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Posts tagged ‘Louis Columbus’ blog’

BCG’s Value Creators Report Shows How Software Is Driving New Business Models

boston-300x211Boston Consulting Group (BCG) recently released their fifth annual technology, media and telecommunications (TMT) value report. The 2013 TMT Value Creators Report: The Great Software Transformation, How to Win as Technology Changes the World (free, opt-in required, 41 pgs).

The five trends that serve as the foundation of this report include the increasing pervasiveness of software, affordable small devices, ubiquitous broadband connectivity, big-data analytics and cloud computing.  BCG’s analysis illustrates how the majority of TMT companies that deliver the most value to shareholders are concentrating on the explosive growth of new markets, the rise of software-enabled digital metasystems, and for many, both.

The study is based on an analysis of 191 companies, 76 in the technology industry, 62 from media and 53 from telecom.  To review the methodology of this study please see page 28 of the report.

Here are the key takeaways from this years’ BCG TMT Value Creators Report:

  • BCG is predicting 1B smartphones will be sold in 2013, the first year their sales will have exceeded those of features phones.  By 2018, there will be more than 5B “post-PC” products (tablets & smartphones) in circulation. There are nearly as many mobile connections in the world as people (6.8B) according to the United Nation’s International Telecommunication Union (ITU).

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  • 27 terabytes of data is generated every second through the creation of video, images social networks, transactional and enterprise-based systems and networks.  90% of the data that is stored today didn’t exist two years ago, and the annual data growth rate in future years is projected to be 40% to 60% over current levels according to BCG’s analysis.

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  • The ascent of communications speeds is surpassing Moore’s Law as a structural driver of growth.  BCG completed the following analysis graphing the progression of microprocessor transition count (Moore’s Law) relative to Internet speed (bps) citing Butter’s Law of Photonics which states that the amount of data coming out of an optical fiber is doubling every nine months. BCG states that these dynamics are democratizing information technology and will lead to the cloud computing industry (software and services) reaching nearly $250B in 2017.
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  • BCG predicts that India will see a fivefold increase in digitally-influenced spending, ascending from $30B in 2012 to $150B in 2016, among the fastest of all nations globally according to their study. India will also see the value of online purchases increase from $8B in 2012 t5o $50B in 2016.

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  • 3D printing is forecast to become a $3.1B market by 2016, and will have an economic impact of $550B in 2025, fueling rapid price reductions in 3D printers through 2017.  BCG sees 3D printing, connected travel, genomics and smart grid technologies are central to their digital metasystem.   The following graphic illustrates the key trends in each of these areas along with research findings from BCG and other sources.

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  • Only 7% of customers are comfortable with their information being used outside of the purpose for which it was originally gathered.

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  • BCG reports that mobile infrastructure investments in Europe have fallen 67% from 2004 to 2014.  Less than 1% of mobile connections in Europe were 4B as of the end of 2012, compared to 11% in the U.S. and 28% in South Korea.   European operators have also been challenged to monetize mobile data as well, as the following figures illustrate.

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  • Big Data is attracting $19B in funding across five key areas according to BCG’s analysis.  These include consumer data and marketing, enterprise data, analytical tools, vertical markets and data platforms.  A graphical analysis of these investments is shown below.

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Roundup Of Cloud Computing And Enterprise Software Predictions For 2014

cloud computing predictions 2014 Alan Kay’s saying that the best way to predict the future is to create it resonates through the best cloud computing and enterprise software predictions for 2014. Constraints that held start-ups back from delivering sophisticated new apps and services are disappearing fast.  The dynamics of one of my favorite books, The Innovator’s Dilemma by Clayton Christensen, are in full force across the cloud and enterprise landscape.

