- Global tech leaders predict cloud computing (11%), mobile platforms and apps (9%), Internet of Things (IoT)/machine-to-machine (M2M) (9%) and data and analytics (9%) will be the most disruptive technologies over the next three years.
These and many other insights are from the fourth annual 2015 Global Technology Innovation Survey released via webcast by KPMG last month. KPMG surveyed 832 technology industry business leaders globally, with the majority of being C-level executives (87%). Respondents were selected from a broad spectrum of businesses including tech industry startups, mid- and large-scale enterprises, angel investors and venture capital firms. For an in-depth explanation of the survey methodology, please see slides 6 and 7 of the webinar presentation. The goals of the survey include spotting disruptive technologies, identifying tech innovation barriers and opportunities, and tracking emerging tech innovation hubs.
The five insights and predictions from the report include the following:
- Global tech leaders predict cloud computing (11%), mobile platforms and apps (9%), Internet of Things (IoT)/M2M (9%) and data and analytics (9%) will be the most disruptive technologies over the next three years. U.S. tech leaders predict biotech/digital health/healthcare IT (15%), data and analytics (14%) and cloud computing (14%) will be the three most disruptive technologies over the next three years. Chinese tech leaders predict artificial intelligence/cognitive computing (15%) will be the most disruptive technology impacting the global business-to-consumer (B2C) marketplace.
- The three most disruptive technologies predicted to drive business transformation in enterprises over the next three years in the U.S. include cloud computing (13%), data and analytics (13%), and cyber security (10%). Japanese tech leaders predict artificial intelligence/cognitive computing will have the greatest effect (23%), and 14% of Chinese tech leaders predict the Internet of Things/M2M (14%) will have the greatest impact on business transformation in their country. The following table compares global tech leader’s predictions of which technologies will disrupt enterprises the most and drive business transformation over the next three years.
- Improving business efficiencies/higher productivity, and faster innovation cycles (both 20%) are top benefits tech leaders globally are pursuing with IoT strategies. The point was made on the webinar that in Asia, consumers are driving greater adoption of IoT-based devices to a richer contextual customer experience. Greatest challenges globally to adopting IoT is technology complexity (22%), lack of experience in the new technology or business model (16%), and both displacement of the existing tech roadmap and security (both 13%).
- Analytics are most often adopted to gain faster innovation cycles (25%), improved business efficiencies and higher productivity (17%) and more effective R&D (13%). The greatest challenges are technology complexity (20%) and lack of experience in the new technology or business model (19%),
- Tech leaders predict the greatest potential revenue growth for IoT in the next three years is in consumer and retail markets (22%). IoT/M2M is also expected to see significant revenue growth in technology industries (13%), aerospace and defense (10%), and education (9%). The following graphic compares tech leader’s predictions of the industries with the greatest potential revenue growth (or monetization potential) in the next three years.
Tech Innovation Global Webcast presenting the findings of KPMG’s 2015 Global Technology Innovation Survey
KPMG Survey: Top Disruptive Consumer Tech – AI In China, Healthtech In U.S., 3-D Printing In EMEA
- Channel sales and inside sales strategies delivered the highest revenue growth rates in 2014.
- Companies in the $5M – $7.5M range achieved 70% revenue growth in 2014, surpassing the median 36% growth rate last year.
These and many other insights are from the 2015 Pacific Crest SaaS Survey published by David Skok of Matrix Partners in collaboration with Pacific Crest Securities. You can download a free copy of Part I of the study here (PDF, opt-in, 72 pp). 305 SaaS companies were interviewed, 31% from international locations and 69% from North America. David Skok and Pacific Crest Securities will publish Part 2 of the results in the near future. SaaS Metrics 2.0 – Detailed Definitions provides a useful reference for many of the SaaS metrics mentioned in the study.
This year’s survey attracted an eclectic base of respondents, with median revenues of $4M a year, with 133 companies reporting less than $5M, and 57 over $25M. Annual Contract Value (ACV) across all respondents is $21K, with 17% of respondents reporting ACVs over $100K. Please see pages 3 & 4 of the study for a description of the methodology. Key take-aways from the study include the following:
- SaaS GAAP revenue growth is accelerating in 2014 and is projected to increase further in 2015 from 44% to 46%. Median revenue growth in 2014 for all survey respondents was 44%, with the aggregate projected growth for 2015 reaching 46%. When SaaS companies with less than $2.5M in revenues are excluded, median GAAP growth was 35% in 2014 and is expected to reach that same level in 2015.
