strategies at this link:  System of Engagement: Yammer Announces Activity Stream API, Open Graph for Enterprise and Yammer Embed

Social infrastructure services

Source: Microsoft’s Changing Social Software Strategy: Yammer, SharePoint and the Role of Cloud Services Within Office

  •  CRM projects lead by consultants and system integrators (SIs) were completed the majority of time for Oracle installations (26%) down from 35% in 2009.  11% of CRM projects completed by consultants and SIs were based on the SAP CRM application suite with 9% based on Microsoft Dynamics CRM.  Salesforce.com has continued to rise in this area, with 16% of all projects completed in 2012, up from 10% during 2009.  The most common projects were customer service and support at 82%; sales, 74%; customer data, 73%; and marketing, 44%.  Projects ranged in size from $500K to over $10M.  The following graphic shows the percentage of projects by large external service providers by year.

percentage of projects by large external service provider

Source: CRM Applications Deployed by Consultancies in 2012 Show Which Skills Are Prevalent

Gartner Releases Their Hype Cycle for Cloud Computing, 2012

Enterprises are beginning to change their buying behaviors based on the deployment speed, economics and customization that cloud-based technologies provide.  Gartner cautions however that enterprises are far from abandoning their on-premise models and applications entirely for the cloud.

Based on an analysis of the Gartner Hype Cycle for Cloud Computing, 2012, the best results are being attained by enterprises that focus on a very specific strategy and look to cloud-based technologies to accelerate their performance.  Leading with a strategic framework of goals and objectives increases the probability of cloud-based platform success. Those enterprises that look to cloud platforms only for cost reduction miss out on their full potential.

The Hype Cycle for Cloud Computing, 2012 is shown below:

Cloudwashing and Inflated Enterprise Expectations

While the hype surrounding cloud computing may have peaked, cloudwashing continues to cause confusion and inflated expectations with enterprise buyers.  This just slows down sales cycles, when more straightforward selling could lead to more pilots, sales and a potentially larger market. Cloud vendors who have the expertise gained from delivering cloud platforms on time, under budget, with customer references showing results are starting to overtake those that using cloudwashing as part of their selling strategies.

Additional take-aways from the Gartner Hype Cycle for Cloud Computing include the following:

  • Cloud Email is expected to have a 10% adoption rate in enterprises by 2014, down from the 20% Gartner had forecasted in previous Hype Cycles.  This represents modest growth as the adoption rate of this category had been between 5 and 6% in 2011.
  • Big Data will deliver transformational benefits to enterprises within 2 to 5 years, and by 2015 will enable enterprises adopting this technology to outperform competitors by 20% in every available financial metric.  Gartner defines Big Data as including large volumes processed in streams, in addition to batch.  Integral to Big Data is an extensible services framework that can deploy processing to the data or bring data to the process workflow itself. Gartner also includes more than one asset type of data in their definition, including structured and unstructured content.  The Priority Matrix for Cloud Computing, 2012 is shown below:

  • Master Data Management (MDM) Solutions in the Cloud and Hybrid IT are included in this hype cycle for the first time in 2012.  Gartner reports that MDM Solutions in the Cloud is getting additional interest from Enterprise buyers as part of a continual upward trend of interest in MDM overall.  Dominant vendors in this emerging area include Cognizant, Data Scout, IBM, Informatica, Oracle and Orchestra Networks, are among those with MDM-in-the-cloud solutions.
  • PaaS continues to be one of the most misunderstood aspects of cloud platforms.  The widening gap between enterprise expectations and experiences is most prevalent in this market.  Gartner claims this is attributable to the relatively narrow middleware functions delivered and the consolidation fo vendors and service providers in this market.
  • By 2014 the Personal Cloud will have replaced the personal computer as the center of user’s digital lives.
  • Private Cloud Computing is among the highest interest areas across all cloud computing according to Gartner, with 75% of respondents in Gartner polls saying they plan to pursue a strategy in this area by 2014.  Pilot and production deployments are in process across many different enterprises today, with one of the major goals being the evaluation of virtualization-driven value and benefits.
  • SaaS is rapidly gaining adoption in enterprises, leading Gartner to forecast more than 50% of enterprises will have some form of SaaS-based application strategy by 2015.  Factors driving this adoption are the high priority enterprises are putting on customer relationships, gaining greater insights through analytics, overcoming IT- and capital budget-based limitations, and aligning IT more efficiently to strategic goals.
  • More than 50% of all virtualization workloads are based on the x86 architecture. This is expected to increase to 75% by 2015.  Gartner reports this is a disruptive innovation which is changing the relationship between IT and enterprise where service levels and usage can be tracked.