There are many predictions being generated right now and instead of writing yet another set,  I’m providing a listing of those that are the most interesting and thought-provoking. They are listed below:

  • 10 Cloud Computing Predictions for 2014 – In-depth analysis of ten predictions including how more companies will realize they are really in the software business, private cloud computing having a moment of truth and continued adoption of cloud brokerages.  This set of predictions is an interesting read and provides useful insight.  I’d just add that as application developers go, so goes an industry, a point Bernard Golden refers to in this post.
  • Analytics Eats the World in 2014 – George Mathew of Alteryx is one of the most driven people I’ve ever met about analytics programming and development.  He’s very focused on breaking down constraints that hold analysts back from getting more value from their data. His predictions provide insight into how business analysts’ roles are changing based on rapid advances in analytics app development, model development and use.
  • Changing Cloud Scapes in 2014 – Jeff Kaplan, Managing Director of THINKstrategies provides ten insightful predictions regarding the continued adoption of cloud computing platforms in the enterprise.  His fourth prediction, “Although horizontal cloud solutions will continue to experience significant growth, vertical market solutions aimed at specific industries will grow even more rapidly” is starting to emerge today.  The recent success of Veeva Systems supports his prediction and points to next year seeing more vertical market solutions being successfully launched.
  • Cloud computing experts forecast the market climate in 2014 – Excellent summary of seven cloud computer experts’ predictions for 2014 including Mark Eisenberg, Roger Jennings, Paul Korzeniowski, David S. Linthicum, Tom Nolle, Dan Sullivan and Mark Szynaka.  Highlights include IDC analysts predicting the “Over the 2013 to 2017 forecast period, public IT cloud services will have a compound annual growth rate [CAGR] of 23.5%, five times that of the IT industry as a whole,” and PaaS will lead IaaS and SaaS with a CAGR of 29.7%. What’s useful about these set of predictions is the breadth of expertise reflected in market statistics, market and technology projections and insights shared.
  • Cloud Computing Predictions for 2014: Cloud Joins The Formal IT Portfolio – James Staten of Forrester Research has compiled an excellent series of predictions for the year with emphasis on security and SaaS becoming the de facto choice for new applications.  While he hasn’t quoted adoption figures of SaaS relative to on-premise, he does point out that Forrester believes HCM, CRM and collaboration will be the leading categories of SaaS apps in 2014.
  • My One Big Fat Cloud Computing Prediction for 2014 – I have been following the industry analysis, writing and research of Joe McKendrick for years based on the excellent insight he provides.  Joe predicts that cloud computing is set to become mainstream computing, period.  He cites Cisco’s research showing the majority of data center will be cloud-based and shares his perspective of the market.  Joe has an innate sense of how enterprises adopt and use technology and this post reflects that expertise.
  • SaaS predictions for 2014 – Chris Kanaracus is predicting that multitenancy will fade away as a major concern in SaaS, geographic depth of coverage will accelerate with cloud vendors announcing new data center openings around the world, and more vertical market adoption of SaaS.  He also prefaces his predictions with the Gartner forecast for SaaS (software as a service) quoting their figures of the total market will toping $22 billion through 2015, up from more than $14 billion in 2012.
  • Top Predictions about Software Companies in 2014 – In-depth analysis and predictions of which companies are going to be the most interesting to watch in 2014 and predictions regarding the enterprise software landscape.  This post provides a great overview of how industry veterans see enterprise software changing as a result of cloud computing as well.
  • Troubling, Challenging 2014 ERP Predictions – Brian Sommer’s predictions are the most thought-provoking and honest of any written so far this year. He writes “for an ERP vendor to sell CX (customer experience) software and then mistreat their own customers so badly is more than ironic (or moronic). It’s a death wish.  Yet, it happens.”  If there is only one set of predictions you read from this list, be sure to read this set.
  • What Should CMOs Do In 2014? IDC’s Top Ten Predictions – Gil Press provides in-depth analysis of IDC’s predictions of how the role of CMO will change in 2014.  He’s summarized the key points of the recent webinar including market forecasts from IDC, providing his insight and expertise in this post.  IDC is predicting that digital marketing investment will exceed 50% of total program budget by 2016, up from 39% in 2013 and that by the end of 2014, 60% of CMOs will have a formal recruiting process for marketers with data skills.