- SaaS companies with mixed customer strategies are growing at 57% a year. Excluding respondent companies with less than $2.5M in revenues, a mixed customer strategy dominates all others. Concentrating on enterprises and small & medium businesses (SMBs) both drove 33% revenue growth of respondent companies this year.
- 40% of SaaS companies are using Amazon Web Services (AWS) to deliver their apps today. AWS is projected to increase to 44% three years from now, with Microsoft Azure increasing from 3% today to 6% in 3 years.
- 41% of all SaaS companies surveyed rely primarily on field sales. Factoring out the companies with less than $2.5M in revenue, field sales accounts for 32%.
- Field sales dominates as the most effective sales strategy when median deal sizes are $50K or more. In contrast, inside sales dominates $5K to $15K deal sizes, and the Internet dominates deal sizes less than $1K. The following graphic provides insights into the primary mode of sales by median initial contract size.
- 16% of new Average Contract Value (ACV) sales is from upsells, with the largest companies being the most effective at this selling strategy. One of the strongest catalysts of a SaaS companies’ growth is the ability to upsell customers to a higher ACV, generating significantly greater gross margin in the process. SaaS companies with revenues between $40M to $75M increase their ACV by 32% using upsells. Larger SaaS companies with over $75M in sales generate 28% additional ACV with upsell strategies.
- The highest growth SaaS companies are relying on upsells to fuel higher ACV. There is a significant difference between the highest and lowest growth SaaS companies when it comes to upsell expertise and execution. The following graphic provides an overview by 2014 GAAP revenue category of percent of ACV attributable to upsells.
- 60% are driving revenues with “Try Before You Buy” strategies, with 30% generating the majority of their revenues using this approach. On contrast, only 30% of companies generate revenues and ACV from freemium.
- 73% of midmarket companies say the complexity of their stored data requires big data analytics apps and tools to better gain insights from.
- 54% of midmarket companies’ security budgets are invested in security plans versus reacting to threats.
These and many other insights are from Dell’s second annual Global Technology Adoption Index (GTAI 2015) released last week in collaboration with TNS Research. The Global Technology Adoption Index surveyed IT and business decision makers of mid-market organizations across 11 countries, interviewing 2,900 IT and business decision makers representing businesses with 100 to 4,999 employees.
The purpose of the index is to understand how business users perceive, plan for and utilize four key technologies: cloud, mobility, security and big data. Dell released the first wave of its results this week and will be publishing several additional chapters throughout 2016. You can download Chapter 1 of the study here (PDF, no opt-in, 18 pp.).
Key take-aways from the study include the following:
- Orchestrating big data, cloud and mobility strategies leads to 53% greater growth than peers not adopting these technologies. Midmarket organizations adopting big data alone have the potential to grow 50% more than comparable organizations. Effective use of Bring Your Own Device (BYOD) mobility strategies has the potential to increase growth by 53% over laggards or late adopters..
- 73% of North American organizations believe the volume and complexity of their data requires big data analytics apps and tools. This is up from 54% in 2014, indicating midmarket organizations are concentrating on how to get more value from the massive data stores many have accumulated. This same group of organizations believe they are getting more value out of big data this year (69%) compared to last year (64%). Top outcomes of using big data include better targeting of marketing efforts (41%), optimization of ad spending (37%), and optimization of social media marketing (37%).
- 54% of an organization’s security budget is invested in security plans versus reacting to threats. Dell & TNS Research discovered that midmarket organizations both in North America and Western Europe are relying on security to enable new devices or drive competitive advantage. In North America, taking a more strategic approach to security has increased from 25% in 2014 to 35% today. In Western Europe, the percentage of companies taking a more strategic view of security has increased from 26% in 2014 to 30% this year.
- IT infrastructure costs to support big data initiatives (29%) and costs related to securing the data (28%) are the two greatest barriers to big data adoption. For cloud adoption, costs and security are the two biggest barriers in midmarket organizations as is shown in the graphic below.