Bottom line: Gartner’s latest Hype Cycle for Cloud Computing  shows that when cloud-based platforms are aligned with well-defined strategic initiatives and line-of-business objectives, they deliver valuable contributions to an enterprise.  It also shows how Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) are the catalysts of long-term market growth.  The following slide from the presentation  High-Tech Tuesday Webinar: Gartner Worldwide IT Spending Forecast, 2Q12 Update: Cloud Is the Silver Lining (free for download) also makes this point.

Gartner Hype Cycle for CRM Sales, 2012: Sales Turns to the Cloud for Quick Relief

Sales VPs for years have been test-driving SaaS-based CRM systems, piloting them with sales teams to see if using them leads to higher sales and greater customer retention.  Marketing VPs and Chief Marketing Officers (CMOs) also continue to pilot SaaS-based web analytics and marketing automation applications.

What’s been missing from these pilots is the ability to bring CRM, marketing automation, sales management and web analytics systems into existing enterprise IT architectures just as fast.  This is changing quickly.  CRM vendors have been quick to respond to the challenge, offering Application Programmer Interfaces (APIs), integration adapters, connectors and from larger vendors, integrated bus architectures.

What the Hype Cycle for CRM Sales, 2012 Means

CRM’s real value is in unifying an entire enterprise based on its ability to sell, serve and retain customers better than before. Gartner shows this is a high priority for its CRM clients by underscoring which technology and application areas of the hype cycle are responding to his market dynamic, and which aren’t.

This Hype Cycle also reflects the urgency I hear from Sales VPs who want to get in control of the complex compensation, quota, territory management, job appraisal and sales coaching responsibilities they have.  While each of these areas is essential, many companies, even those in enterprise software, have ignored these areas, allowing them to stay manually based. Gartner calls this area Sales Performance Management (SPM) and shows it has the highest benefit of all SaaS-based sales management applications in the next two years. Gartner’s analysis captures the time shortage that Sales VPs I know are facing; they have to get to high quota levels while also managing a diverse set of leadership responsibilities as well. The Hype Cycle for CRM Sales, 2012 (G00234919) is shown below:

 

  • Gartner estimates 35% of all CRM implementations today use SaaS, growing to over 50% by 2020 according to their projections. In 2011, more than $5 billion was invested in sales applications.
  • Cloud adoption varies significantly across CRM software categories with Web analytics achieving 95% adoption, Sales Force Automation achieving just over 50%, and Configure Price Quote (CPQ) achieving 40%.  Cloud-based Sales Performance Management has the highest compound annual growth rate (CAGR) of any CRM category according to inquiry and client calls.
  • Sales, Customer Service, Social CRM and Marketing are the four fastest-growing areas of enterprise Sales applications on SaaS.  Campaign Management is increasingly quickly, up from 19% using SaaS in 2010 to 29% in 2011.
  • Gartner sees significant growth in Configure Price Quote (CPQ), projecting a market of $300M in 2012, up from $240M in 2011.  Gartner is due out with a MarketScope on CPQ shortly, where the 15 major vendors it tracks in this area will be ranked.  40% of existing implementations are on SaaS, and that proportion is increasing relative to licensed versions.  Of the 15 vendors in this market, 12 have announced SaaS-based versions of their applications.
  • There are 3.8M Sales Force Automation SaaS users globally today.
  • By 2017, 25% of companies adopting CRM will have extended their customer service contact centers to include social media including Facebook, Twitter and other emerging online communities.  As of 2012, Gartner is seeing only 1% of companies integrate social media into their companies’ departments and workflows to ensure a consistent customer experience.
  • Price Optimization will experience transformational growth in two to five years. Gartner sees this area as one of the most promising across all CRM Sales as can be seen in the Priority Matrix for CRM Sales 2012 below from the Hype Cycle for CRM Sales, 2012.  The research firm has defined this market as including price analysis, price optimization and price execution.  Gartner estimates this market was $180M to $190M in 2010.  Vendor competing in this market include Accenture, Deloitte, Pros, Vendavo, Vistaar Technologies and Zilliant.

