Research Report: Constellation’s Research Outlook For 2011

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					Research Report: Constellation’s Research
Outlook For 2011
By Brian Solis, blogger at BrianSolis.com and principal of FutureWorks, Author of the highly
acclaimed book on social business Engage!




As an advisor to the Constellation Group, I am reposting the team’s first joint research report here. It
offers a glimpse at the hurdles and opportunities organizations will face in 2011 and beyond…

Organizations Seek Measurable Results In Disruptive Tech, Next Gen Business, And Legacy
Optimization Projects For 2011
Enterprise leaders seek pragmatic, creative, and disruptive solutions that achieve both profitability
and market differentiation. Cutting through the hype and buzz of the latest consumer tech
innovations and disruptive technologies, Constellation Research expects business value to
reemerge as the common operating principle that resonates among leading marketing, technology,
operations, human resource, and finance executives. As a result, Constellation expects
organizations to face three main challenges: (see Figure 1.):

Navigating disruptive technologies. Innovative leaders must quickly assess which
disruptivetechnologies show promise for their organizations. The link back to business strategy will
drive what to adopt, when to adopt, why to adopt, and how to adopt. Expect leading organizations to
reinvest in research budgets and internal processes that inform, disseminate, and prepare their
organizations for an increasing pace in technology adoption.

Designing next generation business models. Disruptive technologies on their own will not provide
the market leading advantages required for success. Leaders must identify where these
technologies can create differentiation through new business models, grow new profit pools via new
experiences, and deliver market efficiencies that save money and time. Organizations will also have
to learn how to fail fast, and move on to the next set of emerging ideas.

Funding innovation through legacy optimization. Leaders can expect budgets to remain from flat
to incremental growth in 2011. As a result, much of the disruptive technology and next generation


(cc) Brian Solis, www.briansolis.com - Twitter, @briansolis
business models must be funded through optimizing existing investments. Leaders not only must
reduce the cost of existing investments, but also, leverage existing infrastructure to achieve the
greatest amount of business value.

Figure 1. Innovative Organizations Face Three Main Challenges In 2011




Disruptive Technologies: Growing Enterprise Adoption – And A Few Bumps Along The Way
A flurry of mobile, social, cloud, analytics, and unified communication technologies from the
consumer tech world continue to enter the enterprise. Technology buyers can expect that:

IT teams will face device proliferation while hardware vendors will face device flops
(@maribellopez). In the mobile landscape, organizations have spent the past decade trying to
consolidate everything into a single device which we deemed the ―smartphone‖. Today, the adoption
of devices like the iPad and Kindle demonstrate that consumers and businesses are willing to
embrace a device that excels at a singular or small number of functions. IT will soon realize that it
will be supporting at least two devices per person, if not three. Why? Tablets can’t replace laptops
for most employees; and smartphones while ubiquitous are good for specific tasks. Thus,
organizations will see employees using different devices for different apps. A majority of the tablets
in use in 2011 will remain employee-purchased which will cause IT to formalize employee-liable
policies for security, manageability, and reimbursement. After the successful introduction of the iPad,
everyone believes they can build and sell a tablet. Dell, HP, RIM, and others will struggle to compete
against Apple as they look for the right combination of user interface and applications to drive
demand. Android-based tablets will fare better but only if the OEM have provided significant software
wrappers to plug security, manageability and UI issues.

Large enterprises will stall on adoption of cloud for voice communications (@eherrell).
Despite announcements by major vendors, the cost model for replacing on- premises based voice
equipment will not justify moving voice communications to the cloud in 2011. Cloud adoption will


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most likely begin to pick up during last quarter of the year, when pricing models become more
competitive.

Cloud security will trump on-premises efforts (@fscavo). 2011 will be the year when SaaS
providers find the issue of security turning from a perceived weakness of their offerings to a
perceived strength. A handful of well-publicized targeted attacks against in-house IT applications,
similar to what was seen with the recent Stuxnet worm, will lead many corporate executives to
conclude that their in-house IT organizations can’t match the level of security offered by SaaS
providers.

Forecasts in cloud security breaches will call for partly cloudy cloud
adoption (@rwang0). Despite the woes in on-premises security and move to the cloud, cyber
attacks will force companies to move from public clouds to private clouds in 2011 . Concern about
cyber gangs hacking into commercial and military systems leads to a worldwide trend that
temporarily reduces public cloud adoption. Hybrid models for apps in the public cloud and data in the
private cloud emerge as users migrate from on-premises models. Data integration and security rise
to key competencies for 2011. The bottom line – improved data security reliability will drive overall
cloud adoption in the latter half of 2011.

Android will becomes more enterprise friendly by fixing major manageability issues
(@maribellopez). Android, while very popular with consumers due to its Verizon relationship, still
strikes fear in the heart of IT. Its lack of on device hardware encryption, which even Apple supports,
makes it a non starter for some IT organizations. In general, Android will need to fix its support for for
Exchange including areas such as 802.1x WPA2 wireless network authentication, corporate proxy
servers, Cisco VPNs using certificates, OpenVPN, CalDAV, remote wipe, and managed apps and
configurations. Sure, Android is a consumer platform, but consumer phones are now enterprise
phones. Google must address these issues or risk losing share in its war against Apple.

Social media landscape transforms into information commerce (@briansolis). The social
media landscape will undergo an interesting transformation as it ushers in a genre of information
commerce and the 3C’s of social content — creation, curation, and consumption. While blogging
typically resides in the upper echelons of the social media hierarchy, new services further
democratize the ability to publish and propagate information. 2011 heralds the year of information
curation and the dawn of the curator. Curators introduce a new role into the pyramid of Information
Commerce. By discovering, organizing, and sharing relevant and interesting content from around the
Web through their social streams of choice, curators will invest in the integrity of their network as
well as their relationships. Information becomes currency and the ability to recognize something of
interest as well as package it in a compelling, consumable and also sharable format is an art.
Curators earn greater social capital for their role in qualifying, filtering, and refining the content
introduced to the streams that connect their interest graphs.

Enterprise social software migraine (@sameerpatel). On the Technology front, expect a lot of
noise and confusion on the social and collaborative front when it comes to customer, employee and
partner collaboration. Technology will come from 4 camps: Pure Play Enterprise Social Software
Vendors, ERP and CRM providers layering in collaboration and community features, Networking and
UC providers adding social networking to VOIP and Online Meeting offerings, and finally, specialist
HR and LMS vendors extending their offerings to include collaboration. From a distribution
perspective, today’s largely direct sales model will see expansion into Telco reseller providers who
have sold managed hosting solutions such as email and messaging in the past, as well as system
integrator and strategy consulting providers that are ramping up practices. Due to the nature of
rapidly evolving use cases for social software, traditional sourcing mechanisms and criteria that
might work for static ERP and CRM system selection will be inadequate to make long term and
roadmap decisions on tools and integration for enterprise social software.



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Tools, networks and services that cater to the role of the curator will emerge
(@briansolis).Storify, Curated.by, Pearltrees, and Paper.li break through as the coveted services of
choice amongst curators as they not only enable the repackaging and dissemination of information,
but also deliver in captivating and engaging formats. Similar to blog posts, curated content
represents social objects and curation services will spark conversations and reactions, while also
breathing new life and extending the reach of existing content – wherever it may reside. Curators
play an important role in the evolution of new media, the reach of information, and the social
nicheworks that unite as a result. Curators promote interaction, collaboration, as well as
enlightenment. More importantly, services that empower curators will also expand the topography for
content creation. Forrester estimates that 70% of social media users are simply consumers, those
who search and consume the content available today…but never say anything in public about it.
However, the ease of curation combined with the pervasiveness of microblogging start to entice
consumers to share information, converting the static consumer into a productive curator or creator.

Social analytics will evolve from ad hoc experiments into refined information services
(@rwang0). Organizations will continue to experiment in listening services that filter out noise from
the social sphere, identify trends that deliver insight, and create models that support prediction. As
algorithms increase in complexity, adapt to regional and cultural differences, and require greater
vertical specialization, the end customer organization will no longer be able to support in house
efforts. A new breed of information brokers will deliver social analytics at a scale that will support the
challenges of big data in heterogeneous systems. Expect vendors such as Alterian, Attensity,
Buzzmetrics, Cymfony, IBM, Radian6, SAS, Scoutlabs, Telligent, and Visible to shift their business
models from software vendors to information brokers.

“The Cloud” will become the new Social Media (@ekolsky). Always looking for a technology or
tool to overhype, the recent announcements from Oracle, SAP, Microsoft, Salesforce and many
smaller vendors in the enterprise applications world has placed ―The Cloud‖ as the center of
controversy for 2011 and into 2013-2014. The lack of coherence and understanding of ―The Cloud‖
will result in many wasted dollars trying to implement models that are not sustainable, or reliable, for
organizations, fees paid to consultants with no real knowledge of the market, and failures that will
only serve to reduce the speed of adoption of ―The Cloud‖. Buyers will still have to wait until 2015+ to
see what happens, as most vendors have just begun developing their strategies and organizations
have not yet adopted the model in sufficient numbers to justify faster R&D from vendors (with few
exceptions).

Next Gen Business Models: “Outside In” Strategies Proliferate – With An Eye Towards
Pragmatism.
Business model innovation will rely more on disruptive technology in 2011. Leading organizations
will strive for a better synergy between business and technology. Constellation expects that:

Citizen engagement platforms will get more open despite the emphasis on security
(@ideagov). The combination of the blow back from wikileaks; and the Republican takeover in the
U.S. House of Representatives will lead to a rash of ―military grade encryption packages‖ that will be
stacked on top of many apps and platforms. Whether they work or not will not matter. Conversely
expect to see an explosion of citizen engagement platforms striving to be even more ―open.‖

Organizations will put business back into social business (@sameerpatel). As organizations
increasingly start to see the benefits of deploying social and collaborative initiatives to improve
employee, customer and partner engagement, they will soon begin to realize that the decade old
notion of streamlining repeatable processes made popular by ERP and CRM system-of-record
deployments was largely over promised. In practice, customers and prospects have unique
questions not answerable in the knowledge base or by marketing; employees living in rigid ERP



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systems need to constantly find experts who have the best answers and to collaborate with them.
And reseller partners are constantly spending time looking for the right answers not available on
asynchronous partner portals to keep end customers happy. Silo’d but open collaboration initiatives
on activity streams and other enterprise social networking utilities currently being deployed will
expose such engagement not historically possible in an ERP or CRM laden design. Consequently,
LOB and IT leadership will realize that traditional process approaches and fluid collaborative
constructs need to come together to truly accelerate business outcomes.

Sexy will be out for social media (@ekolsky). Organizations will realize that for something (social
media) to feel sexy there is a lot of work that needs to happen behind the scenes. Time to pay the
piper, as they say, and begin to build integrated platforms that can leverage social channels in
constructing healthier, better relationships with customers. Despite the focus on tools and
technologies, leaders will begin to realize that it is just about processes and people with support from
technology. Want to get ahead? Plan, plan, plan – then roll up your sleeves and start doing,
strategically speaking.

Organizations will get serious about mobilizing apps and embrace the platforms to support
mobility (@maribellopez). In 2011, firms will deploy enterprise mobility management tools to
support multiple device types and operating systems. Companies will also focus IT resources on
moving line of business apps to devices. While cloud-based platforms and SaaS gain in importance,
a majority of firms (75+%) will turn to in-house resources for development. As a result, firms will
adopt mobile enterprise applications platforms and mobility frameworks to help them port apps using
existing IT resources.

The distinction between BPO and ITO will blur (@pfersht). Integrated offerings from service
providers with broad capability gain market share. With the leading IT services providers all heavily
pushing BPO capability, there will be increased blurring of offerings as industrialized process
solutions become more popular. Process-only BPO will continue to proliferate across horizontal
offerings where there is significant labor arbitrage opportunity, namely finance and accounting, order
management and procurement, however within industry-specific process, platform-enabled offerings
are the only way providers can develop cost-effective utility models across their clients.

P2P will displace the old notions of B2B and B2C in social business (@rwang0). B2B and B2C
will cease to exist in 2011. Organizations will conduct social business through Peer-to-peer (P2P)
relationships. Attempts to stove pipe individuals into forced-fit, artificial market segmentations will fail
because each individual brings multiple roles to the community. Each role brings a new perspective
and a set of expectations in customer experience. Organizations will have to retool to the new rules
of business and also move beyond social.

Sustainability software will lead to global starvation (@dahowlett). Sustainability software will
conclusively prove that cows are the biggest contributors to greenhouse gases. The ensuing bovine
cull will ensure population starvation on a massive scale thus solving our climate change issues.
Those flogging carbon solutions will be put out of business.

Legacy Optimization: Flat IT Budgets And New Projects Increase Pressure On Legacy Costs
Between 66% and 75% of most technology budgets go towards supporting legacy systems. In order
to make the shift to support new business models and disruptive technologies, leaders will have to
find ways to optimize existing investments. Leading organizations can expect that:

Corporate IT spending will barely keep up with dollar inflation (@fscavo). Corporate IT
spending in the US and Canada will increase a small 2.0% at the median, after two years of flat
budgets. In addition, although most IT organizations are not currently adding to staff counts, we do
see a significant upturn in initiation of new major projects, extended work hours for IT employees,



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and increasing use of IT contractors. This will lead to an improved IT employment picture by mid-
year.

Technology refresh cycles will accelerate through 2011 (@ekolsky). The recent 2-3 years
―nuclear winter‖ in enterprise applications, which coincided with the advent of social channels and
social technologies, will give way to a massive acceleration of technology refresh channels –
especially in Customer Service departments – leading to large-scale adoption of both new
technology related to social media as well as new technology that was scheduled for later adoption.
This large-scale adoption will result in several smaller vendors with innovative offerings gaining a
sizable presence in Contact Centers and a disruption of the model for old-technology vendors that
cannot adapt quickly to the changes we are seeing.

Organizations will cautiously recommit to BPO (@pfersht). Business Process Outsourcing
uptake will creep back throughout 2011, as the recovery stutters and buyers pull the trigger on
sourcing initiatives, however, many of the deals for the first-time buyer will be small in scope. Many
businesses paralyzed by the Recession have been operating a ―wait and see‖ strategy through 2010
regarding their Business Process Outsourcing (BPO) options. However, a slowing recovery and a
growing pressure to meet budgets will drive a steady wave of increased BPO evaluation and
contract signing in 2011, especially in Finance and Accounting and Procurement. HfS demand-side
research has pinpointed a strong interest from buyers to increase scope in existing BPO contracts,
and close to one-in-four businesses in the mid-market ($1bn – $3bn in revs) are expecting to
investigate their first steps into F&A BPO. Moreover, many BPO services providers are more
determined than ever to ―penetrate and radiate‖ customers with initial small-sized contracts, due to
the shortage of attractive captive acquisitions and affordable competitive acquisition candidates.

Organizations that reevaluate their IT strategies and contracts hand in hand will save the
most money. (@rwang0) Most technology procurement strategies fail to align with IT strategy and
vice versa. Consequently, buyers end up with extra device capacity and shelfware. As organizations
consider their legacy optimization strategies, successful teams will bring enterprise architects, IT
leaders, procurement teams, and business units together to identify waste to pay for innovation. Two
-tier ERP and third party maintenance will prove to be examples where alignment can be achieved to
create win-wins for IT and line of business leaders.

Organizations held hostage by high and useless software maintenance contracts will lead a
massive backlash (@rwang0). Organizations faced with market pressures to create strategic
differentiation amidst the burden of legacy systems will need to find a way to pay for innovation.
Software maintenance fees will come under attack as user groups and leading organizations will
spearhead efforts to renegotiate existing enterprise software vendor contracts. Existing software
vendors caught off guard will suffer through a PR disaster that will cost them significant future sales.
Third party maintenance vendors will continue to emerge to combat vendor-lock in and maintenance
hegemony.

Your POV.
Ready for 2011? Got a prediction we missed? Add your comments to the blog or send us a
comment at info (at) ConstellationRG (dot) com.
Please let us know if you need help with you in 2011. Here’s how we can help:

Disruptive technologies. Assessing the market for social, mobile, cloud, analytics, UC, and internet
of things. Providing vendor selection frameworks. Comparing vendor capabilities. Negotiating vendor
contracts. Providing independent validation and verification.

Next gen business models. Advising management teams and organizations on disruptive
technology adoption leading practices. Designing next gen business models in Social CRM, digital



(cc) Brian Solis, www.briansolis.com - Twitter, @briansolis
marketing transformation, cloud adoption. social business, virtual commerce strategies, business
process innovations, and cloud services.

Legacy optimization. Reviewing existing technology strategies for cost savings. Renegotiating
existing maintenance contracts. Providing go forward optimization plans.

Reprints
Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF
format, please contact sales@ConstellationRG.com.




(cc) Brian Solis, www.briansolis.com - Twitter, @briansolis
Brian Solis is globally recognized as one of most prominent thought leaders and
published authors in new media. A digital analyst, sociologist, and futurist, Solis has
studied and influenced the effects of emerging media in business, culture and the
convergence of marketing, communications, and publishing. He is principal of
FutureWorks, an award-winning business management and New Media consultancy in
San Francisco and has led change management and social programs for Fortune 500
companies, notable celebrities, and Web 2.0 startups. BrianSolis.com is ranked among
the top of world's leading business and marketing websites.

Solis is the author of Engage! The complete guide for businesses to build, cultivate and
measure success in the new Web.




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Description: Enterprise leaders seek pragmatic, creative, and disruptive solutions that achieve both profitability and market differentiation. Cutting through the hype and buzz of the latest consumer tech innovations and disruptive technologies, Constellation Research expects business value to reemerge as the common operating principle that resonates among leading marketing, technology, operations, human resource, and finance executives. As a result, Constellation expects organizations to face three main challenges