IDC’s Top Ten Technology Predictions For 2014: Spending On Cloud Computing Will Exceed $100B

Planning-for-Cloud-Computing-2014-Final-300x2242-300x225International Data Corporation recently presented their top ten technology predictions for 2014.   Frank Gens, Senior Vice President and Chief Analyst at IDC hosted a webinar to present the research firm’s predictions for 2014 including the research firm’s latest cloud computing market forecast.  You can see a replay of the webinar and get the predictions documents at IDC Predictions 2014.  They are briefly summarized below:

  • Emerging markets will return to double-digit growth of 10%, driving nearly $740B or 35% of worldwide IT revenues and, for the first time, more than 60% of worldwide IT spending growth.  IDC also predicted that in 2014 the number of smart connected devices shipped in emerging markets will almost double that shipped in developed markets. In addition, IDC predicts that over the next seven years emerging markets cloud spending will grow seven-fold versus three-fold in developed markets.  IDC is predicting IT spending in Western Europe will be marginally up, with U.S. and Japan spending marginally down.
  • 3rd-platform-253x300Worldwide IT spending will grow 5% year over year to $2.1 trillion in 2014. Spending will be driven by 3rd Platform technologies, which will grow 15% year over year and capture 89% of IT spending growth.  Smartphones and tablets will lead 2014 growth, accounting for over 60% of total IT growth.  Excluding mobile devices, IT growth will only by a modest 2.4%.  The graphic shown to the right was shared during the webinar today, explaining the 3rd platform and its contribution to market growth.
  • Within the 3rd Platform, value will start to migrate “up the stack”, from infrastructure as a service (IaaS) to platform as a service (PaaS) and from generic PaaS to data-optimized PaaS. The latter will be most evident as Amazon Web Services rolls out an avalanche of platform-as-a-service offerings for developers and higher value services for businesses. This will force incumbent IT suppliers – the companies that won market leadership in the 2nd Platform era – to urgently reconfigure themselves to fight for position in the 3rd Platform marketplace.
  • The mobile device onslaught will continue in 2014 with sales of tablets growing by 18% and smartphones by 12%. The Android community, led by Samsung, will maintain its volume advantage over Apple, while Apple will hold onto its value edge with higher average selling prices and an established ecosystem of apps. But Google Play (Android) app downloads and revenues are making dramatic gains and the “app ecosystem value gap” will be significantly narrowed in 2014. And the clock will be ticking louder for Microsoft, which needs to quickly double mobile developer interest in Windows.  Frank Gens presented the following graphic to support this prediction:

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  • Cloud spending, including cloud services and the technology to enable these services, will surge by 25% in 2014, reaching over $100B.   IDC explained the $100B figure includes software, services and cloud infrastructure.  IDC also expects to see a dramatic increase in the number of datacenters as cloud players race to achieve global scale. This will be accompanied by a similar expansion in the variety of workload-specialized cloud infrastructure services, leading to new forms of differentiation among cloud service providers. Finally, a pitched battle will be joined for the developers that can create the cloud-based applications and solutions that will fuel the market’s growth.  IDC predicts that by 2017, 80%+ of new cloud apps will be hosted on six PaaS platforms.
  • Spending on big data technologies and services will grow by 30% in 2014, surpassing $14 billion as demand for big data analytics skills continues to outstrip supply. Here the race will be on to develop “data-optimized cloud platforms”, capable of leveraging high volumes of data and/or real-time data streams. Value-added content providers and data brokers will proliferate as enterprises (and developers) look for interesting data sources as well as applications that help them to understand their customers, products, and the markets in which they exist.  IDC is also predicting that big data analytics services 2014 spending will exceed $4.5B, growing 21% over 2013.
  • Social technologies will become increasingly integrated into existing enterprise applications over the next 12-18 months. In addition to being a strategic component in virtually all customer engagement and marketing strategies, data from social applications will feed the product and service development process. IDC expects enterprise social networks will become increasingly available as standard offerings from cloud services providers. This will enable enterprises to further embed social into the workflow, rather than having a separate “social layer.”  IDC also predicts that by 2017, 80% of Fortune 500 companies will have an active customer community, up from 30% today.  By 2016, 60% of the Fortune 500 will deploy social-enabled innovation management solutions.
  • Datacenters represent the physical foundation underneath the cloud, and are thus a crucial component of the 3rd Platform. As cloud-dedicated datacenters grow in number and importance, the market for server, storage, and networking components will increasingly be driven by cloud service providers, who have traditionally favored highly componentized and commoditized designs. The incumbent IT hardware vendors, who have struggled to sell into this market, will be forced to adopt a “cloud-first” strategy, designing new innovations for initial release and widespread adoption in cloud service provider datacenters.
  • The 3rd Platform will deliver the next generation of competitive advantage apps and services that will significantly disrupt market leaders in virtually every industry. A key to competing in these disrupted and reinvented industries will be to create industry-focused innovation platforms (like GE’s Predix) that attract and enable large communities of innovators – dozens to hundreds will emerge in the next several years. IDC predicts that most of these industry platform players will not reinvent the cloud underpinnings they need, but will build on top Amazon, Microsoft, IBM, Salesforce, and others’ platforms. In 2014, it will be critically important for these IT leaders to find these emerging industry platform players and win their business.
  • The 3rd Platform will continue to expand beyond smartphones, tablets, and PCs in 2014 to the Internet of Things (IoT). With IoT momentum building in 2014, IDC expects to see new industry partnerships to emerge as traditional IT vendors accelerate their partnerships with global telecom service providers and semiconductor vendors to create integrated offerings in the consumer electronics and connected device spaces. This kind of collaboration and coordination will be necessary to reach the 30 billion autonomously connected end points and $8.9 trillion in revenues that IDC believes the IoT will generate by 2020.

