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Posts from the ‘Cloud Computing’ Category

Apr 21

What’s Hot in CRM Applications, 2012

Serving the sales force is a mantra and mindset that resonates through the best companies I’ve ever worked with and for.

That priority alone can help galvanize companies who are adrift in multiple, conflicting agendas, strategies and projects.  Uniting around that goal – serving sales and getting them what they need to excel – can turn around even the most downtrodden companies.  And size doesn’t matter, the intensity of focus and commitment to excel  do.

That’s why the latest report from Gartner’s Ed Thompson, What’s “Hot” in CRM Application 2012, published last Thursday resonates with me.  He’s talking about how sales strategies need to be propelled by rapid advances in mobile technology, social CRM, sales content and collaboration, and clienteling to serve the sales force more thoroughly than ever before.  His assessment of what’s hot in CRM is a great foundation for getting behind the mantra of serving the sales force and engraining it into a corporate culture while getting full value from the latest technologies.

Here are the key take-aways from the report:

  • Software-as-a-Service (SaaS) delivery of CRM applications represented 34% of worldwide CRM application spending in 2011.  More than 50% of all Sales Force Automation (SFA) spending is on the SaaS platform.  Gartner clients who are successfully running SaaS are now looking at how to get value from Platform-as-a-Service (PaaS) in the context of selling strategies.
  • CRM spending grew 13% in 2011, fueled analytical, operational and social CRM growth.  Operational CRM represents 80% of all CRM spending and grew 10% in 2011.
  • Analytical CRM, in which Gartner includes predictive analytics and market segmentation analysis, grew a solid 10% in 2011 and is having a very strong year with inquiry traffic.
  • Social CRM grew 30% in 2011 in revenue terms and is 7% of total CRM spending globally as of 2011.   90% of Social CRM spending is originating in Business-to-Consumer (B2C) organizations with the remaining occurring in B2B.
  • Gartner is projecting that CRM will be one of the top three search terms on Gartner.com throughout calendar 2012 based on the trends and volume of calls they are seeing today.
  • CEOs see CRM as their #1 technology-enabled investment in 2012 according the query calls through April, 2012.
  • CRM is ascending rapidly in the priorities of CIOs in 2012, moving from 18th place to eight place  in the latest Gartner analysis.
  • The following table of Highest CRM Application Priorities, 2012 show what’s trending within Sales, Customer Service, E-Commerce and Marketing inquiries Gartner is receiving from its clients.  Consider these as leading indicators of interest.  Over time these areas will need to solidify for forecasts to be completed.
  • Apple iPads are the great maverick buy of 2012 with thousands being purchased by Sales and Marketing management with the immediate requirement of IT integration to these devices.   IT departments are scrambling on the security issues and lack of polices on BYOD.  In enterprise software, iPads are proving to be highly effective as demo platforms for new SaaS-based applications.  They have become the new sales bag of the 21rst century.
  •  High Tech, Life Sciences and Insurance are the three industries with the greatest levels of iPad adoption as of April 2012.  Gartner is predicting that by the end of 2012, 80% of all sales representatives in the pharmaceutical industry will be using iPads for their daily sales tasks.
  • Social or community customer service is the hottest area of growth for post-sales service with high-tech, media, travel, telecommunications, retail and education-based clients dominating client inquiries.

Apr 2

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Roundup of SaaS ERP Forecasts and Market Estimates, 2012

The latest round of SaaS ERP market forecasts are more grounded in the reality of CIO priorities and committed projects in 2012 than ever before.  And this is good news for the many vendors competing in the Financial Management Systems (FMS), Human Capital Management (HCM) and Manufacturing segments of the SaaS ERP market.

Two weeks ago in Houston I interviewed twenty-five different CIOs, IT Directors, CEOs and CTOs as part of a persona research study I am doing.  Their take on SaaS ERP was consistent with what this round-up shows, namely this type of SaaS application is best suited for extending beyond, not replacing, the main ERP systems and platforms.   I concentrated on SaaS ERP adoption in manufacturing and learned the following during my interviews:

  • Usability and speed of deployment are the two most common benefits CIOs mentioned in my survey during Convergence.  The economics of cloud computing is a topic that CFOs love to talk about, especially in the areas of value-based pricing and how that is determined.
  • When asked what kept them up at night, CIOs said it was the thought of a call from their boss (often the CFO) that a cloud system had been compromised or had completely gone down.  Security and reliability are holding back CIOs in manufacturing from adopting SaaS-based ERP systems more pervasively in their companies.
  • CIOs from aerospace and defense companies get the benefits of cloud computing, yet they have much bigger issues to deal with right now, like replacing financials in their existing ERP system and staying in compliance to government requirements.  Earned Value Management is a major focus they have as well.  SaaS-based ERP systems are interesting to them; they however would require a completely enclosed, locked-down implementation due to security requirements.
  • There are vast differences in how CIOs view cloud computing – something that the following forecasts don’t really capture.  For the CIOs who are strategists, cloud computing in general and SaaS ERP specifically is a consideration given the agility and time-to-market, providing customization is held to a minimum.  CIOs who came up through IT have a healthy degree of skepticism and see SaaS ERP as potentially useful for scaling out an operation yet never being the primary financial system.

Here are the latest SaaS ERP forecasts and market estimates:

  • Gartner released their latest SaaS revenue forecast last week predicting revenue will reach $14.5B this year, a 17.9% increase from 2011 of $12.3B, with strong growth predicted through 2015 when the market is expected to be $22.1B. Source: http://www.itjungle.com/tfh/tfh040212-story08.html
  • In the report Market Trends: Cloud Computing and SaaS Adoption in Manufacturing and Natural Resources, Worldwide, 2012 Gartner is predicting  59% of manufacturers will adopt IaaS during the 2011 – 2015 timeframe and 47% will be either piloting or using SaaS-based applications.  Gartner cites the need for greater business and supply chain agility as the factors driving this rapid adoption.  The following figure is from the Gartner report  Market Trends: Cloud Computing and SaaS Adoption in Manufacturing and Natural Resources, Worldwide, 2012.
  • Forrester forecasts SaaS ERP spending staying at 2% of the global ERP market, while Gartner forecasts 7% through 2012.  Gartner is projecting Project and Portfolio Management (29.1%) and Supply Chain Management (22.1%) will see the greatest growth rates through 2015.  Supply Chain Management is expected to reach $2.7B in revenue by 2015.  The Total Software Revenue Forecast for SaaS Delivery Within Enterprise Software is shown in the following table.  Source: Forecast: Software as a Service, Worldwide, 2010-2015, 1H11 Update Published: 22 June 2011 Analyst(s): Sharon A. Mertz, Chad Eschinger, Tom Eid, Chris Pang, Laurie F. Wurster
  • Gartner, IDC and Forrester all predict that Human Capital Management (HCM) will see the broadest adoption of all SaaS-based ERP components through 2015.  Vendors in this category include ADP, Concur, Cornerstone onDemand, HumanConcepts, Infor, Kenexa, Lumesse, Saba, SilkRoad, Sonar6, SuccessFactors, SumTotal Systems, Taleo, Ultimate Software and Workday.  Based on a recent Gartner Spending and Usage of SaaS Survey, 39% of manufacturers are piloting or using SaaS-based financials followed by 37% using Expense Management.The following figure illustrates their forecast, from the report  Market Trends: Cloud Computing and SaaS Adoption in Manufacturing and Natural Resources, Worldwide, 2012
  • Gartner’s IT Market Clock for ERP Platform Technology indicates that multitenant SaaS-based ERP is maturing rapidly, driven by time-to-market and cost advantages. The IT Market Clock is shown below, indicating SaaS ERP-based systems position relative to other ERP platforms now in use.  Vendors including  Epicor Express Editions, Glovia, Kenandy, NetSuite, Plex Systems, and SAP Business ByDesign compete in this segment.Source: IT Market Clock for ERP Platform Technology, 2011 Published: 19 September 2011 Analyst: Jim Shepherd.

Gartner has also compiled a Market Clock Recommendation Summary which is shown in the following table.  Of the CIOs I’ve spoken with during the persona research, the description of Multitenant SaaS is accurate.  No CIO I’ve spoken with is willing to bet their job on a rip-and-replace strategy for SaaS ERP; yet many are willing to extend their existing ERP systems using SaaS implementations to get up and running quickly at lower cost.  The one caveat nearly everyone mentions is little or no customization is necessary for SaaS ERP systems to be even evaluated by their companies.  Slight configuration is expected; however in-depth customization is not.