  • Social CRM (SCRM) for Sales is at the Peak of Inflated Expectations, with 90% of spending for these applications being generated from B2C companies.  Gartner expects B2B companies to lead the growth of these applications through 2015, increasing spending from 5% of total SCRM sales in 2011 to 30% by 2015.
  • SaaS-based CRM sales within enterprises are expected to reach $4.48B in 2012, growing to $6.3B in 2015.  The following table from the report Forecast: Software as a Service, Worldwide 2010-2015, 2H11 Update provides a frame of reference for SaaS-based CRM growth overall.

  • Salesforce leads all CRM vendors in market share growth, advancing 2.8% from 2010 to 2011 according to Gartner’s’ global market share analysis shown below. Salesforce attained 26.9% revenue growth from 2010 to 2011 ($1.3B to $1.6B) and 36.7% growth from 2011 to 2012 ($1.6B to $2.27B).  The future momentum of Salesforce is in unifying the enterprise, redefining corporate IT in the context of the customer. Their recent acquisitions show analytics, marketing automation and development platforms are key priorities.  The following table is from the report Market Share Snapshot: CRM Software, 2011 (G00233998).

Bottom line:  Making CRM strategies successful has to start with a common vision and urgency for results.  Both are happening quicker in CRM than ever before, driven by a much clearer understanding of what enterprises need and an impatience for results.

Enterprise Software as a Service Market Forecast: The Future is Already Here – It’s Just Not Evenly Distributed

The prescient quote by William Gibson aptly describes the worldwide Software as a Service (SaaS) market today, especially in the enterprise.

Global adoption and growth of SaaS within enterprises is unevenly distributed yet growing rapidly.  One of the primary catalysts moving this forward are Amazon Web Services, Google, Microsoft, Salesforce and other platform providers lowering the barriers to creating new applications, continually investing in security technologies, and streamlining rapid prototyping, testing, and release of SaaS applications.

This week Salesforce showed how extensive the momentum is in their global base of developers during Dreamforce ’11.  The Developer Zone had the most innovation per square foot of any venue at this conference.  Insights gained from visiting the sessions at Dreamforce, speaking with Force evangelists and tech staff, and also with attendees form the basis of the following analysis and insights.  On Friday of last week Gartner also released the report, Forecast: Software as a Service, All Regions, 2010-2015 by Sharon A. Mertz, Chad Eschinger, Tom Eid, Yanna Dharmasthira, Chris Pang, Laurie F. Wurster, Tsuyoshi Ebina, Hai Hong Swinehart, which validated several of the trends seen in the Developer Zone at Dreamforce ’11.

Forecasting the Growth of SaaS in the Enterprise, 2015

In speaking with developers, vendors and after reviewing the Gartner report, here are several insights gained that illustrate how SaaS adoption will vary by region over the next four years:

