Michael Fauscette

Software Spending and the Economy

We just completed another re-forecasting exercise at IDC, as uncertainty  increases over the health of the global economy. This time in particular, I was pressured to lower the enterprise applications forecast for next year and adjust the 5 years forward to account for the new and lower 2012 numbers. I have remained fairly optimistic for apps though, despite the overall economic conditions. It's a question that I answer several times a week..."what's the applications market doing and why?" If you look at the numbers over the last couple of years, especially since the "bottom" year of 2009, you'll see a market that is very healthy. Even so, I find a lot of skeptics when I talk about this health continuing.

Generally there is a predictable pattern to the tech markets and how they respond to economic pressures. We've documented this several times historically and in the most recent crisis, 2008/2009, the pattern held true for the most part. The cycle usually is something like this: 1. hardware spend drops dramatically just after the crisis hits, 2. software lags hardware by 2-3 quarters (the buying cycles are longer and it takes longer to shut down) and 3. services lag the others by another 3-6 quarters (projects are in progress and aren't cancelled, instead the future pipeline dries up and the work flushes out). The recovery usually happens in the reverse, although the lag times are much less. This time though, the cycle coming out, while following the order, has bounced back much more aggressively for software. In fact, in a lot of ways the software apps recovery has been counterintuitive. As we came out of the crisis we talked about what we called the "new normal" and our belief that there have been some fundamental changes in business that are starting to change the software industry.

Look at some recent earnings highlights from leading software companies:

• Oracle - for Q1 2012, which ended August 31, it reported 17% year over year software new license growth. This included growth of applications in EMEA of a phenomenal 55%. In fact, Oracle has seen strong, steady application new license growth for at least 9 straight quarters. Even during the worst of the recession, Oracle remained relatively flat.
• SAP - for Q3 2011, which ended September 30, it reported applications year over year growth of 28%. While SAP saw some rough quarters during the worst of the recession, it has posted 7 consecutive quarters of double-digit applications growth.
• IBM - for Q3 2011, which ended September 30, it reported software growth of 13% year over year. The previous quarter was 17% y/y growth for applications.
• Salesforce.com - for Q2 2012, which ended July 31, it reported 38% year over year growth in subscription and support revenues. For the previous quarter subscription and support grew 35% y/y and for the previous year 28% y/y.

These are only four examples out of many.

What I'm saying is that I think that business is undergoing some long lasting changes and that technology, which is tied to some, if not all of the overall changes, is seeing the impact come out as stronger growth for many software markets above what would "normally" be expected. In fact I think that software will hold up even if the economy worsens significantly. Here are some of the reasons I believe this:

• Companies are investing in automation instead of new jobs. For the period since the end of the recession in June of 2009 payroll spending has been flat, software spend up about 26%. Automation has moved from the shop floor and into the previous bellwether people-centric jobs in the services sector. Technology moves forward exponentially and is now doing things that no one would have believed possible this quickly. Think of IBM's Watson winning Jeopardy or Apple's new Siri voice driven assistant for two high profile examples. With Google's self-driving cars we are seeing that technology can stretch way beyond the limits that we previously put on it; 7 test cars having logged over 1000 miles of unassisted driving and 140,000 miles with only limited human intervention.
• The social customer is forcing companies to invest in new ways to engage and service them, or they're defecting to competitors. These investments are mostly in software to help the companies build customers communities, engage and interact more in the sales process, individualize marketing and offer support "when, where and how" the customer wants across a breadth of public social channels. For most companies the question isn't whether to do social CRM, but a question of when (and the answer better be fast).
• The need to increase productivity, that is, get more from the employees you kept, added to employees insisting on new, collaborative ways of working, is forcing investment in a variety of internal social tools. Our research at IDC shows that social tools can increase productivity by as much as 11-30%.
• Some emerging countries are finally at a development level where automation is cheaper than labor, at least in some industries. While this has not been the case in many emerging countries like India and China, the situation is changing as labor costs increase and technology becomes more available. There is a cross over point where it's less expansive to automate than to just throw more labor at the job. The cross over has the potential to fund growth for many years.
• Customers are starting to expect that companies will provide new and innovative ways for social and mobile commerce and this shift is driving spend for infrastructure all the way out to customer engagement solutions. Commerce, or digital commerce as we call it at IDC, is hot. We're seeing a convergence of mobile, social and on and off line that will drive businesses to invest in a new, converged commerce architecture. The trend is already impacting spend and will increase rapidly for many years as businesses replace and build out the new infrastructure required to provide this new customer experience.
• Companies are continuing to spend for traditional CRM systems, as many were under-invested in some key areas AND they have realized that you can't effectively do social CRM without a solid CRM foundation.
• Companies have come to the realization that technology, particularly software,  can be a competitive advantage and serve to level playing fields between large, medium and small companies. Through technology companies can significantly increase productivity, lower costs, engage new markets, innovate on business models and products, etc.