- Cloud use by midmarket companies in France increased 12% in the last twelve months, leading all nations in the survey. Of the 11 countries surveyed, France had the greatest increase in cloud adoption within midmarket companies. French businesses increased their adoption of cloud applications and platforms from 70% in 2014 to 82% in 2015.
Sources: Dell Study Reveals Companies Investing in Cloud, Mobility, Security and Big Data Are Growing More Than 50 Percent Faster Than Laggards. October 13, 2015
Gartner announced their top 10 strategic technology trends for 2016 at the Gartner Symposium/ITxpo held October 4 – 8th in Orlando. David Cearley, Vice President and Gartner Fellow, presented the company’s Top Ten Strategic Technology Trends for 2016. You can find the video here.
Key take-aways from his presentation and the trends announced are provided below:
- Enterprise 3D-printing shipments will attain a 64.1% Compound Annual Growth Rate (CAGR) through 2019. David Cearley mentioned during his keynote that jet engines are being 3D printed today. He gave the example to illustrate that 3D printing will continue to gain adoption in more demanding manufacturing environments including aerospace, automotive, energy, medical devices and military-based markets and industries.
- Emergence of an entirely new class of business models based on smart machine technologies, advanced analytics and big data. Combining machine learning, continued adoption of Internet of Things (IoT) sensors and supporting data models, and advanced intelligence to interpret and act on the data, Gartner’s predictions set the stage of an entirely new class of business models. Manufacturing-as-a-Service and paying only for the production time used in a factory are within reach for more companies than before based on these predictions.
- The device mesh will expand to include IoT-based devices that scale well beyond the enterprise. Gartner is predicting that in the next three years traditional computing and communication devices, including desktop and mobile devices will increasingly be augmented by wearable devices, home electronics including appliances with sensors, transportation-based sensors and data collection devices, and environmental devices all capable of capturing data in real-time.
- A digital mesh will continue to proliferate, aligning apps and devices to individuals’ specific roles and tasks. Gartner sees this digital mesh as an expanding series of devices, services, platforms, informational networks and individuals that integrate together and provide contextual intelligence and enabling greater collaboration. The proliferation of the digital mesh will lead to more ambient, contextually intelligent and intuitive app design over time Gartner predicts.
- The next twelve months will also see the proliferation of algorithm-based businesses enabling automated background tasks including smart machines. Gartner’s technology trends for 2016 set a solid foundation for the growth of globally-based smart factories and production centers. Acumatica, Plex Systems and other Cloud ERP providers are ideally positioned for this trend, having proven their ability to provide manufacturing intelligence from the shop floor to the top floor. In addition to cloud platforms, these algorithm-based businesses will need to support unstructured data analysis including latent semantic indexing (LSI), data taxonomy and classification algorithms to ensure data fidelity and scalability, and more robust analytics and predictive modeling systems.
- Combining algorithms, analytics, data architectures and smart machines have the potential to revolutionize manufacturing quickly. General Electric’s Predix platform, IBM’s IoT Foundation and several other cloud-based IoT platforms are already making progress on transforming the vision of algorithm-based smart machine production strategies into a reality for manufacturers globally.
- Gartner sees a new IT reality taking shape. Adaptive security, advanced systems, Internet of Things (IoT), mesh app & service architectures are the catalysts of the new nature of IT that Gartner is predicting.
A graphic illustrating the top 10 strategic trends is show below:
Gartner Identifies the Top 10 Strategic Technology Trends for 2016. Press Release Announcement, October 6, 2015.
Video replay of the keynote: The Top 10 Strategic Technology Trends for 2016
These and other insights are from recent cloud computing forecasts and market estimates published by research and advisory consultancies including International Data Corporation (IDC), Forrester, Gartner, Ovum, Wikibon and others.
While the methodologies differ significantly, the findings from a recent Economist Intelligence Unit study provide the galvanizing thread across this diverse set of data. The Economist found that the most mature enterprises are now turning to cloud strategies as a strategic platform for growing customer demand and expanding sales channels. The study found low-maturity or lagging cloud adopters focus on costs more than growth.