Source: IDC Predicts 2014 Will Be a Year of Escalation, Consolidation, and Innovation as the Transition to IT’s “3rd Platform” Accelerates 

Roundup of Cloud Computing Forecasts Update, 2013

tunnel-of-speed-forecast-of-saas-cloud-computing-final-300x201Time-to-market, more flexible support for business strategies by IT, and faster response time to competitive conditions are combining to accelerate cloud computing adoption today.

Of the enterprises I’ve spoken with over the last several months including several Fortune 500 corporations to small businesses just beginning to evaluate cloud-based CRM and manufacturing systems, one message resonates from all of them: they need enterprise applications that keep pace with how fast they want to move on new business strategies. The latest round of cloud computing forecasts reflect the urgency enterprises have of making IT a foundation for strategic business growth.

The following is a summary of the latest cloud computing forecasts and market estimates:

McKinsey Analysis

  • IDC predicts public IT cloud services will reach $47.4B in 2013 and is expected to be more than $107B in 2017. Over the 2013–2017 forecast period, public IT cloud services will have a compound annual growth rate (CAGR) of 23.5%, five times that of the IT industry as a whole. The growing focus on cloud services as a business innovation platform will help to drive spending on public IT cloud services to new levels throughout the forecast period. By 2017, IDC expects public IT cloud services will drive 17% of IT product spending and nearly half of all growth across five technology categories: applications, system infrastructure software, platform as a service (PaaS), servers, and basic storage. Software as a service (SaaS) will remain the largest public IT cloud services category throughout the forecast, capturing 59.7% of revenues in 2017. The fastest growing categories will be PaaS and Infrastructure as a service (IaaS), with CAGRs of 29.7% and 27.2%, respectively.  Source: IDC Forecasts Worldwide Public IT Cloud Services Spending to Reach Nearly $108 Billion by 2017 as Focus Shifts from Savings to Innovation.

IDC Forecast Public IT Spending

  • Informatica’s presentation titled Enable Rapid Innovation with Informatica  and MicroStrategy for Hybrid IT by Darren Cunningham, Informatica Cloud  and Roger Nolan, Informatica Data Integration and Data Quality contains a useful series of cloud market overviews supported by 451 Research Gartner, Forrester and IDC data.  A summary of the statistics section is shown below:

Informatica

adoption graphic from KPMG

  • Gartner predicts that in the next five years enterprises will spend $921B on public cloud services, attaining a CAGR of 17% in the forecast period.  Darryl Carlton, Research Director, APAC with Gartner recently presented Cloud Computing 2014: Cloud Computing 2014: ready for real business?  His presentation is full of insightful analysis and market forecasts from Gartner, with specific focus on Asia-Pacific.
  • Visiongain predicts the Platform-as-a-Service (PaaS) submarket is valued at $1.9B in 2013 growing to $3.7B in 2018, attaining a 14.3% CAGR for the period 2013-2018.  The following figure shows the firm’s forecast.  Source: Visiongain on Slideshare.
  • Gartner predicts that in the next five years enterprises will spend $921B on public cloud services, attaining a CAGR of 17% in the forecast period.  Darryl Carlton, Research Director, APAC with Gartner recently presented Cloud Computing 2014: Cloud Computing 2014: ready for real business?  His presentation is full of insightful analysis and market forecasts from Gartner, with specific focus on Asia-Pacific.
  • Visiongain predicts the Platform-as-a-Service (PaaS) submarket is valued at $1.9B in 2013 growing to $3.7B in 2018, attaining a 14.3% CAGR for the period 2013-2018.  The following figure shows the firm’s forecast.  Source: Visiongain on Slideshare.