These aren't the only things driving the strong applications growth, but they are key to keeping the growth consistent going forward. Have I missed any other drivers of growth?

Tags: software, growth, technology, innovation, productivity, SCRM, socbiz, digital commerce, customer experience, CRM

Innovation Management

I titled the post "Innovation Management", but I intend to focus as much on the activity as on the underlying system. While innovation management is the name we use in our just released Social Business Taxonomy (IDC Doc #230541, currently subscription required, but shortly will be posted here). I'm a little wary of using "management" as a part of a market name. I think we maybe need less  "manage" innovation and more "doing" innovation. It's like content management, while management is what most of the systems end up doing, what we're really trying to do is "share" the content. We should have called the systems content sharing or maybe content liberation software instead. The same is true of knowledge management. Traditionally people "managed" information (and its flow), which effectively meant that certain people controlled or hoarded the information and others did without. In a "knowledge is power" environment this might be the norm but in today's "knowledge sharing is power" environment, its not acceptable behavior. We need a culture of knowledge "sharing" and an underlying system that enables it, not a knowledge hoarding system and culture.

Anyway, I'm rambling, the point is to talk about effective innovation processes and outcomes. This topic has always interested me and I've written quite a bit about it, particularly around continuous or incremental innovation versus discontinuous or disruptive innovation. How should a company approach innovation? Innovation is rarely the product of accidental discovery, it is more often the outcome of a defined process.

Before looking at the parts of the innovation process though, it's important to clearly define what the organization means by the phrase innovation and agree on the process itself. Innovation and the innovation process varies by industry and by company so having a clear corporate understanding is essential. Also often companies target innovation processes only on R&D or product / service development, ignoring the other areas in the business that would benefit from the innovation process. Also having the best innovation management processes in the world won't cure a culture that isn't open to or desirous of innovation, nor will it change a management style that is not open and conducive to innovation. It seems like we're always going back to these two issues in social business, culture and management style can facilitate the process or prevent it, and leadership is essential for the success of any innovation program. Some companies now have a chief innovation officer, while I think that's a great idea to put that much focus on innovation, I'd suggest that in effect, the CEO needs to either fill that role or be a very vocal supporter.

The innovation process, in it's most basic form, is composed of four phases, each with two sub-processes: 1. Ideasource, 2. Develop, 3. Produce, 4. Feedback. While all parts of the process are important, I think there are a few places where critical choices in approach can have dramatic impacts on the outcomes. I should say first, though, that I don't think this is a "one size fits all" kind of discussion, there are several options and what works best will vary by company, product, customer type, geography, culture (both company and broader society), maturity, timing, etc...even innovation type (incremental, discontinuous or business model). 

Sourcing and collecting the ideas may seem like straight forward steps but in fact this part of the process is under a lot of pressure today. The Internet and the evolution of the social web, with it's myriad of new communication channels and legions of empowered people, is causing companies to reexamine both how the data is collected and who is involved. Collecting the ideas isn't complex, although it is an area where technology is providing some much needed innovations. In traditional models ideas generation often came from the product strategy / marketing / management team, which in even the largest companies, is a limited subset of the companies employees. They were tasks though, with somehow coming up with ways to align those ideas with the needs and desires of customers, which often took the form of focus groups, surveys or some other way to provide a representative sampling. The process of establishing requirements was fairly contained and not particularly open. The Internet offers companies the opportunity to involve a broader group of people in the process and substantially increase the sample sizes and constituents for input. In other words, in a hyper-connected global ecosystem companies can tap into employees, customers and partners and involve them in the ideasourcing process. Crowdsourcing, or spreading the source of innovative ideas across a much broader population of engaged constituents can provide powerful results. In ideasourcing diversity of ideas can add a great deal of potential to the process. The term "engaged" is critical to though, as sourcing ideas from the general population for most companies is not a workable idea. The more involved and engaged your constituency the more likely you are of success. 

In some cases the opportunity for involving partners or customers might extend to a deeper and more involved approach referred to as co-innovation. The concept is to actively partner with a constituent in more than just ideasourcing, but to extend that interaction throught the entire innovation process. I wrote about it here, so I won't go deeper into the concept now. There's a related subject that is also getting some attention these days,  open innovation. The term is sometimes used to mean having an innovation process that uses available, outside knowledge, ideas, products, etc. to jumpstart or shorten the innovation process. This is closely related to co-innovation and in fact, either might involve the other. I've also heard the term used to represent collaborative innovation, although, to me, that's the same thing as co-innovation.