  • APIs are getting more adept at managing multi-party transactions across all platforms.  Marc Benioff and Chuck Phillips alluded to this when Infor announced Inforce this week at Dreamforce.  It was also evident in how partners in the Developer Zone were demonstrating frameworks for supporting more advanced enterprise software application development.  These included supply chain management, the ability to manage complex project plans more effectively using apps based on these APIs, and greater control over collaboration development.  Gartner published their total software revenue forecast for SaaS delivery, 2007 – 2015 back in June, and a table from that analysis is shown below.  Their forecast reflects in large part depth of REST APIs which are part of Web Services.   This table is from the report, Forecast: Software as a Service, Worldwide, 2010-2015, 1H11 Update, 22 June 2011, ID:G00213816, Sharon A. Mertz, Chad Eschinger, Tom Eid, Chris Pang, Laurie F. Wurster.
  • Graphical interface flexibility, usability options, localization, and local language support dominate EMEA concerns about SaaS.  In Dreamforce sessions attended and in the Gartner report, it’s clear Salesforce is struggling to make localization work more effectively via their programming platforms and tools in EMEA.  This came out during many of the discussions in the Developer Zone as well.  All platform providers are facing this challenge, yet the pace of new API enhancements shows significant potential.  As a result the forecast for SaaS revenue in Western Europe is forecasted to be $2.66B in 2011 growing to $4.8B in 2015, achieving a compound annual growth rate (CAGR) of 17% according to Gartner.
  • Total Cost of Ownership (TCO) is aggressively pushed by Salesforce in the U.S. yet is most effective in EMEA.  This became evident in discussions and presentations, and also was validated by the recent Gartner report.  Salesforce also has extensive TCO calculators on its Force developer sites for the U.S. yet ironically they are finding they are most effective in EMEA sales cycles.
  • Based on my informal poll 20% of iPad-to-Salesforce account demos failed at Dreamforce.    Dozens of companies were hyping their iPad clients at Dreamforce, yet I found nearly one in five failed to deliver reliable performance. While the sample is hardly scientific, it does show that the iPad to Salesforce integration so heavily hyped by so many vendors is still nascent.  It’s as if these companies invested so much on iPad clients they ran out of time to make the back-end integrations work reliably.  Gartner found that lack of integration is the single greatest inhibitor to SaaS growth in North America.
  • Ease of speed and deployment, limited capital expense, and lower TCO are the most critical factors driving SaaS growth in U.S. enterprises today.  This became evident from listening to customer testimonials during the many vendor sessions in Moscone West, in addition to discussions with developers.  The impact of these factors is also evident in the total software revenue forecast for SaaS delivery within enterprise application software markets by region, 2008 – 2015.   This is from the Gartner report, Forecast: Software as a Service, All Regions, 2010-2015. Sharon A. Mertz, Chad Eschinger, Tom Eid, Yanna Dharmasthira, Chris Pang, Laurie F. Wurster, Tsuyoshi Ebina, Hai Hong Swinehart.

  • CRM continues to dominate SaaS usage across all enterprise applications, closely followed by Web conferencing and e-learning in North America and Northern Europe.  Both North America and Northern Europe have comparable adoption trends regarding these SaaS applications, with Western and Southern Europe lagging in terms of adoption and spending.
  • Asia/Pacific continues to be the most fragmented of all regions when it comes to SaaS adoption in the enterprise.  Countries with greater stability of their Internet infrastructures including Australia, Hong Kong, Singapore and South Korea are experiencing greater SaaS growth, and also contributing to Salesforce’s success in these regions.  Salesforce has 14.5% CRM share in this region, third behind SAP and Oracle. Emerging countries are the most rapid adopters of SaaS-based accounting, e-mail and collaboration-based apps.
  • China, India and Malaysia are experiencing the most rapid adoption of SaaS-based enterprise applications in the Asia/Pacific region.  WiPro’s decision to invest so heavily in Dreamforce as a promotional event is a case in point.  The Developer Zone had  several companies from this region offering their programming and system integration services as well.

Bottom line: SaaS adoption continues to accelerate globally across enterprise software, growing from $12B in 2011 to $21B in 2015, achieving a 16.3% CAGR annually. Platform providers are knocking down the barriers to market growth by using events including Dreamforce to educate, entertain and enable developers to quickly turn concepts into applications.

