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Posts tagged ‘Analytics’

Roundup Of Analytics, Big Data & Business Intelligence Forecasts And Market Estimates, 2014

NYC SkylineFrom manufacturers looking to gain greater insights into streamlining production, reducing time-to-market and increasing product quality to financial services firms seeking to upsell clients, analytics is now essential for any business looking to stay competitive.  Marketing is going through its own transformation, away from traditional tactics to analytics- and data-driven strategies that deliver measurable results.

Analytics and the insights they deliver are changing competitive dynamics daily by delivering greater acuity and focus.  The high level of interest and hype surrounding analytics, Big Data and business intelligence (BI) is leading to a proliferation of market projections and forecasts, each providing a different perspective of these markets.

Presented below is a roundup of recent forecasts and market estimates:

  • The Advanced and Predictive Analytics (APA) software market is projected from grow from $2.2B in 2013 to $3.4B in 2018, attaining a 9.9% CAGR in the forecast period.  The top 3 vendors in 2013 based on worldwide revenue were SAS ($768.3M, 35.4% market share), IBM ($370.3M, 17.1% market share) and Microsoft ($64.9M, 3% market share).  IDC commented that simplified APA tools that provide less flexibility than standalone statistical models tools yet have more intuitive graphical user interfaces and easier-to-use features are fueling business analysts’ adoption.  Source: http://www.idc.com/getdoc.jsp?containerId=249054
  • A.T. Kearney forecasts global spending on Big Data hardware, software and services will grow at a CAGR of 30% through 2018, reaching a total market size of $114B.  The average business expects to spend $8M on big data-related initiatives this year. Source: Beyond Big: The Analytically Powered Organization.
  • Cloud-based Business Intelligence (BI) is projected to grow from $.75B in 2013 to $2.94B in 2018, attaining a CAGR of 31%.  Redwood Capital’s recent Sector Report on Business Intelligence  (free, no opt in) provides a thorough analysis of the current and future direction of BI.  Redwood Capital segments the BI market into traditional, mobile, cloud and social business intelligence.   The following two charts from the Sector Report on Business Intelligence  illustrate how Redwood Capital sees the progression of the BI market through 2018.

redwood capital global intelligence market size

  • Enterprises getting the most value out of analytics and BI have leaders that concentrate more on collaboration, instilling confidence in their teams, and creating an active analytics community, while laggards focus on technology alone.  A.T. Kearney and Carnegie Mellon University recently surveyed 430 companies around the world, representing a wide range of geographies and industries, for the inaugural Leadership Excellence in Analytic Practices (LEAP) study.  You can find the study here.  The following is a graphic from the study comparing the characteristics of leaders and laggards’ strategies for building a culture of analytics excellence.

leaders and laggards2

  • The worldwide market for Big Data related hardware, software and professional services is projected to reach $30B in 2014.  Signals and System Telecom forecasts the market will attain a Compound Annual Growth Rate (CAGR) of 17% over the next 6 years.  Signals and Systems Telecom’s report forecasts Big Data will be a $76B market by 2020.  Source: http://www.researchandmarkets.com/research/s2t239/the_big_data
  • Big Data is projected to be a $28.5B market in 2014, growing to $50.1B in 2015 according to Wikkbon.  Their report, Big Data Vendor Revenue and Market Forecast 2013-2017 is outstanding in its accuracy and depth of analysis.  The following is a graphic from the study, illustrating Wikibon’s Big Data market forecast broken down by market component through 2017.