The Development phase is also very important to the success of an innovation program. It is critical that an agreed and consistent process is applied to take ideas collected in the first phase and pass them through some internal filters to get the best ideas out into the open and selected for further development. The definition of "best" is very organization centric as you might expect. Building an evaluation and selection process that uses the input of the crowd but also aligns to company goals, objectives and market factors is a big part of success. This assumes, of course that the company has already defined goals and objectives prior to the innovation process and that the company continues to refine them in light of changing market pressures. Applying filters to place ideas into categories (continuous, discontinuous and business model) can be very helpful in finding the "right" ideas and in the evaluation of eventual success of the idea. You're trying to answer:

• Is the idea tied to a business objective?
• What type of innovation would be required to implement the idea?
• Does the idea have potential future value (can it be created and if so, will it be profitable)?
• Can the idea be implemented or tested (rapid validation) in a reasonable amount of time?
• Do we have the resources available to implement the idea?
• Is the idea aligned with corporate culture and corporate conscience?
• Is the idea adjacent or a part of the current product / market?

I'm sure there are other relevant questions, it varies by company.

In the produce phase the idea is ready to be designed into an actual product / service. This should be a part of the companies core competencies so we won't spend time on it. I will add though, that it's very important to ensure that you have a way to make sure that the designer has access to and is tied to the specifications from the ideation process.

Feedback is the "final" phase, although, as a practical matter the innovation process is actually continuous. Capturing market reaction / feedback is ongoing and feeds back into the overall idea funnel. Taking feedback, conducting analysis and then taking some action based on the feedback are all a part of the process. I'll also stress that it's very important that this process be transparent and that companies update the feedback with its progress.

Collaboration is the underpinning of a modern innovation management process. I mean people-centric collaboration too, not just effective file control and management. This is where the social aspect of the new innovation process is most obvious and where new tools can make a huge difference in a companies ability to be successful. Any system for managing innovation must also tie into or provide collaboration capabilities with the ability to bring all constituents together in a secure environment.

Implementing a successful innovation process can be facilitated by selecting the right underlying tools to make the process flow and tie together. I'll save discussion of specific systems to a future post but one tool is so critical I want to discuss it a bit. The overall innovation process is really a complex and ongoing project or actually, a portfolio of projects. It is essential then, to have a well document and systematic way of managing a portfolio of projects, which by default then, requires an underlying project management / portfolio management solution.

This is a long post, so I'll end it here, even though I'm sure I've missed something. It's a broad subject and something that I'll revisit again in the near future. Please provide additional ideas and suggestions in the comments.

Tags: innovation, management, process, ideation, ideasourcing, product, service, project management, portfolio

IDC Names 2011 Innovative Application Software Companies Under $100M to Watch

Today, for the third year in a row, IDC published the Innovative Software Companies Under $100M to Watch, in an effort to recognize innovation in the software around specific hot trends. The selection for the Application Software vendors was conducted out of my group and was based on three key trends that were taken from our 2011 Top Ten Predictions Document. This year the trends were:

• Commerce 2.0 The resurgence of eCommerce, driven by the increasing importance of providing a social customer experience, the proliferation of context aware mobile apps and the emergence of new social tools, is leading to an innovative commerce experience that is a combination of social, mobile, online and brick and mortar. Underlying this shift in commerce are new technologies, platforms and applications that will power the next generation of customer commerce experience.

• Social business solutions. Enterprise social solutions that support the transformation to a social business. Solutions could be social platforms that enable communities, blogs, microblogs, wiki's or other social collaboration and business functions and applications, or other innovative social business software tools

• Socialytics. Analytic applications that listen, collect and analyze social data like emails, IM, blogs, social communities and networks, microbogs, etc. using techniques like behavioral modeling to provide actionable business insights.

We selected eight hot companies that we believe clearly support the trends in an innovative way and for the first time, we also have one additional company as an Honorable Mention from over 70 submissions. We used the Honorable Mention category to recognize a company that submitted that we believed was unique and innovative, even thought it did not specifically fall into this year's three trends. This year we recognize:

Commerce 2.0:

• ShopIgniter

Social Business Solutions:

• Hearsay Social

• Newsgator Technologies, Inc.

• Socialware

• Yammer

• CSOFT

• DoubleDutch

Socialytics:

• GX Software

Honorable Mention

• Marketo

Congratulations to each of the companies selected this year!

Tags: innovative, company, software, technology, social, socbiz, socialytics, commerce

Oracle buys RightNow Technologies

This morning Oracle announced its intent to acquire RightNow Technologies, a SaaS customer service / CRM application vendor for ~$1.5B. The acquisition is positioned to expand Oracle's recently announced Public Cloud offering and signals a shift in focus for Oracle's acquisition strategy. Oracle's Public Cloud offering, up to this announcement, was presumed to be composed of existing Oracle products including Fusion Applications but clearly now, Oracle plans a more aggressive move into the SaaS apps space. This is consistent with Oracle's strategy which has, for the last 6+ years been based on an aggressive acquisition strategy, first in horizontal apps and lately in deep vertical apps, all aimed at building out the broadest set of capabilities in its apps portfolio. With the shift to a focus on cloud, validating the overall momentum that cloud apps have garnered in the enterprise over the last few years, it seems that Oracle will attempt to repeat its successful strategy in the cloud. According to the press release "Oracle is moving aggressively to offer customers a full range of Cloud Solutions including sales force automation, human resources, talent management, social networking, databases and Java as part of the Oracle Public Cloud," said Thomas Kurian, Executive Vice President, Oracle Development. "RightNow's leading customer service cloud is a very important addition to Oracle's Public Cloud." Contained in a briefing deck for RightNow customers and partners the following graphic shows the current Oracle Public Cloud including RightNow:

The addition of RightNow is clearly targeted at Salesforce.com's Service Cloud offering and is an escalation in an already heated competition between the two companies. RightNow, which acquired some social capabilities last year by buying HiveLive, also adds to Oracle's growing investment in social business software and is, again, a counter to the Social Enterprise messaging that Salesforce.com launched at this years Dreamforce conference. Here's a simple diagram of the RightNow offering:

So where does Oracle's acquisition engine turn from here? While some might speculate that Oracle might finally bring Netsuite into the fold (Oracle CEO Larry Ellison owns a sizable share of the company already), I don't believe that this is the case. Oracle Fusion Applications are all multi-tenant capable, and it would seem more likely that the rest of that suite would make up the ERP part of the Public Cloud offering, but I guess we'll have to wait on see on that one. Other areas that seem more interesting include broadening it's social business product portfolio, which today is fairly sparse. Collaboration, in particular, could be an interesting market, especially since it is usually the #1 app when we survey companies for what goes in the cloud. Oracle could pick up one of the smaller remaining web conferencing vendors like Vyew or Glance for example. Slideshare also has good momentum and could be a good target. While Oracle has a solid on prem content management solution maybe it would be interested in picking up a SaaS content sharing / file sync / storage vendor like Dropbox, Box.net or SugarSync. The Oracle HCM and Talent Management offerings are already available in the cloud so presumably there would be no reason to look there, although there are some strong players in that market, including Taleo and SuccessFactors. Travel and expense management SaaS vendor Concur could also prove an interesting target. Supply chain is in general under served in the cloud today, and might provide some opportunity. Oracle could also move into cloud based vertical apps. It's all conjecture at this point of course, so we'll have to wait and see what Oracle's next move will be, but I'd bet on more cloud acquisitions in the near future.

Tags: cloud, SaaS, Oracle, RightNow, Salesforce.com, CRM, customer service, acquisition

Social Software, Feature or Product?

We have this debate running about social software and whether it's, for the most part anyway, a set of features that should be embedded in other products / platforms, or long term stand-a-lone products. The evolution of new applications can take a few different paths but there seems to be a pattern of sorts. It goes like this, some one sees a business need (or opportunity to create awareness of a need) and builds some software to address that need. Others see the need and either 1. copy the feature set as their own product, 2. create a competing but different product or 3. extend an existing product to meet the business need. All of these can exist simultaneously but if the product in #3 has a strong market following already it often spells the death of #1 and #2 (death by acquisition, or by changing direction, or by going out of business).

Once the product exists there are a few ways that the story plays out:

• The product has unique value and develops a rich feature set that defines the new market - survives as a stand-a-lone product and market
• The product has value but is not unique enough to survive on its own, thus it becomes a feature of some other product.
• The product and feature set are unique and the foundation for a new approach to solving some business problems, becoming a next generation platform (and probably pulls in a few other features / products as well)

 If the product is really a feature then there are a few potential outcomes to that as well:

• The feature vendor aggregates other features (from other vendors or developed in house) into a richer product that can survive stand-a-lone.
• The feature gets merged into a product with a richer and complimentary feature set, thus surviving embedded into another application.
• The feature gets consumed by the OS or by a platform.  OS's and platforms consume features like a black hole consumes nearby matter.
• And lastly there is the possibility that the product could really be a feature, but it gains such broad acceptance that it becomes a standard. Think Google and search. When a product becomes a verb, as in google something, it has stickiness and the legs to survive on its own (and in the case of Google search also formed the core of a business model innovation).

Just because the feature gets consumed it doesn't mean that it isn't valuable, by the way. Actually the opposite is true, it's so valuable that vendors want to embed it into their products. It also doesn't mean that at some point in the future the feature might not emerge in some stand-a-lone model again. Internet browsers are an example of both. During the great browser wars of the 90's Microsoft won by letting the OS consume the feature set, Internet Explorer (IE), thus becoming the default browser for the majority and effectively killing off Netscape. Years later though, and perhaps because Microsoft did not continue to keep the feature set up to date (or at least good enough), several new competitors have emerged as stand-a-lone products again, Google Chrome (which Google is trying to make into a next generation OS), Mozilla Firefox and Opera. Safari is also gaining share but it's really a feature of the OS as well.

There are a few current examples of debates going on around new products (or features), specifically cloud-based file storage / sync (services like Dropbox, Sugarsync, Box.net, etc) and virtualization. The argument around the cloud-based file storage / sync was started by Steve Jobs after Apple's failed bid to acquire Dropbox, when he claimed that Dropbox was really a feature of an OS. Of course Apple just released it's own version, iCloud, which is an extension of OS X and IOS, so maybe there's some weight to the argument. On the opposite side of the argument though, is the fact that both Dropbox and Box.net recently closed very large funding rounds. The virtualization argument, that it's really a feature of the OS, has been around for a few years. In my opinion though, I think there's a good chance that virtualization forms a part of a next generation platform.

So let's apply this concept to social software. Generalizations can be dangerous but in this case, I tend toward the idea that most social software products are in fact features. There are some exceptions of course, but for me, at least for the social collaboration tools and the social CRM tools, I can see a path where they become embedded in other applications in the future (in fact, it's a part of our predictions for the IT vision of year 2020). There was a time when I was convinced that social features could become a stand-a-lone social platform, but I now think that in fact, the social collaboration tools need to be embedded inside the next generation of enterprise platform so that the functionality can be exposed at the point of activity in a work process, and in context to the specific activity. The idea of creating a social layer, while useful today, is in my opinion, a transition enabling step toward a future (read not yet available, or at least not yet complete) enterprise platform that makes social a part of every application. If you want to read more about my idea of the next gen apps platform, look at this post.

To this point, we've already seen quite a bit of merger activity among first generation social start ups, as they try to expand the initial feature set into something broad enough to survive as a stand-a-lone app. In particular a lot of these companies have bought and embedded socialytic features, which is consistent with the idea that analytics also needs to be embedded into the work process, and also contextual. For example Lithium bought Scout Labs, and Attensity bought Biz360. As an example of a large company adding social functionality to an existing product, Salesforce.com bought Radian6. We 're also seeing moves to put social collaboration tools into platforms or embed them into other apps like Salesforce.com Chatter, which is a part of the Force.com platform, and SocialCast, that  was acquired by VMWare, with its' ability to be embedded in other apps, and it appears that VMWare also plans on embedding it into a platform. 

On the social CRM side much of the required functionality is already showing up as extensions to existing CRM solutions and since I believe that companies cannot attempt SCRM until they have a stable CRM base on which to build, this make sense. In some cases though, the functionality has evolved into a stand-a-lone app, at least for now. The areas where we're seeing social influence CRM, based on our new social business taxonomy, are 1. sales: social sales enablement and sales intelligence, 2. marketing: social marketing automation and 3. customer service: new social communication channels and peer to peer (community-based) support. I think that all of these new features will end up embedded in full CRM systems eventually. We're already starting to see this in the leading CRM apps like Salesforce.com, and Oracle Siebel and Oracle Fusion. CRM vendor RightNow, which is focusing more on the overall customer experience and has a solid customer base for its customer service apps, has already added community management functionality to its base product by acquiring social software vendor HiveLive. 

There are social products that seem to be well positioned to remain stand-a-lone of course. Social publishing, for example, could exist as a platform that enables building and managing social content like blogs and wikis, or even video.  Innovation management is another area where I think there could be a need for an end-to-end solution that, while integrated with other enterprise software and eventually built on the next gen platform, could stay as a complete suite of innovation apps.

So what does this mean for businesses that are looking for solutions? First I'd say that since we're in a time of transition, the solutions are evolving rapidly, but taking a wait and see approach is not really an option. For now take stand-a-lone features that meet your business needs and integrate them into your current enterprise software solution. When available of course, using embedded features that are a part of other apps is maybe a better approach, as long as the software meets your needs, but focusing on meeting business needs outweighs the feature / product argument by a long shot. For "social layer" type apps though, paying enough attention to change management to drive adoption is critical. This is particularly true for social collaboration tools that gain value as more people adopt and use the tools, creating a self-fueling adoption or rejection cycle.

Tags: feature, software, product, SCRM, social, socbiz, CRM, social business 

Consumerization of IT, Well...

This topic has been coming up a lot over the last couple of weeks, and I've just been asked to speak on it at two conferences in Latin America next year, so I thought it was time to write down some thoughts on the subject. First I have to say that I've never been that fond of the words, mostly because I think they create some confusion and because they're very overused. While I do think there is a clear definition, I think that the words themselves conjure up all sorts of scary (from a CIO standpoint anyway) images of employees running rampant on the company network. This is a another case of the words getting in the way of the meaning I think. So first, what do I think the definition of consumerization of IT actually is? I believe that it is simply the trend for IT innovation to appear first in the consumer market and then spread into the enterprise. In reality new technology gets vetted in the consumer sector first, then incorporated into the enterprise. This represents both a shift in innovation and a change in expectations from employees. There is, of course some shift to a "bring your own" culture, where employees feel empowered to use the best tool for the job and if the enterprise doesn't provide it, they'll use their own device / software / etc. Part of this empowerment though, is related directly to the tech savvyness of the employee population, which is increasing rapidly. As the level of tech competency increases so does the confidence to go around IT.

The underlying key to understanding the concept though, is the two shifts, innovation and employee expectation. The shift in innovation is pretty easy to see in everything from smartphones and laptops to social software and even productivity software. A lot of this change in innovation (and also the change in expectations) can be traced to the proliferation of the Internet and the expectation of continuous connectivity. The Internet, and the resulting connected home, opened up the opportunity for and the need of better and easier to use home equipment. On top of that the growth of cloud based services has exploded, which provides capabilities to individuals that were unheard of only ten years ago. Every home is turning into (or has turned into) it's own version of an IT operations center, complete with high speed network, server, storage, backup. etc. and, at least in many homes, comes complete with a proxy network admin and family help desk (I know because I'm the family help desk in my family).

Think of an obvious example of the shift in innovation in connected devices. The first widely available 2-way device was the Motorola SkyTel 2-way pager but close on it's heels was RIM's email device in the late 1990's. RIM quickly expanded to include devices running on GSM, CDMA and iDen cellular networks and became the corporate standard in what became know as smartphones. They understood the enterprise and built the back end capabilities to securely manage the enterprise deployment and maintenance of a "fleet" of the devices. In 2009 RIM was recognized by Fortune Magazine as the fastest growing company in the world with profit growth of 84% over the trailing three years. But the handwriting was already "on the wall" and in less than two years RIM announced a large layoff and in the period of June 2008 to June 2011 had lost 82% in shareholder value. What happened? Simple, Apple released the iPhone to consumers (in June of 2007) and changed the smartphone market forever. Now the first iPhone certainly wasn't enterprise ready but, it provided a user experience that was far superior to any smartphone before, and most importantly provided real Internet access in a way that was inherently more usable and flexible than any RIM device. It also provided the vehicle for converging iPod, digital camera, SMS, personal email, and access to applications (well, at first only web apps, but that was quickly changed by Apple). While it lacked corporate email capabilities at first, Apple quickly yielded to consumer pressure and added support for corporate email and added the capability for remote wipe of the phone, a key feature for success in the enterprise. Close on the heels of the wildly successful iPhone came Google's Android operating system, opening up the touch smartphone to a multitude of additional device manufacturers. The customer experience was so much improved and the phones were infinitely more capable than their RIM competitors. While RIM was focusing on things like longer battery life, Apple and the Android gang along with the rapidly growing ecosystem were releasing better cameras, HD video, thousands of applications for almost every conceivable activity (including games) and ever increasing Internet access (and speed).  

The second shift is in employee expectations. The birth and growth of the social web with it's "simple to use" development paradigm taught people that software, even complex software, could be simple and elegant from the users perspective, keeping complexity in the background. It also taught people that all of the functionality could be available in the palm of their hand, in real time and always connected. Take those expectations into enterprises that often are running on software applications from the late 1990's, with aging and outdated UI's, and with limited or no mobile functionality and it's no wonder that they started to revolt. Add to that aging / substandard networks, collaboration built on an outdated paradigm of file / information control and management, knowledge management systems that are more about knowledge control than knowledge sharing and content management systems that are more about version control than about getting the right content to the right person at the right time; and "standard" hardware (laptop, mobile device, etc.) that is glaringly behind the technology they use every day at home and that revolt has even more fuel. And all of these short comings forced on employees that are empowered and just want to get their work done with the best tools possible, and no wonder people started bring consumer into the workplace.

So in a business world where consumer is converging with enterprise what does that mean for vendors, IT and employees? I think the first concept we have to understand is that we also have to see the "enterprization" of consumer for the enterprise to successfully embrace the transformative technologies offered by the social and mobile Internet. We need the new user experience but not at the costs of enterprise security, IP protection and scalability. There are several ways we can get to this:

• New virtualization technologies give enterprise IT the capability to allow employees to use their own devices but in a secure environment and with access to needed enterprise resources. This is leading to many companies moving away from standard provisioning to providing allowances so that employees can choose the devices they want but IT can maintain corporate security and IP protection.
• Vendors are incorporating features and building products based on the easy to use - complexity behind the scenes paradigm, that meet the needed social, people-centric collaboration, knowledge sharing, mobile requirements.
• At the enterprise boundary, enterprise systems are used to connect to consumer channels so that the enterprise can engage customers, suppliers, partners, etc. on the channels they choose while at the same time maintaining scalability, security and tracking that the company needs. This can be seen today in many modern customer support systems where support agents can interact with customers on public social channels like Facebook and Twitter but do so in their familiar enterprise support application console.
• New platforms are emerging that can sit on top of aging enterprise applications and provide the needed UX while leaving the core applications in place for as long as necessary. I describe these platforms more here.

Businesses are under tremendous pressure to change into a more social, open and collaborative enterprise build on information, knowledge sharing and a networked business model. These consumer proven technologies are accelerating and supporting this transition and are necessary. Even so, they must grow to meet enterprise standards or take advantage of new technology that can ride between the consumer and the enterprise to provide the needed security, protection and scalability. That's what I think of consumerization of IT, what are you seeing?

Tags: consumerization, IT, social, mobile, networked business, socbiz, social business, collaboration

Think Different

Yesterday afternoon, while live Tweeting Oracle CEO Larry Ellison's live streamed keynote from Oracle OpenWorld I saw a Tweet in my #oow11 stream saying that the AP had just reported that Steve Jobs had died. A quick search on Twitter yielded enough information to corroborate the story and I join with my colleagues on Facebook, Twitter, Google+ and Tumbler in sharing some of our sorrow and our respect to a very great man, a visionary, an icon, a leader and a hero. I did that at first on my current generation MacBook Air and later from my iPad 2 and my iPhone 4. Apple fan boy...you can call me that, I don't care because I use products that just work from a company that has managed to change the way we use technology. For Jobs, it was always about the user experience and for me, as a user of technology, I eventually learned that the experience I craved was delivered by that little company in Cupertino.

My own involvement with the Apple brand came to it quite late by comparison to many of my friends and colleagues. I've always loved technology and particularly new gadgets but I somehow ended up on the PC side of the Mac v. PC war, without really ever trying a Mac I should add. My first Apple product was the 1st generation iPod. I love music and had hundreds of CD's, so the concept of accessing so much music and being able to carry it around with me in a small and elegant package definitely drew me in. Add to that the real innovation of iTunes and I was really hooked. I think I've owned 7 versions of the iPod for my personal use and if you add in my 2 daughters and gifts to friends have purchased 16 total. Next came the iPhone, I've owned every version except the AT&T iPhone 4. My experiences with the iPhone eventually led me to the Mac computing experience and that too, changed my expectations on using a computer. Of course I had to try the iPads as well, and it quickly found its way into my regular device rotation. There's something about the experience with Apple that is unlike any other tech brand, and most of that is because of Jobs.

When someone great dies you imprint your memory of that event, the details of where you are, what you were doing...people like John Kennedy, Robert Kennedy, Martin Luther King, Jr, John Lennon...a few others; last night will join those memories. The world needs heroes, I need heroes and for me, Jobs is certainly one of them. I am keenly interested in leadership and innovation, something that I've studied for many years and written about many times. In our time, if you look at either topic very long, you are led to Jobs. Once you start looking at him, his career, his life, you realize just how much he contributed to the world. Here's a quote that I often refer to, words to live by:

"Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary." From Steve Jobs Stanford Commencement Speech, 2005

What did we learn from him?

• Don't settle for mediocrity
• Trust in yourself
• Do what you say, say what you do
• Don't be afraid to fail but learn from your mistakes
• You can be innovative and cool after your 20's
• The future doesn't look like the past
• Don't be afraid to discard old thinking when it doesn't work
• Keep it simple and focus on the user experience
• The details do matter
• Love what you do
• Your time is limited, so don't waste it (yes, I know I said that twice, but it bears repeating)

I'll leave you with this: "Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes.

The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them.

About the only thing you can’t do is ignore them. Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward.

Maybe they have to be crazy.

How else can you stare at an empty canvas and see a work of art? Or sit in silence and hear a song that’s never been written? Or gaze at a red planet and see a laboratory on wheels?

While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.

" ...Think Different

Stay hungry, stay foolish

Tags: steve jobs, apple, life, innovation, leadership, hero

The Next Generation Enterprise Platform

Now that I've had a a few weeks since Salesforce.com's Dreamforce conference to think more about Salesforce's new positioning around social enterprise I'm starting to put something together around enterprise platforms that hadn't occurred to me. Taking some of the assumptions that I've made and written about and putting them together, seems to support the need for a technical approach for the next generation enterprise that's beyond what is currently available, or maybe more accurately, supports the need to use available technology in a somewhat different way. First let me lay out my assumptions and then I'll look more specifically at the capabilities that would be required to provide a reasonable operational foundation. Assumptions, trends and observations:

- Current core enterprise applications deployed by many businesses have reached a level of functionality that is "good enough" for current enterprise requirements. Innovation is happening along the edges of the business, not in the core.

-  The recession and the continuing economic pressures have created an environment of caution for businesses that makes them carefully prioritize IT spending for software that offers high return on investment (ROI) and is business critical. Core enterprise systems, while essential, are good enough and don't offer areas of high ROI for new investment and will increasingly be maintained for long periods of time without replacement. Other areas offer better competitive advantage and are increasingly getting more of the IT budget allocation.

- Many (most) currently deployed IT applications have outdated user interfaces and offer a sub-optimal user experience even though they do meet business requirements. This is increasingly a problem as employees get used to the modern, clean, simple UX provided in their personal use of the Internet, which is glaringly better than their experiences at work.

- The new business model that is evolving will be built on the concept of a business network, tying the traditional business resources closely with those of partners and suppliers. This connected model will also need to include much stronger connectivity to customers. Most currently deployed enterprise IT infrastructures and systems don't support and provide the required management capabilities for this close connected model.

- Hyper-connectivity has redefined competition and innovation. The new business landscape is increasingly global and changing at a very rapid pace. Innovation extends beyond products and services, although these are also radically impacted, to include business models. Rapidly innovating business models are considerably more challenging to defend against, particularly in businesses where rigid process and inflexible systems are difficult and slow to change.

- The new networked business is built on a foundation of people-centric collaboration. New "social" collaboration tools must connect people inside and outside the enterprise but do it in a way that provides real time communications and real time access to supporting content, data and systems in the context of the activity. More over this tool (or tools) must support ad hoc work groups that need to reach beyond traditional enterprise boundaries and at times include customers, partners and suppliers, which protecting enterprise intellectual property and providing flexible security. Contextual collaboration also implies that the tool resides inside employees workflow and thus inside current enterprise applications. --embedded, contextual, real time, ad hoc, people-centric collaboration--

-  Business strategy, which for many businesses was a rigid set of approaches / processes reflected in rigid organizational structures and IT systems, is becoming something that needs to be organic and flexible in real time. What was once defined once and executed over long periods of time is becoming an ever morphing and evolving organism. The IT infrastructure to support this type of ongoing redefinition of strategy and business model, must also be ultra flexible, reconfigurable and support on going ad hoc work groups and processes. Think of it as short term throw away applications to support ad hoc (and throw away) organizational structures that can include employees across the business combined in various ways with customers, partners and suppliers.

- As business intelligence and business analytics tools improve, available data increases (dramatically increases, this is referred to as big data) and our ability to ensure data quality improves, systems will be required to automate more of the routine and mundane activities to free up employees to focus on higher value activities.

- Employees expect to interact with enterprise systems in a "any device, any time" paradigm. Current enterprise systems are not set up to support this philosophy of continuous connectivity. This trend is supported by two important technology trends, cloud computing and mobile.

- There is a long period of time where businesses will be forced due to the overwhelming cost of change, to operate in a model that maintains aging infrastructure at the core while providing new systems on the edges of the business that integrate with the core and provide the primary method of interacting with the old systems. Over time, and in a modular way, the core would be replaced with next generation apps that are built using the new paradigm / platform.

I'm sure I forgotten a few other trends and assumptions but these should provide a good foundation for the argument that there is a need to approach the overall enterprise evolution in a different technological way, particularly in a way that ties all of these things together. So what could possibly meet the requirements? Here's what I think is needed:

Cloud based (public or private) platform that:

• Is easy to integrate
• Supports rapid app development and deployment (ad hoc or composite apps).
• Serves as the foundation for the next generation of enterprise applications.
• Provides the ability to build a clean, simple UX while keeping complexity below the surface
• Has social collaboration embedded inside so that any app built on it is automatically social
• Supports widely accepted / available development tools (so that development resources are readily available at reasonable cost)
• Supports "any device, any time" connectivity
• Supports across the firewall connectivity and ad hoc collaboration with very granular control over IP protection and security
• Embedded analytic capabilities (I suppose there are a bunch of options for connecting to some type of big data analytics engine / appliance / service that provides the data as needed in context to the apps, the trick is to have apps that can make use of the delivered information). Analytics should also extent to socialytic apps, although these could also be external to the platform and simply provide information into the enterprise.
• A way to manage information flow with very granular filtering capabilities so that employees can use information to support work activities and decision making in real time and in context.
• Workflow and task automation that makes use of the growing fire hose of data
• Offer or integrate to other social applications like community management, sales intelligence, supplier networks, etc.

I'm sure there are more requirements but this at least this gives you some idea of what I think is required. The question then, is are there vendors that are moving towards this type of platform? First I should say that I'm not sure any vendor I'll mention has actually though about the platform in the way I mention above, although it's certainly possible that they have. But as I look at what Salesforce.com has done over the last few years and particularly this last year, I have to wonder if they aren't moving in a direction that would provide this next generation social business platform. The other vendor that I think might also have a similar vision is VMWare. I wrote about some of what they're doing here. There are of course, other vendors that could assemble this social business backbone, not the least of which is Oracle. Oracle has many of the component parts, although I don't think it is thinking about the problem in exactly this way yet. IBM is  another key player, they're making a big push around social business and have many of the social applications that would be needed around the platform and well as a concept around integrating many of these components. Businesses are still early in the overall adoption of social business of course, but there are quite a few that are maturing in their use of social tools. The next step though, the move to the networked business model is still in its infancy but offers a lot of value upside for business and a lot of opportunity for enterprise software vendors.

Tags: social business, socbiz, enterprise, networked business, platform, mobile, integrated, next generation apps, applications, software