Gartner Releases Their Hype Cycle for Cloud Computing, 2011

Calling the hype around cloud computing “deafening”, Gartner released their annual hype cycle for the 34 different technologies in a 75 page analysis today.  You can find the Hype Cycle at the end of this post and I’ve provided several of the take-aways below:

  • The industry is just beyond the Peak of Inflated Expectations, and headed for the Trough of Disillusionment. The further up the Technology Trigger and Peak of Inflated Expectations curve, the greater the chaotic nature of how technologies are being positioned with widespread confusion throughout markets. The team of analysts who wrote this at Gartner share that conclusion across the many segments of the Hype Cycle.
  • Gartner states that nearly every vendor who briefs them has a cloud computing strategy yet few have shown how their strategies are cloud-centric. Cloudwashing on the part of vendors across all 34 technology areas is accelerating the entire industry into the trough of disillusionment. The report cites the Amazon Web Services outage in April, 2011 as a turning point on the hype cycle for example.
  • Gartner predicts that the most transformational technologies included in the Hype Cycle will be the following: virtualization within two years; Big Data, Cloud Advertising, Cloud Computing, Platform-as-a-Service (PaaS), and Public Cloud computing between two and five years; and Community Cloud, DevOps, Hybrid Cloud Computing and Real-time Infrastructure in five to ten years.
  • There continues to be much confusion with clients relative to hybrid computing.  Gartner’s definition is as follows ”Hybrid cloud computing refers to the combination of external public cloud computing services and internal resources (either a private cloud or traditional infrastructure, operations and applications) in a coordinated fashion to assemble a particular solution”. They provide examples of joint security and management, workload/service placement and runtime optimization, and others to further illustrate the complex nature of hybrid computing.
  • Big Data is also an area of heavy client inquiry activity that Gartner interprets as massive hype in the market. They are predicting that Big Data will reach the apex of the Peak of Inflated Expectations by 2012.  Due to the massive amount of hype surrounding this technology, they predict it will be in the Trough of Disillusionment eventually, as enterprises struggle to get the results they expect.
  • By 2015, those companies who have adopted Big Data and extreme information management (their term for this area) will begin to outperform their unprepared competitors by 20% in every available financial metric. Early use cases of Big Data are delivering measurable results and strong ROI.  The Hype Cycle did not provide any ROI figures however, which would have been interesting to see.
  • PaaS is one of the most highly hyped terms Gartner encounters on client calls, one of the most misunderstood as well, leading to a chaotic market. Gartner does not expect comprehensive PaaS offerings to be part of the mainstream market until 2015.  The point is made that there is much confusion in the market over just what PaaS is and its role in the infrastructure stack.
  • SaaS performs best for relatively simple tasks in IT-constrained organizations. Gartner warns that the initial two years may be low cost for any SaaS-based application, yet could over time be even more expensive than on-premise software.
  • Gartner estimates there are at least 3M Sales Force Automation SaaS users globally today.

Bottom line: The greater the hype, the more the analyst inquiries, and the faster a given technology ascends to the Peak of Inflated Expectations. After reading this analysis it becomes clear that vendors who strive to be accurate, precise, real and relevant are winning deals right now and transcending the hype cycle to close sales.  They may not being getting a lot of attention, but they are selling more because enterprises clearly understand their value.

Source: Gartner, Hype Cycle for Cloud Computing, 2011 David Mitchell Smith Publication Date: 27 July 2011 ID Number: G00214915 © 2011

Open APIs – State of the Market 2011

John Musser of ProgrammableWeb.com presented the following results of his latest research on API development and adoption trends at the Glue Conference, 2011 held May 25th and 26th, 2011 in Broomfield, Colorado.  The following presentation has many excellent insights and analysis regarding the direction of API development.

 
Here are a few of the take-aways from the presentation:

  • Fifteen of the most popular segments of the software market now have over 100 APIs available in each, with Internet (252) and Social (225) applications and platforms leading all categories.
  • REST-based protocols are now dominating all API protocols and styles, and are projected to continue their growth into 2012.
  • As of 2011, 55% of all APIs support JSON and 20% are entirely JSON-based.
  • Proliferation of business models based on APIs over applications, with Amazon Web Services, Retailigence, Twilio and others mentioned 
     
     

Building a High Performance Cluster with Amazon Web Services

Amazon Web Services has released the following video that provides a fascinating look at how straightforward it is to create, launch and monitor high performance cluster instances.