Big Data Wikibon

  • SAPIBMSASMicrosoftOracle, Information Builders, MicroStrategy, and Actuate are market leaders in BI according to Forrester’s latest Wave analysis of BI platforms.  Their report, The Forrester Wave™: Enterprise Business Intelligence Platforms, Q4 2013 (free PDF, no opt in, courtesy of SAS) provides a thorough analysis of 11 different BI software providers using the research firm’s 72-criteria evaluation methodology.
  • Amazon Web Services, Cloudera, Hortonworks, IBM, MapR Technologies, Pivotal Software, and Teradata are Big Data Hadoop market leaders according to Forrester’s latest Wave analysis of Hadoop Solutions.  Their report, The Forrester Wave™: Big Data Hadoop Solutions, Q1 2014 (free PDF, no opt in, courtesy of MapR Technologies) provides a thorough analysis of nine different Big Data Hadoop software providers using the research firm’s 32-criteria evaluation methodology.
  • IDC forecasts the server market for high performance data analysis (HPDA) will grow at a 23.5% compound annual growth rate (CAGR) reaching $2.7B by 2018.  In the same series of studies IDC forecasts the related storage market will expand to $1.6B also in 2018. HPDA is the term IDC created to describe the formative market for big data workloads using HPC. Source: http://www.idc.com/getdoc.jsp?containerId=prUS24938714
  • Global Big Data technology and services revenue will grow from $14.26B in 2014 to $23.76B in 2016, attaining a compound annual growth rate of 18.55%.  These figures and a complete market analysis are available in IDC’s Worldwide Big Data Technology and Services 2012 – 2016 Forecast.  You can download the full report here (free, no opt-in): Worldwide Big Data Technology and Services 2012 – 2016 Forecast.

big data analytics by market size

  • Financial Services firms are projected to spend $6.4B in Big Data-related hardware, software and services in 2015, growing at a CAGR of 22% through 2020.  Software and internet-related companies are projected to spend $2.8B in 2015, growing at a CAGR of 26% through 2020.  These and other market forecasts and projections can be found in Bain & Company’s Insights Analysis, Big Data: The Organizational Challenge.  An infographic of their research results are shown below.

Big-Data-infographic-Bain & Company

potential payback of big data initiatives

Cloud Predictive Analytics Most Used To Gain Customer Insight

AnalyticsUsing analytics to better understand customer satisfaction, profitability, retention and churn while increasing cross-sell and up-sell are the most dominant uses of cloud-based analytics today.

Jim Ericson and James Taylor presented the results of Decision Management Solutions’ cloud predictive analytics survey this week in the webinar Predictive Analytics in the Cloud 2013 – Opportunities, Trends and the Impact of Big Data.  The research methodology included 350 survey responses, with a Web-based survey used for data collection.  The survey centered on the areas of pre-packaged cloud-based solutions, cloud-based predictive modeling, and cloud deployment of predictive analytics.  You can see a replay of the webinar at this link.

Key takeaways of the study results released during the webinar include the following:

  • Customer Analytics (72%), followed by supply chain, business optimization, marketing optimization (57%), risk and fraud (52%), and marketing (58%) are the areas in which respondents reported the strongest interest.
  • When the customer analytics responses were analyzed in greater depth they showed most interest in customer satisfaction (50%) followed by customer profitability (34%), customer retention/churn (32%), customer management (30%), and cross-sell/up-sell (26%).
  • Adoption was increasingly widespread and growing, with over 90% of respondents reporting that they expected to deploy one or more type of predictive analytics in the cloud solution.
  • Industries with the most impact from predictive analytics include retail (13% more than average), Financial Services (12%) and hardware/software (4%). Lagging industries include health care delivery (-9%), insurance -11%) and (surprisingly) telecommunications (-33%).  The following graphic illustrates the relative impact of cloud-based predictive analytics applications by industry.

Adoption of Cloud-based Predictive Analytics by Industry

  • The most widespread analytics scenarios include prepackaged solutions (52%), cloud-based analytics modeling (47%) and cloud-based analytic embedding of applications (46%).  Comparing the 2011 and 2013 surveys showed significant gains in all three categories, with the greatest being in the area of cloud-based analytic modeling.  This category increased from 51% in 2011 to 75% in 2013, making it the most likely analytics application respondents are going to implement this year.

Comparison of Analytics Applications Most Likely To Deploy, 2011 versus 2013

  • 63% of respondents report that when predictive analytics are tightly integrated into operations using Decision Management, enterprises have the intelligence they need to transform their businesses.

Impact of Predictive Analytics Integration Across The Enterprise

  • Data security and privacy (61%) followed by regulatory compliance (50%) are the two most significant concerns respondent companies have regarding predictive analytics adoption in their companies.  Compliance has increased as a concern significantly since 2011, probably as more financial services firms are adopting cloud computing for mainstream business strategies.

Concerns of Enterprises Who Are Using Cloud-based Predictive Analytics Today

  • Internal cloud deployments (41%) are the most common approach to implementing central cloud platforms, followed by managed vendor clouds (23% and hybrid clouds (23%). Private and managed clouds continue to grow as preferred platforms for cloud-based analytics, as respondents seek greater security and stability of their applications.  The continued adoption of private and managed clouds are a direct result of respondents’ concerns regarding data security, stability, reliability and redundancy.

Approach To Cloud Deployment

  • The study concludes that structured data is the most prevalent type of data, followed by third party data and unstructured data.
  • While there was no widespread impact on results from Big Data, predictive analytics cloud deployments that have a Big Data component are more likely to contribute to a transformative impact on their organizations’ performance.  Similarly those with more experience deploying predictive analytics in the cloud were more likely to use Big Data.
  • In those predictive analytics cloud deployments already operating or having an impact, social media data from the cloud, voice or other audio data, and image or video data were all much more broadly used as the following graphic illustrates.

Which Data Types Deliver The Most Positive Impact In A Big Data Context

Making Analytics Pay In The Enterprise

global-analytics-300x2001With analytics and big data being so heavily hyped today, it is ironic the majority of business analysts often lack access to data and tools they need.

But things are changing with the next generation of analytics software coming to market.  A recent study by The Economist, “Big Data and the Democratisation of Decisions,” shows the severity of the big data analytics problem and which departments need the most support: customer service, human resources, marketing, strategy and business development.  The following is an infographic based on the study’s key findings. To be clear, all companies mentioned in this post are not and never have been clients of mine or companies I have worked for.

Unleashing Greater Insight in the Enterprise

The real analytics payoff in the enterprise begins when business analysts can achieve customer and market insights faster than their competitors.  In the consumer packaged goods industry, every week counts in a new product launch and product lifecycle.  In healthcare, lag times in customer service lead to patients seeking more responsive treatment alternatives.  The net result in each is lost revenue.

Analytics applications and platforms are increasingly being designed for self-service and the needs of business analysts first.  Instead of having to rely on IT for analytics, big data and advanced statistical analysis support, business analysts need to be able to complete projects on their own. Analytics applications are advancing quickly on this self-service dimension, making it possible for business analysts to get complex projects done in a fraction of the time it would have taken IT to staff and complete them.

Alliances and partnerships between analytics software providers are focused on getting business analysts the tools they need so they don’t have to rely on IT so much to get their work done.  The recent partnership announced between Alteryx and Revolution Analytics puts R-based predictive analytics directly in the hands business analysts is a case in point.

What’s noteworthy about this partnership above all others is the option it gives enterprises to integrate big data and other 3rd party sources into a common system of engagement. Business analysts can then use tools to design analytics and reporting workflows that align and stay in step with line-of-business needs over time.

alteryx-gallery1-300x1691Once an application or workflow is complete, business analysts can publish and distribute their analytics applications enterprise-wide. The Alteryx Analytics Gallery (shown to the right) gives customers the opportunity to share their analytics applications with each other.  The gallery is helping business analysts learn from each other, serving as a catalyst for broader analytic consumption.

This is the same model ServiceNow (NYSE:NOW) has been so successful with in the area of IT Service Management.  I attended Knowledge13 earlier this year and found their customer base to be one of the most enthusiastic I’ve ever met.  What ServiceNow has done IT Service Management, Alteryx is on its way to accomplishing in analytics.

Why All This Matters For Customers

Getting analytics applications and tools in the hands of business analysts significantly improves the customer experience and reduce errors at the same time. At Kaiser Permanente, business analysts focus on cost saving projects that improve customer service.

Kaiser has a continual stream of customer interactions across multiple channels going on daily.  Supported by legacy IT systems, Microsoft Excel spreadsheets and manual processes to keep the entire system working, the healthcare provider was seeing patient satisfaction levels drop as they didn’t have a clear view of their customers.  The legacy and manual systems also made coordinating customer service teams very difficult and replicating analytics tools very difficult.

Alteryx-Workflow-21

Kaiser Permanente was able to aggregate and cleanse the myriad of data sources they rely on and gain greater insights into their customer’s needs. Creating analytics and reporting workflows that business analysts and lean leaders in their Service Organization use to stay on top of customer needs has led to a five-fold increase in customer service performance according to Greg Hall, Senior Service Optimization Leader.

Best- And Worst-Performing Cloud Computing Stocks In The First Half Of 2013

Cloud computing stocks continue to show wide variation in performance throughout the first half of this year.

Ten of the twenty companies in the Cloud Computing Stock Index delivered returns to shareholders with NetSuite leading with a 37.30% share gain, delivering $13,730 on $10,000 invested on January 2, 2013.

To more fully define the stock performance of these companies, I’ve added Earnings Per Share (EPS), Price/Earnings Ratio, Year-To-Date (YTD) Total Gains or Loss, Annualized Gain or Loss, and Total Dollar Value of $10,000 invested on January 2, 2013.  You can download the latest version of the Cloud Computing Stock Index here.  The filter applied to these companies is that 50% or more of their revenues are generated from cloud-based applications, infrastructure and services.  Additional details of the index are provided at the end of this post.

 

Best Performing

Name

Symbol

(1/2/13 – 7/5/13)Total Gain or Loss

Annualized Gain or Loss

Total Dollar Value of $10K invested in this stock on Jan. 2, 2013 as of July 5th:

NetSuite Inc

N

37.30%

87.55%

$13,730.00

Keynote Systems, Inc.

KEYN

36.18%

84.53%

$13,618.00

CA, Inc.

CA

26.67%

59.83%

$12,667.00

Workday Inc

WDAY

23.81%

52.77%

$12,381.00

Cisco Systems, Inc.

CSCO

22.60%

49.82%

$12,260.00

Symantec Corporation

SYMC

18.84%

40.84%

$11,884.00

Amazon.com, Inc.

AMZN

11.10%

23.23%

$11,110.00

 

Worst Performing

Name

Symbol

(1/2/13 – 7/5/13)Total Gain or Loss

Annualized Gain or Loss

Total Dollar Value of $10K invested in this stock on Jan. 2, 2013 as of July 5th:

Rackspace Hosting, Inc.

RAX

-46.78%

-71.39%

$5,322.00

Fusion-IO, Inc.

FIO

-41.21%

-65.13%

$5,879.00

F5 Networks, Inc.

FFIV

-31.57%

-52.88%

$6,843.00

VMware, Inc.

VMW

-29.94%

-50.63%

$7,006.00

Riverbed Technology…

RVBD

-24.91%

-43.34%

$7,509.00

Red Hat, Inc.

RHT

-11.47%

-21.46%

$8,853.00

Key Take-Aways:

  • NetSuite leads the index with a 37.3% gain in their stock price, and $10K invested in their stock on January 2nd of this year would be worth $13,730 as of July 5th.  Cloud-based Enterprise Resource Planning (ERP) systems acceptance is accelerating, evidenced by the success NetSuite is having with their two-tier ERP strategy and recent announcement they are moving into manufacturing.  Their recent alliance with Oracle also shows upside potential.   A cloud-based ERP provider leading the index is good news for Acumatica and Plex Systems especially, the leader in cloud-based ERP systems for manufacturing and one of the most enthusiastic customer bases in enterprise software.  Both of these companies are privately held or they would have been included in the index.
  • The 20 companies that comprise the Cloud Computing Stock Index attained a 29.6% return from July 10, 2012 to July 5, 2013.  The Dow Jones Industrial Average (DJIA) gained 18.83%;  Microsoft, 14.02%; Oracle, 7.17%; and SAP, 27.51%.  The following chart compares the performance of each. Please click on the index to expand it for easier viewing.

  • Widespread adoption of Amazon Web Services, success using the Kindle series of tablets as customer acquisition tools for digital content, market leadership of the online retail landscape, and successful pilots of the AmazonFresh online grocery business in Los Angeles and Seattle are all fueling Amazon’s stock performance this year.

Specifics on the Cloud Computing Stock Index

I used The Cloud Times 100 as the basis of the index, and included the 20 following companies, all of which are publically traded.  The latest edition of the Cloud Computing Stock Index is shown here.  Please click on the index to expand it for easier viewing.

 Note: I do not hold equity positions or work for any of the companies mentioned in this blog post or included in the Cloud Computing Stock Index.  

What’s Hot In CRM 2013: Strong Interest In Mobile For Streamlining Sales And Service

Whats Hot in CRM 2013 imageGartner published the report What’s Hot in CRM Applications in 2013, by Ed Thompson on June 20, 2013.  The report covers areas of interest by clients in the four areas of marketing, sales, customer service and e-commerce.

The report states that “the 2013 What’s Hot list was compiled after examining Gartner inquiry volumes by topic. It was then supplemented by asking all Gartner CRM analysts to offer their opinions on what has been generating the most interest during all the client inquiries they have taken since the end of 2012 and in the beginning of 2013.”

Big data, cloud, social, mobile and the Internet of Things are the five catalysts that are driving inquiries in the hottest areas of interest.  Gartner’s Ed Thompson, author of the report, states that “this is where our clients’ interests lie, although not their current CRM spending.”  Technologies highlighted in red are the hottest in terms of interest, shown in the following table Highest CRM Application Priorities for 2013.

What This Says About the Future of CRM

Mobility is just one part of delivering an excellent customer experience.

  • It is surprising that Gartner clients aren’t looking to create a more unified strategy to customer experience across all channels at all times. As the report states, “The refreshing of an aging agent desktop with a new, more intelligent and unifying user interface has shot to the top of the heat charts once more.” The findings of this Gartner analysis make the highly promoted claims of usability by many CRM vendors look overly hyped.  I think usability is the fastest path to greater system adoption of any CRM system, and that has to include mobile.  It is surprising that a related technology in this area didn’t rise farther in the rankings.
  • Second, mobile sales on smartphones and tablets dominate, followed immediately by Social – Internal Collaboration and Social – Integration with Social Data. What is fascinating about this group of four top items in Sales is the indication that the behavior of how sales teams work individually and together is changing fast. Collaboration is a strong catalyst for Return on Investment (ROI) from social technologies and the sequence of these priorities in Sales underscores that.
  • Third, the vision of the mobile-enabled support representative able to be autonomous yet fully supported to solve customer problems is rapidly approaching.  Of all patterns emerging from this data, this is one shows the greatest profit potential.  Service Lifecycle Management (SLM) and the many forms of service management all have very significant profitability associated with them for manufacturers.  The quicker this area of mobility moves, the faster SLM and Maintenance, Repair and Overhaul (MRO) strategies will grow – giving manufacturers and service providers the ability to mine their installed bases for more profits.
  • Fourth, predictive analytics and big data are reordering how marketing strategies are designed, implemented and managed.  Given the increasing complexity of marketing automation systems and the strategies they support, predictive analytics and big data are starting to dominate the conversations I’ve personally had with Chief Marketing Officers (CMOs) and many demand generation professionals.  I expect the predictive analytics aspects of marketing, combined with big data, to accelerate quickly over the next year.
  • Fifth, the rapid adoption of mobile-based platforms including the Apple iPad in the Configure, Price, Quote (CPQ) continues throughout the professional services, discrete and process manufacturing companies I often visit.  One manufacturer I often work with on their CPQ strategies has the ability today to present a completed 3D model of the proposed product, embed it in a quote and e-mail it to the prospect all from an iPad.  The future of CPQ is going to be dominated by mobility and enterprise support for key order management, pricing and product configuration options.
 Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

North Bridge Venture Partners Future Of Cloud Computing Survey: SaaS Still The Dominant Cloud Platform

6-19-2013-4-19-15-AM-300x223North Bridge Venture Partners and GigaOM Research released the results of their third annual Future Of Cloud Computing Survey today, providing a glimpse into cloud computing adoption trends, inhibitors and drivers of long-term growth.

This year’s survey included 855 respondents selected across business users, IT decision makers and cloud platform and application vendors.  North Bridge and GigaOM Research report that a third of respondents are C-level executives in their organizations.

You can view a copy of the report results here from SlideShare.

The following are key take-aways from the report:

  • Cloud adoption continued to rise in 2013, with 75%  of those surveyed reporting the use of some sort of cloud platform – up from 67% last year. That growth is consistent with forecasts from GigaOM Research, which expects the total worldwide addressable market for cloud computing to reach $158.8B by 2014, an increase of 126.5% from 2011.  The survey also shows significant growth is yet to come in SaaS adoption for business systems and IT management.

.

  • 63% of those surveyed report Software-as-a-Service (SaaS) is in use in their companies, growing 15% over 2012.  45% are using Infrastructure-as-a-Service (IaaS) today, attaining a growth of 29% from last year.  Platform-as-a-Service (PaaS) is expected to grow the fastest over the next five years, with 72% of respondents saying they expect to use PaaS in their organizations.
  • The survey results also included cloud segments and overall growth analysis forecasts from 451 Research Market Monitor Report.  The graphic showing CAGRs by IaaS, PaaS and SaaS is shown below, with comparisons of 2012 results and 2016 market forecasts.

  • 52% of organizations are using cloud-based applications to advance business priorities, compared with 36% that use applications that advance IT initiatives.
  • CRM, marketing (including marketing automation) social business & collaboration and file sharing cloud-based applications are in use by more than 50% of all organizations in the sample.
  • North Bridge Venture Partners reports that cloud investments by venture capitalists totaled $1.6B in 2010, increasing to $2.4B in 2011.  Investments in 2012 dropped to $1.8B and through May, 2013, venture-based investments in cloud computing application and services providers totaled $281M.  Subscription fee-based business models dominate with 77% of cloud vendors relying on this strategy.
  • Gaining greater business agility (54.5%), scalability (54.3%) and cost (48%) are the three main drivers of cloud adoption today according to the survey results.  Mobility was mentioned by 25% of respondents as a major driver for adopting cloud applications and platforms, behind cost.
  • Security concerns (46%), vendor lock-in (35%), interoperability (27%), concerns over reliability (22.3%) and complexity (21%) are the top inhibitors to cloud adoption.  Regulatory compliance (30%) and privacy (26%) are he next most frequently mentioned inhibitors to cloud computing adoption according to the survey.
  • 39% expect to increase training, and 17% expect to hire outside resources as a result of increased cloud adoption.
  • Amazon (14.3%), Microsoft (10.96%) and Google (7.88%) are the three most used cloud platforms by the organizations who responded to the survey.

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

Using Search Analytics To See Into Gartner’s $232B Big Data Forecast

By combining search analytics and the latest Gartner forecast on big data published last week, it’s possible to get a glimpse into this areas’ highest growth industry sectors.  Big data is consistently a leading search term on Gartner.com, which is the basis of the twelve months of data used for the analysis.

In addition, data from Gartner’s latest report, Big Data Drives Rapid Changes in Infrastructure and $232 Billion in IT Spending Through 2016 by Mark A. Beyer, John-David Lovelock, Dan Sommer, and Merv Adrian is also used.  These authors have done a great job of explaining how big data is rapidly emerging as a market force, not just a single market unto itself.  This distinction pervades their analysis and the following table showing Total IT Spending Driven by Big Data reflects the composite market approach.  Use cases from enterprise software spending, storage management, IT services, social media and search forecasts are the basis of the Enterprise Software Spending for Specified Sub-Markets Forecast.  Social Media Analytics are the basis of the Social Media Revenue Worldwide forecast.

Additional Take-Aways

  • Enterprise software spending for specified sub-markets will attain a 16.65% compound annual growth rate (CAGR) in revenue from 2011 to 2016.
  • Attaining a 96.77% CAGR from 2011 through 2016, Social Media Revenue Is one of the primary use case catalysts of this latest forecast.
  • Big Data IT Services Spending will attain a 10.20% CAGR from 2011 to 2016.
  • $29B will be spent on big data throughout 2012 by IT departments.  Of this figure, $5.5B will be for software sales and the balance for IT services.
  • Gartner is projecting a 45% per year average growth rate for social media, social network analysis and content analysis from 2011 to 2016.
  • Gartner projects a 20 times ratio of IT Services to Software in the short term, dropping as this market matures and more expertise is available.
  • By 2020, big data functionality will be part of the baseline of enterprise software, with enterprise vendors enhancing the value of their applications with it.
  • Organizations are already replacing early implementations of big data solutions – and Gartner is projecting this will continue through 2020.
  • By 2016 spending on Application Infrastructure and Middleware becomes one of the most dominant for big data in Enterprise Software-Specified Sub Markets.

  • $232B is projected to be sold in total across all categories in the forecast from 2011 to 2016. From $24.4B in 2011 to $43.7B in 2016, this presents a 12.42% CAGR in total market growth.

Search Analytics and Big Data

Big data is continually one of the top terms search on Gartner.com, and over the last twelve months, this trend has accelerated.  The following time series graph shows the weekly number of inquiries Gartner clients have made, with the red line being the logarithmic trend.

Banking (25%), Services (15%) and Manufacturing (15%) are the three most active industries in making inquiries about big data to Gartner over the last twelve months.  The majority of these are large organizations (63%) located in North America (59%) and Europe (19%).

What unifies all of these industries from a big data standpoint is how critical the stability of their customer relationships are to their business models.  Banks have become famous for bad service and according to the American Customer Satisfaction Index (ACSI) have shown anemic growth in customer satisfaction in the latest period measured, 2010 to 2011.  The potential for using big data to becoming more attuned to customer expectations and deliver more effective customer experiences in this and all services industries shows great upside.

Bottom line: Companies struggling with flat or dropping rankings on the ACSI need to consider big data strategies based on structured and unstructured customer data.  In adopting this strategy the potential exists to drastically improve customer satisfaction, loyalty, and ultimately profits.

How Google is Driving Mobile Video Market Growth

Google’s top advertising customers are pushing for convergence of mobile and video quickly, which is turning into a strong catalyst of growth of the global mobile video market.  With their largest advertising customers wanting greater flexibility in bringing video to mobile devices, Google will make significant strides this year to make that happen.

During their latest earnings call, Google execs said that Android, Chrome and YouTube are the highest priority areas of their business. I’ve been following the last year of earnings calls closely, and it’s clear that Google’s largest advertising customers are pushing the company to bring video to mobile at a level of performance and usability not accomplished yet.  The Q2, 2012 earnings call transcript makes this point clear which can be accessed here Google’s Management Discusses Q2 2012 Results – Earnings Call Transcript.

 Mobile and Video: Transforming Convergence Into Cash

Over the last year, Google executives have mentioned the growth of YouTube and its quick evolution from a content management system to a profitable advertising platform.   During the Q1, 2012 earnings call held on April 12, 2012 the following points were made:

  • Google reported they had over 800 million monthly users uploading over an hour of video per second
  • U.K. mobile operator O2 used YouTube as the foundation of a brand launch that year with support for 100 new original channels completed and launched
  • Global product launch plans from GM, Toyota and Unilever and several other large advertising accounts are also underway

During the Q2, 2012 earnings call, Nikesh Arora, Senior Vice President and Chief Business Officer started his comments regarding the YouTube business with the statement “I think in 2007 it was when newspapers frequently said YouTube is groping for an effective business model. I think we can declare we found our model.” Immediately after making this statement, Mr. Arora mentioned that yearly account signups have doubled year-over-year and users are uploading over 72 hours of video every minute.  He also mentioned that  “thousands of partners are making six figures and we’re proud to work with major record labels in Hollywood studios on this platform.”

The call continued with the points made of Danish advertisers shifting their television advertising dollars to YouTube and other Google branding solutions.  Additional companies mentioned on the call using YouTube-based advertising include Denon, Shire, and Intel.  Clearly these companies have major product introductions coming up and see mobile video as perfect for reaching more potential customers than ever before.

Google’s Challenge: Keep Content Quality and User Experience Constantly Improving

If Google is going to attain the full revenue potential of YouTube as an advertising platform, they’ll need to focus on the following factors:

  • Create Application Programmer Interfaces (APIs) and easy-to-use programming tools for quickly creating mobile-optimized sites.  As Gartner studies have shown, video on telephones is most often used as a time-filler, with a median length of 2 minutes, 46 seconds.
  • YouTube will need to support more optimized mobile-based video browsers that can support contextual search.  This will be a core requirement for the enterprise, specifically in the areas of mobile customer care, mobile commerce and mobile health.
  • More extensive analytics in YouTube than are available today, specifically tying into to major marketing strategies including product introductions.  It is becoming common knowledge that videos improve viewer engagement and prospects attribute a more positive shopping experience when they are used.  Luxury brands are investing heavily in this technology including BMW, Burberry, Channel, Louis Vuitton and many others.
  • A Google/Ipsos OTX MediaCT smartphone users study completed in April, 2011 shows that 77% of smartphone users said that their most visited site was a mobile search engine.

Mobile Video: The Market YouTube Built

The size of the worldwide mobile video market was comprised of 429 million mobile video users in 2011, projected to grow exponentially to 2.4 billion users by 2016.  Smartphones and tablet sales will contribute 440 million new mobile video users during the forecast period.  These market estimates are from the recently published Gartner report, Market Trends: Worldwide, the State of Mobile Video, 2012.

Additional take-aways from this report include the following:

  • Allot Communication’s reports that mobile streaming grew 93% in the first half of 2011; Allot also reports that the usage of YouTube’s mobile channel grew by 152% and YouTube generated 22% of all mobile video traffic in the first half of 2011.  YouTube reports getting 400 million video views a month globally.
  • Gartner reports from a survey completed in the 4th quarter of 2010 that 32% of mobile enterprise users watch short videos from YouTube and other sites optimized for video streaming.
  • The fastest growth for mobile video will be in Latin America as smartphone adoption continues to accelerate, replacing traditional cell phones in these markets.  Asia/Pacific will have the highest number of mobile video users at 541 million by 2016.  Both of these markets will benefit from low-cost smartphones being produced by contract manufacturers who are becoming the dominant production strategy of brand leaders globally. The following graphic shows the Mobile Video User Forecast by Region, Worldwide, 2008 – 2016.

  • By 2016, close to 60% of professionally developed mobile video content will be delivered via mobile-optimized websites that also have enhanced contextual search functionality included in the content management systems.
  • Mobile customer care, mobile commerce and mobile health will be the three primary industry drivers in the near-term of mobile video market, emerging as growth catalysts of this emerging market.
  • Cisco’s Visual Networking Index study reports that last year, mobile video accounted for 56% of all mobile data traffic.
  • 3G/4G connections are emerging as a powerful catalyst of mobile video growth.  Gartner is forecasting that the worldwide share of mobile video connections on 3G/4G will increase from 18% in 2011 to 43% in 2015.  In more established markets incouding North America and Western Europe, the percentage of 3G/4G connections is expected to be as high as 80% and 96% respectively.
  • Gartner projects that 70% of mobile video users will use only Wi-Fi to view mobile video, with the remainder of the market relying on a mix of cellular and Wi-Fi networks to gain access and also upload content.   The following figure shows the Mobile Video User Forecast by Network Type, Worldwide, 2008 – 2016.

Source: Market Trends: Worldwide, the State of Mobile Video, 2012. Gartner Group. Published: 10 February 2012 ID:G00223693 Author: Shalini Verma.   Link: http://www.gartner.com/id=1920315

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