visiongain forecast

marketscape

  • Boston Consulting Group writes that SaaS is a $15B market, growing at three times that rate of traditional software.  BCG estimates that SaaS is 12% of global spending on IT applications.  BCG interviewed 80 CIOs and found they were willing to consider SaaS solutions for 35% to 60% of their application spending.  BCG also evaluated how the economics of cloud software adoption vary for on-premises versus SaaS customers.  The following two charts from the completed study. Source: (Free, opt-in required) Profiting from the Cloud: How to Master Software as a Service

Profiting_Cloud_Ex1_lg_tcm80-138310 BCG Categories

Profiting_Cloud_Ex2_lg_tcm80-138309 BCG Economics

Asia Pacific Cloud Market Growth

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.

Why Salesforce Is Winning The Cloud Platform War

300px-Salesforce_Logo_2009The future of any enterprise software vendor is being decided today in their developer community.

Alex William’s insightful thoughts on Salesforce Is A Platform Company. Period. underscores how rapidly Salesforce is maturing as a cloud platform.  And the best measure of that progress can be seen in their developer community.

(To be clear, Salesforce and the other companies mentioned in this post are not clients and never have been.  I track this area out of personal interest.)

DevZone force.com

The last four years I’ve made a point at every Salesforce Dreamforce event to spend the majority of my time in the developer area.  Watching mini hacks going on in the DevZone, mini workshops, the Salesforce Platform and Developer keynotes over the last few years has been a great learning experience.  An added plus: developers are often skeptical and want to see new enhancements help streamline their code, extend its functionality, and push the limits of the Force.com platform. This healthy skepticism has led to needed improvements in the Force.com platform, including a change to governor limits on Application Programmer Interface (APIs) performance and many other enhancements.  Despite the criticisms of Force.com being proprietary due to Apex and SOQL, the crowds at developer forums continue to grow every year.

I’ve started to look at the developer area as the crucible or foundry for future apps.  While the Cloud Expo shows how vibrant the partner ecosystem is, the developer area is where tomorrow’s apps are being coded today. The Force.com Workbook, an excellent reference for Force.com developers, was just released October 1 and DeveloperForce shows how far the developer support is matured in Salesforce.  In addition a new Force.com REST API Developer’s Guide is out just last month.

The Journey From Application To Platform

In visiting the developer area of Dreamforce over the last four years I’ve seen indications that Salesforce is successfully transforming itself into a cloud platform business:

  • Significant jump in the quantity and quality of developer attendees from 2010 to 2012.  The depth of questions, sophistication of code samples, calls for more flexibility with governor limits, and better mobile support typified these years.
  • Steady improvement to visual design tools, application development environment and support for jQuery, Sencha and Apache Cordova.
  • The steady maturation of Salesforce Touch as a mobile development platform and launch of Salesforce Platform Mobile Services Launched in 2011, this platform continues to mature, driven by developer’s requirements that reflect their customers’ needs for mobility support.  HTML 5 is supported and the apps I’ve seen written on it are fast, accurate and ideal for customer service.  ServiceMax has created exceptional mobile apps including their comprehensive ServiceMax for iPad app on the Force.com platform.
  • 2012: Rise of the Mobile Enterprise Developer.  Salesforce’s enterprise customers in 2009 weren’t nearly as active as they were last year with questions on legacy systems integration and how to create web services capable of integrating customer data.  2011 was a breakout year in mobile app development with 2012 showing strong momentum on mobile web services development.  I expect this year’s Dreamforce developer community to reflect the rapidly growing interest in mobile as well.