Key take-aways from the round-up are provided below:
- 57% of IT architects and tech professionals are running apps on the Amazon Web Services (AWS) platform today. Rightscale’s 2015 State of the Cloud Report found that AWS adoption is over 4X greater than Microsoft Azure IaaS and 5X that of Rackspace Public Cloud. Rightscale found that AWS, Microsoft Azure IaaS, Azure PaaS, Rackspace Public Cloud and VMWare vCloud Air are the top five public cloud platforms used in enterprises today. Source: RightScale 2015 State Of The Cloud Report
- Goldman Sachs is forecasting the cloud infrastructure and platform market will grow at a 19.62% CAGR from 2015 to 2018, reaching $43B by 2018. Their recent market analysis also forecasts that the global market for cloud infrastructure and platforms will grow from $21B this year to $43B by the end of the forecast period. Source: How Big Can The Amazon Web Services Business Grow In The Future?
- 46% of surveyed firms in the European Union (EU) are using advanced cloud services relating to financial and accounting software applications, customer relationship management or to the use of computing power to run business applications. In 2014, almost twice as many firms used public cloud servers (12%) versus private cloud servers (7%). The following graphic illustrates the degree of dependence on cloud computing, by economic activity, EU-28, 2014. Source: Eurostat Statistics Explained. Cloud computing – statistics on the use by enterprises.
- 64% of Small & Medium Businesses (SMBs) are already using cloud-based apps, with average adoption being 3 apps. 78% of businesses indicate that they are considering purchasing new solutions in the next 2-3 years creating the potential to move the average number of applications used to 7, with 88% consuming at least one service. Source: The small business revolution: trends in SMB cloud adoption.
- Worldwide spending on enterprise application software will grow 7.5% to reach $149.9B in 2015, increasing to more than $201B in 2019 with accelerating cloud adoption driving new software sales. Gartner’s analysis of enterprise software spending shows that alternative consumption models to traditional on-premises licenses are accounting for more than 50% of new software implementations; these include SaaS, hosted license, on-premises subscriptions and open source. Gartner also predicts that by 2020, about a quarter of organizations in emerging regions will run their core CRM systems in the cloud, up from around 10 percent in 2012. Source: Gartner Says Modernization and Digital Transformation Projects Are Behind Growth in Enterprise Application Software Market.
- 2015 Top Markets Report Cloud Computing A Market Assessment Tool for U.S. Exporters U.S. Department of Commerce | International Trade Administration | Industry & Analysis (I&A) July 2015
- Cloud Computing: Principles and Paradigms. (PDF, free, no opt-in, 674 pp.)
- Forrester Research – Adoption Profile: Hosted Private Cloud, North America And Europe, Q3 2014
- Global Cloud IT Infrastructure Market Rose 25 Percent in Q1: IDC
- 451 Research & Microsoft Hosting and Cloud Study 2015 – Beyond Infrastructure: Cloud 2.0 Signifies New Opportunities for Cloud Service Providers Survey Results. (free, no opt-in, 66 pp.)
- IDC Report, Worldwide Cloud Systems Management Software Market Shares, 2014: Year of Hybrid Cloud (free, no opt-in).
- Montclare SaaS 250
- Oracle Industry Analyst Relations Reports
- U.S. technology hubs (Silicon Valley/San Francisco, New York, Boston, Los Angeles & Chicago), Israel and Canada dominate while confidence continues to fall in Brazil and other emerging markets.
These and other insights are from Deloitte’s 2015 Global Venture Capital Confidence Survey. You can download a copy here (PDF, no opt-in, 70 pp.). Deloitte has also produced and made available infographics of the key findings here (PDF, no opt-in, 4 pp.). Deloitte & Touche LLP and the National Venture Capital Association (NVCA) collaborated on the eleventh annual survey, which was conducted in May & June of this year. The study assesses investor confidence in the global venture capital environment, market factors shaping industries and investments on specific geographies and industry sectors. Please see page 4 of the study for a description of the methodology.
Key take-aways include the following:
- Global venture capital investors are most confident in cloud computing (4.18). Investors were asked to rate their confidence level in each sector. Confidence levels were measured on a scale of 1 to 5, with 5 representing the most confidence. Basis points indicate year-over-year changes. Mobile (4.05), Internet of Things (3.95) and enterprise software (3.82) are the top four sectors venture capitalists are the most confident in today. Biopharmaceuticals are experiencing the greatest increase in venture capital confidence today. Please the the graphic below for additional details.