CPU utilization, disk I/O and network utilization are tracked as part of the metrics, and guidance on how to define hardware virtualization (HVM) is also defined.   Creating an 8-node, 64 core, ad hoc cluster is defined in the steps in this video with the intent of running a molecular dynamics simulation.

What is interesting about this video is how Amazon Web Services continues to show the practicality of its broad spectrum of server capacities on the Elastic Compute Cloud (EC2).   This is the first in a series of videos Amazon Web Services will be releasing on creating high performance clusters.  It’s worth checking out as the walk-through of steps shows how rapidly EC2 is maturing as an enterprise platform.

Implications for the Enterprise

EC2 has language-agnostic Web Services APIs that show potential for integrating legacy systems, databases, master data management (MDM), CRM and enterprise systems.  For enterprises that have data-centric operations and business models, EC2 could become the foundation of contextual search and role-based access of their legacy data.  Decades of data accessed via contextual search would provide insights that aren’t possible today using existing methods of data access, integration and analysis.

Bottom line: Creating high performance clusters in AWS EC2 shows potential to increase the accuracy and precision of business intelligence and analytics, and potentially solve the most complex data-driven challenges of social CRM.

Flickr attribution: http://www.flickr.com/photos/vitroids/2586785504/

Using App Inventor for Android To Create Web-based Applications and APIs

O’Reilly Media recently produced the following video, which provides an excellent tour of App Inventor for Android.

Hosting the video are Dr. David Wolber and Courtney Nash.  Dr. David Wolber is the Department Chair of Computer Science at the University of San Francisco and Courtney Nash is Head First Editor at O’Reilly Media.  Together they provide an overview of how quickly Web-based applications can be created and used.

What’s noteworthy about this introduction to App Inventor is the ease of variable definition, data integration to Amazon.com, and the option of defining APIs during application development.  This video and others in the series are worth checking out as they show how quickly programming applications and platforms are progressing in the area of cloud-based data integration.

Salesforce.com’s Trojan Horse API Strategy

DreamForce 2010 had energy, intensity and focus that is rarely seen in enterprise software events.  There are many excellent summaries of the event with Michael Krisgman’s The new age of sexy enterprise software – Part 1: Salesforce.com gets mojo being one of the best.

The bottom line is that Salesforce.com is redefining enterprise software – not just at the marketing or user level – but at the developer level as well.
2010: The Year of the Trojan Horse

At the center of this year’s DreamForce is the transformation of Salesforce.com into an enterprise platform provider, an endorser of open APIs including REST (Representational State Transfer), which the Salesforce.com development community had been asking for over a year.  As the Google Trend graphic shows, the timing of a REST-based Salesforce.com API couldn’t’ have been better, it is now leading other APIs in terms of interest in trending data and adoption. Please click on the Google Trends graphic to enlarge for easier viewing.

Like the REST announcement, the timing of the Heroku acquisition last week shows how committed Salesforce.com is to creating a world-class development platform.  Having Ruby on Rails as part of the development suite of applications further accelerates this strategy of dominating development platforms.  The VMWare alliance does the same for Java.

There’s also urgency for getting as many developers onto Salesforce.com platforms, you can sense that in the presentations from the VPs of Development and from Marc Benioff as well.  The quicker they can reach critical mass with developers on the Force.com platform the quicker they can move on to entirely new application areas.  Chris Brogan would call it escape velocity and in the world of Salesforce.com, it looks a lot like a Trojan horse strategy of having as many applications in the enterprise on their platform as quickly as possible.

In the coming months, there will be more API-based announcements, more of an endorsement of open APIs.  JSON APIs for example will become increasingly important in this strategy.  Salesforce.com is out to win the stack war with a developer and API-driven land grab.  CloudStock showed this company knows how to excel at evangelism.  Time will tell if the Trojan horse strategy, now in full force, succeeds.

Note: The following is an excellent presentation on open APIs presented last week at CloudStock by John Musser.  The analysis of Open API trending and analysis is worth reading, Salesforce.com must be studying these statistics given the strategy directions they are choosing.

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