How Enterprise Applications Make The Salesforce Platform Work For Them

In speaking with Salesforce developers over the years one of my favorite questions continues to be “what is the real payoff of having a native Force.com application in your company?”  Initially I thought this was marketing spin from enterprise software vendors attempting to use features as benefits, however after a closer look it is clear that the platform has significant advantages, especially for any solution requiring global deployments or large numbers of users.  Here is what I found out:

  • The investments Salesforce.com has made in their cloud infrastructure over several years (and continue to make) has resulted in a platform that developers  are leveraging to rapidly deliver enterprise applications that deliver world-class performance, reliability, and security.
  • Of the many native Force.com applications that extend Salesforce beyond CRM, it’s been my experience the most challenging are Configure-Price-Quote (CPQ) and contract management.  Creating a single system of record across these two areas is challenging even outside of Force.com, which is why many companies in this space have two entirely different product strategies.  Apttus is the exception as they have successfully created a unified product strategy on Force.com alone.  I recently had the chance to speak with Neehar Giri, President and Chief Solutions Architect.  “Apttus’ strategic decision to deliver our enterprise-class applications natively on the Salesforce platform has allowed us to focus on our customer needs, meeting and exceeding their expectations in both functionality and speed of innovation,” said Neehar Giri, president and chief solutions architect, Apttus.  “We’ve seen the platform evolve rapidly in its capabilities and global scalability.  Apttus’ customers have and continue to benefit from the true multi- tenancy, world class security, reliability and performance of the Salesforce Platform.”
  • Salesforce.com’s multi-tenant architecture allows for optimization of computing resources resulting in savings and significant gains in efficiency for global enterprises even over applications deployed on private clouds.
  • Native Force.com applications share the same security model as Salesforce apps.  Financialforce.com chose to develop their accounting, ordering and billing, professional services automation and service resource planning entirely on the Force.com architecture due to shared master data, multi- tenancy, world class security, reliability and performance.  This shared architecture also benefits enterprise consumers of native applications by providing best-in-class uptime.
  • Native Force.com applications are contributing to greater return on investment (ROI). IT often does not need to manage data integration or sync issues, upgrades to even large numbers of users are easily deployed, and users can remain in a familiar interface.   These benefits support faster and easier deployment as well as rapid user adoption both of which are critical to success and a high ROI for any solution. Enterprise developers have often mentioned the familiar interface and ease of deployment have led to higher rates of adoption than any other approach to delivering new application functionality.
  • Advanced APIs to support integration of legacy applications not on the Force.com platform.
  • Proven ability of Salesforce.com to support global deployments.  The company has expanded its global support centers.  Salesforce.com also publishes real-time statistics on system status: http://trust.salesforce.com/trust/.
  • A continuing acceleration of new capabilities resulting from increasing numbers of developers driving the advancement of the platform through their collective input, suggestions and requirements.
  • Ability to design applications that respond with greater customer insight and intelligence across mobile devices.  ServiceMax has an impressive series of mobile applications that do this today.  I had a chance to speak with David Yarnold, their CEO about his vision for the company.  He wants to give ServiceMax’s customers the ability to deliver flawless field service where every interaction is perfect.  By building on the Force.com architecture he explained how each service customers’ contextual intelligence can be seen in real-time by everyone involved in serving customers.  Clearly ServiceMax is capitalizing on the mobile development platform area of Force.com as well.

Bottom Line: Enabling developers to attain greater revenue growth, while creating an extensive mobile app development platform is further proof Salesforce has turned the corner from being an application company to a platform provider.

Best- And Worst-Performing Cloud Computing Stocks Through Q3, 2013

cloud-computing-stock-update-October-2013-300x225The five highest-performing cloud computing stocks as of Q3, 2013 in the Cloud Computing Stock Index have proven prowess in closing enterprise-level deals, expertise in compliance and security, and years of infrastructure experience.

Twelve of the nineteen companies in the index delivered a positive return in the first three quarters of this year.  NetSuite (NYSE:N) leads all companies in the index with an annualized gain as of calendar Q3 of 88.69% and has a dollar value of $16,078 on $10,000 invested on January 2nd of this year.    Workday (NYSE:WDAY) attained an annualized gain of 81.49% as of Q3, and has a dollar value of $15,617 on $10,000 invested on January 2nd.  Qualys (NASDAQ: QLYS) attained an annualized gain of 49.33% and delivered $13,498 on $10,000 invested from January 2nd to October 2nd of this year.  The following table lists the top best performing cloud computing stocks in the index.

Best Performing 

high-performing-cloud-computing-stocks

Worst Performing

Seven of the nineteen companies in the index lost value, with Fusion-IO (NYSE:FIO) experiencing the greatest annualized loss in stock value of -51.03% and $10,000 invested on January 2nd of this year being worth $5,862 as of October 2nd.  Rackspace (NYSE:RAX) had an annualized loss of -38.61%, with $10,000 invested on January 2nd being worth $6,943 as of October 2nd.  The following table shows the five lowest-performing cloud computing stocks in the index.

low-performing-cloud-computing-stocks

The nineteen companies that comprise the Cloud Computing Stock Index attained a 19.41% return from October 3, 2012 to October 2, 2013.  In the same period Microsoft gained 13.98%, Oracle, 7.05% and SAP, 4.83%. Please click on the index to expand it for easier viewing.

CLOUD-INDEX-FOR-A-YEAR

Specifics on the Cloud Computing Stock Index

I used The Cloud Times 100 as the basis of the index, selecting nineteen companies all of which are publically traded.  The latest edition of the Cloud Computing Stock Index is shown here.  The filter applied to these companies is that 50% or more of their revenues are generated from cloud-based applications, infrastructure and services.  Please click on the index for easier viewing.

clous-computing-stock-index-October-2-20132-1024x351

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.  

451 Research Summit: Enterprises Competing With Digital Infrastructure & Cloud Computing

bellagio1Enterprises are defining their own cloud strategies, their own way, ignoring vendor hype and requiring metrics that reflect security (61%), mean-time-to-recover from outages (57%), number of data center outages (51%).

This and many insights were gained from attending the 451 Research Hosting and Cloud Transformation Summit at the Bellagio Resort & Casino in Las Vegas last week. 451 Research provided a free pass to the event but did not cover travel, hotel or meals.

What’s refreshing about 451 Group’s conferences is that each of their companies including 451 Research, Uptime Institute, and Yankee Group rely on solid methodologies to research their coverage areas and markets. This results in presentations that are packed with insight and are based on a solid foundation of interviews and research.  I had a chance to catch up with SoftLayer’s Lance CrosbySimon West and Andre Fuochi for an update on how the IBM acquisition is going, which is summarized in this post as well.  The slides shown are from Michelle Bailey, Vice President, Datacenter Initiatives and Digital Infrastructure’s excellent presentation given at the conference.

The following are the key take-aways from the summit:

  • Enterprises are defining their own cloud strategies, their own way, ignoring vendor hype and requiring metrics that reflect security (61%), mean-time-to-recover from outages (57%), number of data center outages (51%). When asked which metrics beyond Service Level Agreements (SLAs) service providers should report, respondents to the 451 Research survey provided the following insights, shown below:

  • The top three SaaS applications in two years will be for the enterprise, business support, and database platforms per 451 Research’s latest survey:

  • Infrastructure-as-a-Service (IaaS) growth is critical to off-premises hosting deployments succeeding in the next two years, as the following graphic illustrates:

  • 80%of enterprises would experience a severe impact to their operations if there was a cloud outage of just a day which make security and availability must-haves for any hosting and cloud services provider.  The following graphic breaks down the impact of service provider outage by time:
  • Worldwide Infrastructure-as-a-Service (IaaS) is projected to grow from $4.475B in 2013 to $10.23B in 2016, with Platform-as-a-Service (PaaS) growing from $2.23B in 2013 to $5.24B in 2016.  The following slide provides a breakout of forecast categories by hosting and cloud business categories:

Why Enterprises Need A Digital Infrastructure Playbook

The focal point of the summit was the launch of the digital infrastructure playbook.  Tony Bishop, Chief Strategy Officer, The 451 Group introduced the Digital Enterprise Playbook Series which you can download here. His presentation provided insights into how enterprises are struggling to align legacy IT, infrastructure including data centers, cloud, applications and system management to business goals while becoming more agile.

I had a chance to speak with Tony after his presentation and asked him why enterprises need a digital infrastructure playbook now.   “Digital transformation is breaking down the barriers to sustainable global prosperity by shifting power towards the individual,” he said. “This revolution will transform how enterprises create and deliver value. Digital enterprises will pursue and build dynamic infrastructure capabilities to innovate and differentiate customer experience, constantly empower employees and disseminate prescriptive knowledge across the enterprise.”

One of the most passionate and knowledgeable people I’ve ever met in infrastructure and IT research is Martin McCarthy, Chairman and CEO, The 451 Group.  He told me he’s seeing more pressure than ever for edge-to-core integration in the enterprise, which is forcing CIOs to be strategists over experts in cost reduction.  “Digital infrastructure will be the backbone enabling enterprise transformation in coming years. To blaze this trail, organizations need an ‘edge to core’ digital infrastructure playbook,” he said.   Presented below is a page from the Digital Enterprise Playbook Series:

The eight-striper wordmark of IBM, the letters...

IBM SoftLayer Update

  • IBM’s acquisition of SoftLayer is going excellently and many IBM divisions now are actively collaborating with the Softlayer team to migrate existing apps and develop new ones. Thank you Lance CrosbySimon West and Andre Fuochi for the update provided at the conference, it was invaluable.
  • Softlayer will be the foundation for a global cloud services infrastructure capable of delivering applications across multiple continents and thousands of users within hours, not days.  Lance Crosby explained the vision IBM has of delivering a continual stream of new applications and services over the global cloud services infrastructure network, which has the potential to turn into a high margin business quickly.
  • Softlayer is assisting with making the IBM Request for Proposal (RFP) more efficient based on their deep expertise in this critical area. Based on personal experience it can take anywhere from several weeks to up to several months for an RFP response.  SoftLayer has devised processes and systems that make RFP response times a fraction of that.
  • The majority of the top ten customers Softlayer has today are running large-scale clusters of Hadoop, with 40 Hadoop clusters being commonplace.  Lance Crosby mentioned these customers are very sophisticated in their use of Hadoop and many of them are in consumer products companies, looking to gain greater insights into customer behavior.
  • Bare metal servers running Hadoop are one of the fastest growing areas of the Softlayer business right now.  Simon West made an excellent point that running Hadoop on bare metal servers instead of through virtualized environment leads to a higher level of throughput, given Softlayer’s internal testing results.  Bare metal servers continue to accelerate in the industry and Softlayer’s executives confirmed they are seeing an acceleration of demand in this area.
  • An additional six data centers are planned for 2014, and SoftLayer has the capability to build one data center every two months of needed.  When asked what the global expansion plans are for SoftLayer since the acquisition, Lance Crosby told me London and Germany are of primary interest.  He also added that whenever the demand for a given nation reached between four and five thousand servers, Softlayer and IBM will consider building a data center in-country.

Gartner’s Mobile App Store Forecast Predicts $26B in Sales, 102B Downloads in 2013

App-store-300x209Gartner’s latest Mobile App Store Worldwide Forecast predicts annual downloads will increase 59.38% from 64 billion in 2012 to 102 billion in 2013.  Worldwide revenue is forecast to also increase 44.45%, from $18B in 2012 to $26B in 2013.

Here are additional key take-aways from the Gartner Mobile App Store Forecast that was published this week:

  • Free applications are forecast to be 91% of all downloads in 2013, increasing to 94.5% by 2017.  Paid-for downloads will grow at a Compound Annual Growth Rate (CAGR) of 14.22% from 2012 through 2017.  The following table provided in the Mobile App Store Forecast announcement this week provides an overview of free and paid-for downloads by year.
  • In-app purchases (IAP) are growing at a 27.83% Compound Annual Growth Rate (CAGR), increasing from 11% of revenue in 2012, projected to increase to 48% of app store revenue by 2017. IAP purchases are also projected to deliver 17% of store revenue in 2013, increasing to 48% in 2017.  At the projected rate of growth in this forecast, it is reasonable to assume IAP will surpass paid-for and advertising-based approaches to downloading.
  • 90% of global downloads in 2017 will be from Apple iOS and Google Android app stores.  Gartner cites the large developer communities and expanding ecosystems for each of these mobile app stores as being catalysts of their growth.
  • Average monthly downloads per Apple iOS device is projected to decline from 4.9 in 2013 to 3.9 in 2017.  Gartner is also forecasting Google Android average monthly downloads to drop from 6.2 in 2013 to 5.8 in 2017.
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