Bottom line: The persona research completed shows that the SaaS-based ERP growth is being helped by the transition occurring in the CIO ranks today.  More of them are strategists, who are expected to make business strategies happen, over and above just keeping the system dial tone on in their enterprises.

Mar 20

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Gartner Search Analytics Shows Spike in Hadoop Inquiries in 2012 – Good News For CRM

Hadoop was one of the most-searched terms on Gartner’s website in 2011 through 2012, spiking to 601.8% over the last twelve months alone.  Additional insights from the Search Analytics on Hadoop include the following:

  • 27% of all inquiries are from banking, finance and insurance industries, followed by manufacturing (14%), government (13%), services (10%) and healthcare (8%).
  • North America (75.9%) and EMEA (13.5%) are the two most dominant geographies in terms of query volume.
  • Here is the trend line from Gartner Search Analytics:

What’s driving Hadoop’s meteoric rise in searches is a combination of industry hype about big data, CIOs getting serious about using Hadoop distributions that minimize time and risk yet deliver value, and the dominant role Amazon is playing in bringing Hadoop into the cloud.  Today Amazon offers Elastic MapReduce as a Web Service that relies on a hosted Hadoop framework running the Elastic Compute Cloud (EC2) in conjunction with Amazon Simple Storage Service (S2).

Microsoft also scored a major hiring win this week announcing that Raghu Ramakrishnan, former chief scientist for three divisions of Yahoo is now with Microsoft. Raghu is now a technical fellow working in the Server and Tools Business (STB).  He’ll focus on big data and integration to STB platforms.  Big Data on Azure will accelerate now with him on-board.

Hadoop’s Potentially Galvanizing Effect on CRM and Social CRM Analytics

The quickening pace of Hadoop adoption in the enterprise is good news for CRM and especially social CRM. Analytics and Business Intelligence (BI) are the “glue” that unify CRM and keep it in context. One of Hadoop’s greatest potential contributions is the analysis, categorization and use of unstructured content.  Marketing and sales won’t have to run three or four systems to gain insights into customer data, they can run a single analytics platform that fuels the entire selling cycle and lifetime customer value chain of their businesses.  Hadoop has the potential to make unstructured content more meaningful while also reporting the impact of customer insights on financial performance, profitability and lifetime customer value.

Translating terabytes of customer, sales, services and partner data into meaningful analytics and business intelligence (BI) is emerging as a priority for CIOs, who are sharing responsibility for driving top-line revenue growth.   Hadoop shows potential to be the “glue” or galvanizing technology base that unifies all CRM and Social CRM strategies.

To get a perspective on how fast Hadoop is being evaluated and adopted it’s useful to look at the Hype Cycle for Data Management, the latest edition published July, 2011.   This is another indicator of how quickly Hadoop and big data are gaining in terms of CIO mindshare.  Big Data and extreme information management are on the technology Trigger area of the hype cycle.  The Hype Cycle for Data Management is shown below:

Bottom line:  CRM and Social CRM will benefit more than any other area of an enterprise as Hadoop’s adoption continues to accelerate.  CIOs are increasingly called upon to be strategists, and with the ability to translate terabytes of data into strategies that deliver dollars, look for Hadoop’s contributions to drive top-line revenue growth.

Mar 5

Sizing the Data Center Services Market, 2012

The Data Center Services (DCS) market is at a turning point today, with both Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) strategies potentially playing a pivotal role.

Traditionally data centers generate the majority of their business from colocation, data center outsourcing, and hosting.  The current and future impact of IaaS and PaaS is small but growing rapidly in this market.  Gartner estimates the global DCS market generated $150B globally as of 2011, projected to grow to $200B in 2012.

IaaS and PaaS Will Define The Future of the DCS Market

With IaaS generating $4B in global revenues in 2011 and PaaS is generating $1.4B, together they contributed 3.6% of the total DCS revenues last year.  The future direction of the DCS market, including the nature and trajectory of IaaS and PaaS, will be determined over the next three to five years by enterprise adoption of these platforms and the increasing move of enterprise applications to the cloud.  In sizing the DCS market, it’s useful to take a look at the forecasts from Gartner of cloud application infrastructure and cloud applications as a proportion of enterprise application software.  The following tables provide this analysis.

Cloud Application Infrastructure, Cloud Systems Infrastructure as a Proportion of Core ITO and Traditional Web Hosting (Dollars in Billions)

Source: Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2010-2015, 2011 Update

Cloud Applications as a Proportion of Enterprise Application Software (Dollars in Billions)

Source: Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2010-2015, 2011 Update

Mapping the Data Center Services Market – A First Approach

Gartner has proposed a Data Center Services Map and Market Compass for Enterprise Data Center Services, both of which are shown below.  Taken as taxonomies for organizing the market, they are effective, resembling value chains in their structure.  The Garter Data Center Services Map is shown below:

The Gartner Data Center Services Map

Source: Data Center Services: Regional Differences in the Move Toward the Cloud, 2012

Gartner’s Market Compass for Enterprise Data Center Services takes into account size, scope and management of data center (DC) applications by the use of sharing, pricing models and elasticity (Time to Provision Change) to create a market grid.  These are considered to be the six most differentiating factors in DC performance in this model.  The foundation of the Market Compass are shown below:

Gartner’s Market Compass for Enterprise Data Center Services

Source:Data Center Outsourcing, Hosting or Cloud? Use Gartner’s Market Map and Compass to Decide

The Garter Market Compass can further be used to define which solution sets in the DCS market best align with a given business’ strategic and IT needs.  Elasticity of infrastructure utility and cloud computing are, according to the analysis, the strongest growth factors in the DCS market today.

Analyzing the Six Main Segments of the Data Center Services Market with the Gartner Market Compass

Source: Data Center Outsourcing, Hosting or Cloud? Use Gartner’s Market Map and Compass to Decide

Bottom line: As more enterprise applications migrate to the cloud, DCS providers will be forced to rapidly improve the elasticity and time provisioning options their platforms provide.  All these changes will re-order the economics of cloud computing forcing DCS providers to greater level of flexibility that many have attained in the past.

Jan 17

6 Comments

Roundup of Cloud Computing Forecasts and Market Estimates, 2012

The latest round of cloud computing forecasts released by Cisco, Deloitte, IDC, Forrester, Gartner, The 451 Group and others show how rapidly cloud computing’s adoption in enterprises is happening.  The better forecasts quantify just how and where adoption is and isn’t occurring and why.

Overall, this year’s forecasts have taken into account enterprise constraints more realistically  than prior years, yielding a more reasonable set of market estimates.  There still is much hype surrounding cloud computing forecasts as can be seen from some of the huge growth rates and market size estimates.  With the direction of forecasting by vertical market and process area however, constraints are making the market estimates more realistic.

I’ve summarized the links below for your reference:

  • According to IDC, by 2015, about 24% of all new business software purchases will be of service-enabled software with SaaS delivery being 13.1% of worldwide software spending.  IDC further predicts that 14.4% of applications spending will be SaaS-based in the same time period. Source: http://www.idc.com/getdoc.jsp?containerId=232239
  • The cloud computing marketplace will reach $16.7B in revenue by 2013, according to a new report from the 451 Market Monitor, a market-sizing and forecasting service from The 451 Group. Including the large and well-established software-as-a-service (SaaS) category, cloud computing will grow from revenue of $8.7B 2010 to $16.7B in 2013, a compound annual growth rate (CAGR) of 24%. https://451research.com/
  • Forrester forecasts that the global market for cloud computing will grow from $40.7 billion in 2011 to more than $241 billion in 2020. The total size of the public cloud market will grow from $25.5 billion in 2011 to $159.3 billion in 2020. Link to report excerpt is here.
  • Deloitte is predicting cloud-based applications will replace 2.34% of enterprise IT spending in 2014 rising 14.49% in 2020.  The  slide below  is from an excellent presentation by Deloitte titled Cloud Computing Forecast Change downloadable from this link.

  • Gartner predicts Small & Medium Business (SMB) in the insurance industry will have a higher rate of cloud adoption (34%) compared to their enterprise counterparts (27%).  Gartner cites that insurance industry’s opportunity to significant improve core process areas through the use of technology.  The following figure from the report, 2011 SMB Versus Enterprise Software Budget Allocation to Annual Subscriptions indicates the differences in software budget allocation for annual subscriptions by vertical market from the report:

2011 SMB Versus Enterprise Software Budget Allocation to Annual Subscriptions

  • Gartner is predicting that the cloud system infrastructure (cloud IaaS) market to grow by 47.8% through 2015. The research firm advises outsourcers not moving in that direction that consolidation and cannibalization will occur in the 2013 – 2014 timeframe  The providers named most often by respondents were Amazon (34%), SunGard (30%) and Verizon Business (30%). Of the global top 10 IT outsourcing market leaders, only CSC appears on the list. Source: User Survey Analysis: Infrastructure as a Service, the 2011 Uptake  Claudio Da Rold,  Allie Young.

External Service Providers Being Considered for IaaS (or Cloud IaaS)

Jan 2

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How Cloud Computing And ERP Mobility Are Reordering Gartner’s Hype Cycle for ERP

A good friend of mine recently became CIO of a financial services firm and was given his first major project last month: make the complete accounting, financial, and loan provider data and applications available 24/7 on any iPad or Android-based tablet from any office, at any time.

The majority of loan provider applications are cloud-based and his company is running NetSuite.  His corporate office is in Asia and cloud-based applications made it possible for the company to launch and operate in California within months.   He’s been given six months to transform this mobile vision into reality.

Another CIO of a major A&D manufacturer I recently visited wants vendors to challenge him more to get greater value from his investments in legacy data and ERP systems. Using ERP to run batch reports alone has nearly caused project schedules to slip, so the focus internally is on real-time system integration of project management and accounting systems.  He’s also been given the task of revamping accounting and financial systems by October, 2012, and they just started late last year.

Gartner’s Hype Cycle for ERP 

Considering these two extremes in the context of the Gartner Hype Cycle for ERP (shown below) and the recent report SaaS and Cloud ERP Trends, Observations, and Performance 2011  (free for download until January 9, 2012) published by Aberdeen last month several take-aways emerge.

  • CIOs are under increasing pressure in 2012 to enhance, modify even replace existing ERP systems while standardizing technology across the enterprise at the same time.  The most risk-averse way around this is to add applications to single instance ERP backbone systems, with analytics and Business Intelligence (BI) being the among the most in demand.
  • Cloud-based ERP in the Enterprise and Small & Medium Businesses (SMB) are accelerating along the Hype Cycle faster than Gartner indicates.  Enterprises are using Cloud-based ERP systems as part of their two-tier ERP system strategies due to the Total Cost of Ownership (TCO) and time-to-deploy advantages, and the flexibility of tailoring everything from user interfaces to workflows to their specific requirements.  Highly specialized Cloud-based ERP suites including those from Plex Systems are gaining traction due to their expertise in specific industries and the compliance-related challenges inherent within them. In SMBs, the cost and time-to-deploy are two major drivers with concerns over security being the biggest impediment to growth.  Gartner reports that they are seeing Cloud-based ERP adoption fastest in companies with fewer than 200 users overall.
  • Cloud-based ERP systems most often considered in industries that have high variable costs, rapid transaction cycles and tend towards higher Return on Invested Capital (ROIC).  Based on the research SaaS and Cloud ERP Trends, Observations, and Performance 2011 the industries who are the most willing to consider Cloud-based ERP versus on-premise are Financial Services (22% SaaS versus 44% on-premise); Healthcare (42% SaaS versus 58% on-premise); and Professional Services (56% SaaS versus 58% on-premise).
  • Large companies (over $500M in annual revenue) using Cloud-based ERP systems are opting for hosted deployments managed by their ERP vendor (10%) or an independent 3rd party (11%), with just 2% relying on a SaaS platform. Aberdeen defined small organizations as those with annual sales under $50M, midsize organizations having annual sales of $50M – $500M. The following is from SaaS and Cloud ERP Trends, Observations, and Performance 2011:
  • ERP mobility will be a dominant force from the shop floor to each sales call where quotes, orders and contracts deliver real-time order and pricing updates.  How a given manufacturer chooses to sell is even more important than what they sell in many industries. Equipping manufacturing, quality assurance, production scheduling, procurement and sales to have immediate data on what’s going on with orders, customers and suppliers is critical.  For the sales and service teams, real-time data is the fuel they run on.  There’s a chronic time shortage in many, many companies right now, and bringing greater ERP mobility from the shop floor to the sales call will increasingly be seen as a means to lessen the time crunch.  2012 is the year where mobility gets real across the enterprise with solid performance numbers being generated as a result.  For companies with large sales forces and service organizations, integrating to key ERP systems to gain real-time data will quickly lead to increased sales and higher gross margins on service and warranty repairs.
  • Gartner predicts that by 2015 enterprises who are successfully using extreme information management strategies (Big Data) will outperform competitors in their industry sectors by 20% in every available financial metric.  The following is the Priority Matrix for ERP, 2011 showing what Gartner believes to be transformational technologies and strategies in ERP.