- The United States (4.17), Israel (3.90) and Canada (3.60) dominate venture capital investors’ confidence while emerging markets including Brazil continues to fall. U.S. technology hubs including Silicon Valley/San Francisco, New York, Boston, Los Angeles and Chicago continue to retain and reinforce global venture capital investor confidence. The following graphic illustrates global venture capital investor’s confidence by nation.
- Silicon Valley/San Francisco (4.28), New York (3.86) and Boston (3.77) are the top three U.S. metros global venture capital investors have the greatest confidence in. Los Angeles (3.43) and Chicago (3.22) are the fourth and fifth most trusted U.S. metros that venture capitalists have confidence in. $15.2B was invested by global venture capital investors in Silicon Valley/San Francisco according to the Deloitte study. The following graphic compares venture capitalist confidence levels and venture capital investment dollars received in 2015 through Q2.
- Immigration reform (61%) and patent demand reform (36%) are the top two initiatives U.S.-based venture capitalists want addressed by policy leaders. For non-U.S. venture capitalists, tax incentives/credits (50%), infrastructure and job creation (both 41%) are the top two initiatives they would like to see public policy leaders take on in their home country.
- Cloud computing continues across all sectors as the area global venture capital investors have the greatest confidence in. Confidence in biopharmaceuticals grew the fastest of any sector measured by the survey between 2014 and 2015, and this is the first year Deloitte is tracking investor confidence in the Internet of Things (IoT). A sector comparison is provided below.
- 69% of enterprises expect to make moderate-to-heavy cloud investments over the next three years as they migrate core business functions to the cloud.
- 44% of enterprises are relying on cloud computing to launch new business models today, predicting this will increase to 55% in three years.
- 32% are using cloud computing to streamline their supply chains today. Senior executives predict this figure will increase to 56% in three years, a 24% increase.
- 59% say they use cloud-based applications and platforms to better manage and analyze data today, reflecting the increasing importance of analytics and big data enterprise-wide.
These and other insights are from a recent Oxford Economics and SAP study of cloud computing adoption, The Cloud Grows Up. You can find the study here (no opt-in). In late 2014, Oxford Economics and SAP collaborated on a survey of 200 senior business and IT executives globally regarding the adoption and use of cloud technology. Oxford Economics’ analysts compared the latest survey with one completed in 2012 looking for leading indicators of cloud adoption in enterprises. They found many C- and VP-level executives are taking a more pragmatic, realistic view of what cloud technologies can contribute. Enterprises are moving beyond the hype of cloud computing, putting in the hard work of launching new business models while driving top-line revenue growth.
Oxford Economics has made two interactive infographics available from the study here. The first details cloud adoption, and the second, on how enterprises see cloud computing changing their business models over the next three years. As cloud platforms and applications become a scalable, secure and for the most part reliable, once-elusive enterprise goals and new business models become attainable.
Key take-aways from the study include the following:
- Top–line growth (58%), collaboration among employees (58%), and supply chain (56%) are the three areas enterprises expect cloud computing to impact most in three years. The greatest gains will be in the areas of supply chain (a 24% jump), collaboration among employees (20%) and increased agility and responsiveness to customers (17%). The following graphic compares where enterprises are seeing cloud computing’s impact today and a prediction of each areas’ impact in three years.
- Developing new products & services (61%), new lines of business (51%) and entering new markets (40%) are three key areas cloud computing is transforming enterprises. With a 35% increase, developing new products and services is the most dominant strategy enterprises are relying on to grow their businesses. See the comparison below for further details.
- 58% of enterprises predict their use of cloud computing will increase top-line revenue growth in three years. 67% see the cloud changing skill sets and transforming the role of HR. The following graphic illustrates the first of two interactive infographics Oxford Economics and SAP are providing with the report. You can access the infographic here.
- 74% of enterprises say innovation and R&D is somewhat or mostly cloud-based. 61% say they will have developed new products and services in three years as a result of adopting cloud technologies. The following graphic illustrates the second of two interactive infographics Oxford Economics and SAP are providing with the report. You can access the infographic here.
- Enterprise cloud security strategies are maturing rapidly. From 2012 to 2014, strategies for ensuring the security of API and interfaces increased 24%, from 20% to 44%. Additional concerns that increased include virus attacks (up 19%), and identity theft (up 16%). The following figure compares the top concerns enterprises have in the area of cloud security.