Dec 26

8 Comments

Analytics, Cloud Computing Challenge Flat Growth in Forrester’s Tech Market Outlook for 2012

It’s time to strip away the hype surrounding analytics, big data and cloud computing by asking how these technologies contribute  to excellent customer experiences and greater customer engagement.  Those are the real catalysts of market growth and the greatest disruptive forces at work in enterprise software today.

Filtering forecasts of future technology adoption with a customer experience and engagement mindset is essential for separating hype from reality.  Two excellent blog posts were published today that provide useful insights for doing this.  Ray Wang’s Monday’s Musings: 10 Mega Business Trends To Watch For In 2012 provides pragmatic, insightful analysis of the progression going on from transactional to personal fulfillment systems.  Many of the CIOs I’ve met with in the last two months are saying exactly what Ray has written regarding this transition.   Paul Greenberg’s CRM 2012 Forecast – The Era of Customer Engagement – Part I delivers more insight than any of the financial or industry analyst reports I’ve read in the last twelve months on CRM and its intersection to social networks.  He has defined customer engagement so thoroughly I am sure this post will be a classic, referenced for years to come.  Both posts provide an excellent framework to evaluate the upcoming wave of new forecasts due out from research firms at the start of 2012.

Having recently read Forrester’s US Tech Market Outlook For 2012 and applying the concepts Ray Wang and Paul Greenberg discuss, here are several take-aways from that report:

  • Total U.S. ICT market in 2011 was $962B with the majority being generated from software sales ($208B) followed by Telecom Services ($199B) and IT Consulting and Systems Integration Services ($188B).  The following graphic illustrates the purchase of ICT product and services in the U.S. during 2011.  As enterprise software companies are striving to deliver what Ray Wang is calling Experiential Systems, the majority of their core Intellectual Property (IP) was obtained from building Transactional Systems.  Despite this conflict, software development methodologies including Agile give the industry a fighting chance at growth in 2012.
  • Software continues to dominate both in total revenue ($208B) and growth rate, with 8.2% growth projected for 2012.  In addition to analytics and Business Intelligence (BI), Forrester is predicting an increase in ERP, Middleware and SaaS-based application growth.
  • Forrester is most optimistic in their forecasts for analytics, BI, Cloud Computing and Smart Computing.  Cloud Computing forecasts at Forrester are indexed to sales levels of NetSuite, RightNow Technologies (Oracle), Salesforce.com, and Ultimate Software.  Forrester is claiming these four vendors will generate a 23% increase in revenues in calendar Q1, 2012 over Q1, 2011, increasing and staying constant at 24% year-over-year growth from Q2 to Q4, 2012 relative to Q2 to Q4,  2011. Salesforce.com could accomplish this level of growth through acquisitions alone. They’re showing they can integrate newly acquired companies faster than Oracle, who they are challenging for global CRM market leadership in the 2012 – 2013 timeframe.  When customer experience and engagement is taken into account, the forecast seems high.  Salesforce knows how to translate trial users into customers.  The question is can they do this fast enough in 2012 throughout the enterprise and mid-tier accounts to keep up their sales growth on track while reducing churn and increasing profitability.
  • Smart Computing is defined by Forrester as platform technologies including specialized analytics, BI, service-oriented architecture (SOA) infrastructure, virtualization software, rules engines, and awareness-based technologies.  Forrester is very optimistic about this area with a growth rate second only to cloud computing. Its index of the market is based on Informatica, Pegasystems, and Tibco Software.  Forrester is predicting in calendar Q1, 2012 there will be 16% growth over Q1, 2011, followed by consistent 13% growth year-over-year for Q2 to Q4, 2012 relative to 2011.  The following graphic compares growth of both Cloud Computing and Smart Computing.

  • The inflexion point of Smart Computing will happen when analytics, BI and awareness-based technologies including RFID can be used to make customer experiences consistently positive and drive cultural change throughout a business to center on customers’ expectations.  Paul Greenberg refers to this area of customer engagement in his blog post.  I agree with him and see the real value of analytics not for reporting, but for being a barometer of just how customer-centric and focused on delivering exceptional customer experiences a company is becoming.
  • In 2012, financial services, professional services, and manufacturing will be the three industries that dominate software purchases.  Financial services (19%), professional services (15%) and manufacturing (14%) will be the largest buyers of enterprise software.  Forrester believes that ERP replacements, supply chain management (SCM) and product lifecycle management (PLM) will all be proprieties in the coming twelve months.

Bottom line: Critiquing high growth technologies based on their contribution to customer experience, engagement and the creation of Customer Lifetime Value (CLV) is what matter most. Hopefully the new wave of forecasts for 2012 and beyond will take the customer – not just technology and statistical extrapolations – into account.

Oct 7

2 Comments

Transactions and Complex Selling: Strong Catalysts of Cloud Computing Growth

Enterprise software vendors need to challenge themselves to deliver significantly more value if the potential for cloud computing is going to be achieved .

Instead of just going for the low-end, easily customized processes within analytics, CRM, supply chain management, ERP, pricing or service, vendors need to take on the more challenging, complex hard-to-solve problems enterprises have.

As I am completing more research on personas, I’m finding what CIOs really look for in SaaS apps.  Flexibility and ease of workflow support, intuitive user interface design without sacrificing functionality, and support for analytics, business intelligence and knowledge management systems integration are all mentioned often.

Nearly all of them also mention that the existing generation SaaS applications on the sell-side, from CRM to order capture and order management aren’t taking on the more challenging areas of their strategies.  The result is the CIOs are still relying on legacy, on-premise apps in areas of their companies that are ready for change to SaaS-based applications.  Cloud platforms are taking on these more complex, challenging problem areas, yet innovation still lags the needs in the market.

Transactions Are The Fuel of Cloud Infrastructure Growth  

CIOs are focusing on how to exceed the expectations of their internal customers at the workflow and interface level while infusing SaaS apps with analytics, business intelligence and knowledge management support.  What’s missing is the killer transaction platform layer and transaction-based applications.  Gartner’s report, A Workforce Without Humans: Three Ways Technology Will Eliminate Skilled Jobs in the U.S. Through 2020 by Kenneth F. Brant by Johan Jacobs has the following graphic which shows CIO’s estimates of migration to cloud-based IT infrastructure and applications which supports this point.

Source: Maverick Research: A Workforce Without Humans: Three Ways Technology Will Eliminate Skilled Jobs in the U.S. Through 2020 by Kenneth F. Brant by Johan Jacobs

Much of the report is based on the results of Gartner’s 2011 survey of U.S. CIOs. Additional insights from the survey include the following:

  • Virtualization and cloud computing are the two top-ranked U.S. CIO technology priorities for 2011.
  • 83% of U.S. CIOs estimated that more than half of their transactions would be conducted on a cloud infrastructure by 2020.
  • 79% of the respondents predicted that more than half of their transactions would be completed on applications leased using the SaaS platform by 2020.

For cloud infrastructure platforms and SaaS applications to deliver that level of transaction volume and support, there needs to be a major shift in how enterprise vendors develop software. Making better use of analytics, business intelligence and knowledge in the enterprise is key. Designing applications that make information and knowledge sharing intuitive is critical.

The following figure from the same report cited earlier shows the relationship of technologies to potential business value.  Many CRM and sell-side vendors tend to focus on being a substitute or just barely delivering increases in human productivity.

Going after the hard work of optimizing pricing strategies, call centers, making multichannel selling strategies profitable and getting the most out of social networks to make the customer experience exceptional will deliver major gains in productivity.  It’s been my experience during the persona interviews that for any SaaS vendor to really excel here they need to get beyond human productivity and make it possible for enterprises to deliver exceptional customer experiences daily.

Creating SaaS applications that take on real complexity earns trust too, which no amount of pure efficiency can compete with.

Source: Maverick Research: A Workforce Without Humans: Three Ways Technology Will Eliminate Skilled Jobs in the U.S. Through 2020 by Kenneth F. Brant by Johan Jacobs

An Example: SaaS in Manufacturing

The following table compares the strategies and systems used in a typical manufacturing company.  Enterprise apps vendors for the most part are focused on make-to-stock and assemble-to-order automation and efficiency (SAP ByDesign for example).

As the continuums move from left to right, the process, systems and strategy challenges exponentially increase.  As a result there are only a few vendors who can manage the more complex engineer-to-order requirements in manufacturing for example. Transactions there are very small in number, yet orders of magnitude more profitable.  This is just an example of many areas in enterprises that need major improvement.

Instead of just focusing on the easy processes and strategies on the left, vendors need to go after the more difficult, complex selling and transaction challenges on the right.  This is why CIOs want SaaS applications that are easy to customize from a user interface and workflow standpoint, while at the same time supporting analytics, BI and knowledge management.  The goal is to slot them into these more challenging areas of their business and transform their company’s intelligence and expertise into profitable growth.

Bottom line: The true catalyst of cloud computing growth isn’t just SaaS economics; it’s how effectively enterprise software vendors address the very difficult transaction, order management and selling challenges their potential customers face all the time. When that happens, the many optimistic forecasts of cloud adoption in the enterprise will take a step closer to being fulfilled.

Sep 25

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How Analytics and Business Intelligence Are Accelerating Enterprise Cloud Adoption

During the last few weeks of completing a research project on buyer personas, a key finding of of just how quickly enterprises are switching out legacy reporting apps for SaaS-based analytics and Business Intelligence (BI) is emerging.

I’ve been interviewing sales VPs, sales operations directors, contract managers and CIOs. Of all these groups, the CIOs are providing valuable insight into the transition SaaS is going through in their enterprises.

Throughout this post I’ll correlate the interviewed CIOs’ comments back to a recent report Forrester published titled Understanding The Business Intelligence Growth Opportunity by Holger Kisker, Ph.D.  Dr. Kisker’s findings support many of the insights gained from the research on personas completed to date.

Key Points from Persona Interviews and Forrester Study

  • Forrester predicts the market for BI SaaS software will be $529M in 2011 growing to $2.4B in 2014.  The report mentions that by 2012, up to 30% of companies will have some SaaS-based BI services.  From the conversations with CIOs, I think this is actually low.  The urgency to get off of legacy reporting systems and onto a unified reporting platform is quickly changing this market.
  • 80% of enterprises will complement on-premise analytics and BI systems with SaaS-based applications by 2014 according to Forrester.  From the persona study I am working on, the cut-over is going to be much more abrupt.  50% or less of companies will most likely have on-premise applications in place by 2014, as SaaS-based analytics and BI applications provide business users with the information they need when they need it.
  • iPads running analytics and BI apps with lenders’ data in real-time are the new bling in financial services.  One CIO who recently was recruited to a financial services firm told me he quickly picked out the other C-level execs in the room – they all had iPads running analytics apps with live customer data.  One of his first projects: make that happen for the sales teams with a policy app.  Everyone I’ve spoken with on this research study tells me being able to get to their analytics data on an Android or Apple iOS device is critical for their build-out plans.
  • The greatest concerns the CIOs continue to have with SaaS are data integration to legacy systems and lack of security standards.  Despite these concerns one CIO summed it up well and said “We really don’t have a choice, the legacy reporting apps are too high maintenance, don’t integrate to our new workflows well – we need a new reporting platform, so we are piloting a SaaS-based analytics app right now.”
  • The high cost of maintaining legacy reporting applications, integrating them to the latest Microsoft, Oracle or SAP databases, and preserving tribal knowledge are factors pushing CIOs to adopt SaaS-based analytics and BI apps.  One of the CIOs is with a government subcontractor who has Airbus, Boeing, Sikrosky Aircraft as their largest clients explained how dashboards are manually generated in Excel, taking weeks and often being inaccurate.  To comply with contracts they must move to a faster reporting process.  Using SaaS-based analytics in pilots have trimmed the time for creating dashboards from weeks to hours.
  • Cloud integration and security are the skill sets these CIOs are hiring for right now.  A quick analysis from Google Insights shows the rapid ascent of cloud integration as a search term. While Insights doesn’t provide demographics, the persona interviews underscore this trend.
  • Analytics and BI data integration wins are setting the foundation for more complex system migrations in the future.  Bank of America, Citibank and other financial institutions have client-side systems that are outpacing legacy systems’ ability to analyze and make use of the massive amount of inbound data they provide.  Implementing cloud integration projects successfully, in conjunction the successful launch of more scalable SaaS-based analytics and BI applications sets the foundation for migrating even more complex systems.  The Forrester Report Understanding The Business Intelligence Growth Opportunity included the following graphic with further underscores this point.

Bottom line: The lessons learned from migrating analytics and reporting from legacy to SaaS-based analytics and BI applications, combined with the need to have customer and market intelligence on mobile devices, is leading to rapid changes in this market.

Sep 3

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.

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