- 31% of respondents say the cloud computing has had a transformative impact on their business. 48%, nearly half, state that cloud computing has had a moderate impact on business performance. The majority believe cloud computing will have a significant impact on top-line revenue growth in three years.
- 67% of enterprises say that marketing, purchasing, and supply chain are somewhat and mostly cloud-based as of today. Cloud-based adoption has reached an inflection point in enterprises, with functional areas having the largest percentage of workloads running on cloud-based apps. Enterprise senior executives see the potential to improve innovation, R&D, and time-to-market via greater collaboration using cloud technologies.
- Enterprises are only realizing 35% of the total potential value of their cloud deployments according to a recent Bain & Company study.
- Companies that moved development to IaaS and PaaS clouds from Amazon Web Services (AWS) reduced downtime by 72% and improved application availability by 3.9 hours per user per year.
These and other key take-aways are from the recent Bain & Company study, Tapping Cloud’s Full Potential. The full report PDF is available for download here (free, no opt-in). The following graphic from the report illustrates the currently realized value of cloud deployments in enterprises today according to Bain & Company.
The researchers found several critical drivers of cloud value with one of the most important being the strengthening and clarifying of a product and service focus. The following graphic illustrates the critical drivers of cloud value.
Cloud Service Providers Give Manufacturers The Ability To Stay Competitive
Cloud-first strategies designed to accelerate and strengthen shifts in emerging business models is paying off according to Bain’s research results.
Manufacturers choosing to pursue a cloud-first strategy are focusing on evolving their business models, processes, systems and performance quickly to stay in step with customers’ needs. For many manufacturers, their customers’ pace is faster than internal IT organizations can anticipate and react to. CSPs are helping to close that gap.
Here are five ways CSPs are making manufacturers more competitive:
- Bringing industry expertise to the shop floor level. The best CSPs serving manufacturers today have management teams that have decades of combined manufacturing experience in specific industries. The CEO of a specialty tools manufacturer remarked that his company’s cloud strategy was more focused on accelerating plant floor performance first. Working with a CSP that had expertise in their industry, this manufacturer was able to gain greater supply chain visibility and improve forecast accuracy, all with cloud-based apps.
- Solving legacy and 3rd party system integration problems so that cloud-based ERP, CRM, supply chain management (SCM) systems can scale quickly. When a rust-belt based manufacturer of heating, ventilation and air conditioning (HVAC) systems had the opportunity to grow their business by expanding into build-to-order customized products, their CSP partner made it possible to integrate an entirely new product configurator and cloud-based ERP system module to manage quote-to-cash. Today, 30% of corporate-wide profits are from build-to-order selling strategies.
- Knowledge-sharing supplier networks are becoming more attainable for manufacturers thanks to cloud technologies and CSPs. All manufacturers have strategic plans that include greater integration of their supplier networks, with many seeking to create knowledge-sharing networks. One of the best studies of how to create a knowledge-sharing network is from Dr. Jeffrey Dyer and Dr. Kentaro Nobeoka based on their intensive work with Toyota. Their study, Creating And Managing A High Performance Knowledge-Sharing Network: The Toyota Case is a great read. The following graphic from the study illustrates the evolution of a knowledge-sharing network. Manufacturers are relying on cloud platforms and CSPs to enable shifts in network structures and nurture change management to create self-sustaining systems.
- Two-tier ERP adoption in manufacturing is growing as CSPs master cloud ERP systems. CSPs are moving beyond providing basic services, specializing in cloud ERP, CRM, SCM, pricing, services and legacy system integration to keep pace with manufacturers’ demands. In one high tech manufacturer, their CSP partner orchestrated the procuring and launch of their cloud-based two-tier ERP system integrated to an SAP instance in their headquarters. Today they operate production centers in Asia, North America and Australia, all coordinated through the main SAP instance in the U.S. headquarters.
- Making Service Level Agreements (SLAs) more relevant to manufacturing business models. Instead of just getting SLAs for uptime, security and system stability, manufacturers are getting advanced manufacturing intelligence dashboards that provide visibility to the plant or production center level.
Bottom Line: Manufacturers are increasingly relying on CSPs’ cloud, industry and integration expertise to support the transition many are making to new business models and get greater than 35% of the value from their cloud investments.
Additional resources on Cloud ERP systems: