Is there a single initiative to start Enterprise Digital Business adoption? Yes, there is!

Andy Mulholland

Vice President and Principal Analyst, Constellation Research
Constellation Research

Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems. Coverage Areas Consumerization of IT & The New C-Suite: BYOD, Internet of Things, IoT, technology and business use Previous experience: Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...

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If there is a standard question asked in any meeting involving Digital Business, or even on current IT, by a CEO, or a CIO, then this is the one! Fortunately there is a clear answer that has not yet failed to arouse interest, as the financial benefits are immediately clear and easy to track, yet at the same time it is low on internal operational disruption. Finally, it doesn’t cause conflict with Sales, Marketing or new Digital Officers activities!

The answer lies in transforming Procurement through using Digital Business to reduce the cost of each purchase by real time competition; increase the number of items that are subjected to individual bids through reducing the cost of bidding; and to realign Procurement staff experience and knowledge towards finding new lower cost suppliers through using Digital Markets.

Focusing on Procurement seems somewhat counter intuitive as to date the almost inevitable focus of Digital Business has been to look to find new ways to sell more, but by the end of this blog hopefully the reasons will have become clear!

Even if your Enterprise is focused on using Digital Business to transform its competitive abilities then sooner, or later, it will become clear that Procurement will need to be transformed to match. It is difficult to radically transform sales and marketing of products with out an equally radical transformation in the procurement processes to provide a back-to-back alignment of agility and flexibility from your suppliers!

Before introducing the immediate, and very real, cost savings to be made from Procurement, with the practical steps to deliver these results, consider the very real strategic benefit in support of the Sales and Go To Market activities. The transformation of the Enterprise supply side market place placing pressure on Suppliers to find new ways to compete to gain your Enterprise business is an excellent demonstration of the kind of future Digital Business markets that your Sales activities will need to compete within.

Creating a Digital Business market in which your Suppliers must compete in real-time for your business introduces a perfect environment to learn new techniques and methods that can deliver sales success for your own Enterprise’s ability to compete in Digital Business markets.

But what can the transformation of Procurement into a Digital Business actually produce as practical tangible short-term results?  Constellation Research has an available case study on how an investment of $13 million turned into savings of $132 million in the first full financial year following the investment. In the second year savings of more than $200 million are forecast, as a return on investment that’s way better than most, perhaps even all current IT projects can manage! In fact that’s worth saying again in bold print to make the point!

See how an investment of $13 million in a Procurement Transformation to a Digital Business made savings in the first full financial year of $132 million in Constellation Research case study

https://www.constellationr.com/research/how-transforming-purchasing-can-lead-annual-savings-128-million

The approach, methodology and focus on cost saving all align to the role that the CIO and IT department has traditionally played in the Enterprise, so its well within the current enterprise approach for IT projects. A point not necessarily true for many Sales and Marketing projects, plus most Procurement Management is more than happy to work in partnership improving their core function. Its fair to say that a Procurement Transformation is the low hanging fruit of Digital Business being most readily accessible, and offering clear financial benefit targets, in contrast to many Sales moves.

Where do the cost savings accrue from in Digital Business Procurement?

1. A sharp, and pronounced decrease in the cost of competitive supplier bidding, coupled with substantial automation of the procurement bidding processes, enables an increased amount of the procurement expenditure to be competitively managed. In the case study some $5 billion of expenditure was moved from periodic competitive bidding with one or more year best buy status awards to every purchase being competitively bid.
2. The automation of bidding processes by new technology Services and capabilities, (supporting point 1), reduces substantially reduces the time/cost of running a procurement bid. Shifting to online real time auction bidding using reverse auctioning, which forces suppliers to bid against each other, and can be fully integrated with the requirement and order processes.
3. A reorganization of work teams, (to enable point 2) by introducing flexible virtual workgroups based to better utilize time and knowledge optimization through collaboration and social tools. Virtual work teams focus on using personal knowledge and flexible time management to better find and realize short-term opportunities.

In most enterprises though reduced expenditure (point1) is the transformation ‘to be’ outcome the path from the current ‘as is’ situation will start from the reorganization of the manner of working (point 3) to unlock the necessary skills and knowledge to make the transformation. In any case introducing good quality collaboration tools to enhance communication and clarification of every day working issues is fast becoming accepted good practice as speed and variety of the daily activities increases and becomes more frequently variable.

Collaboration tools allow unstructured questions to be asked around topic, and answered by those able to provide answers, without either party needing to know the names or roles of each other. Unlike email that constrains the questioner to only being able to address questions to people they know, and therefore misses reaching a large section of the available experience and knowledge accumulated within an Enterprise.

Analyzing the results of Collaboration provides new and usually radically different information, it possible to see the new unrecognized issues being raised, by whom, and with what the frequency of occurrence to better understand and improve existing processes. This newly found knowledge allows the transformation program to immediately add operational improvements.

Analyzing Collaboration threads quickly identifies who is answering which question, and allows a new mapping of people skills and knowledge by topics, thus providing a fundamental insight into who is best able to contribute to which part of the transformation process through redesign of particular identified elements.

Armed with this increased knowledge of the current issues, trends and the capabilities of the people in Procurement it becomes easier to logically break down the transformation tasks to align with available skills. Leaders of virtual work groups can now tap into a deeper pool of expertise without disrupting normal organizational structures or work. The first stage will need to focus on understanding exactly what is current good practice in Digital Business Procurement, or e-commerce online procurement to add an older term.

For those not familiar with the various aspects of ‘digital’ Procurement there is a bewildering section of terms and techniques though almost all are based on some from of Reverse Auction. This is literally the reverse of an ordinary auction in which a single Seller offers goods for sale and a range of Buyers compete through outbidding each other with increasing prices. In a Reverse Auction there is a single Buyer with multiple sellers, usually actively bidding in real time to undercut each other. A Reverse Auction is usually a fully transparent bidding process, through a single sealed bid process is possible, to actively excite interest and competitive pricing pressures from suppliers in order to secure the business.

Implicit in Reverse Auctioning Procurement is the Sellers acceptance of the Buyers commercial terms, thus placing the responsibility, a major part of the cost, and a great deal of the work, associated with normal Procurement process onto the seller! This point alone results in sharp reductions in time and negotiations of terms in normal competitive bidding.

In examining the market for information on ‘digital’ procurement any of the following terms may be used by various Business Process Outsourcing, or BPO, providers, and product vendors, to describe the capabilities they provide; Procurement auction, e-auction, sourcing event, e-sourcing or eRA, eRFP, e-RFO, e-procurement, B2B Auction.

In addition there is a further specialized type of ‘digital’ procurement whereby the Buyer stipulates the maximum price they are prepared to pay.  The use of this process is of great value when a manufacturer is costing their fully assembled product and wants to allocate an allowable cost to each bought in component.  

There are a large number of Procurement Service Providers offering various levels and volumes of Procurement capabilities, As a Service, avoiding direct investment and aiding direct cost allocation to individual business activities. This is a further advantage in adopting Procurement as a Digital Business transformation as the practices are indeed standardized with the outcomes providing the competitive differentiation. Unlike Sales and Marketing Digital Business where the competitive differentiation is usually a key success factor in Digital Business initiatives and accordingly requires higher investment.

An a quick first stop example to gain a rapid overview on Business Process Outsourcing, SourceOne offer an informative and well laid out web site. There are of course a great many other Procurement BPO providers, as well as many excellent Procurement products. Some Enterprises in some industry sectors will still wish to maintain particularly competitive advantages by operating their own Procurement Services, a reasonable comprehensive list of some of the best-known products can be found here.

If you have read this far then the argument that there is a single initiative that introduces Digital Business into the enterprise with both the capability to target clear savings, and with a transformation program that offers less risk and disruption must be becoming clear.

Most likely you are even now formulating some ideas on how to explore further how Digital Business Procurement might work in your Enterprise. So in conclusion here is a set of suggestions as to a starting point to work out the potential benefits.

1. Determine the total annual spend of your enterprise in the last financial year, together with the number of orders, and the number of suppliers. (Previous good Procurement practice has been to reduce the number of suppliers, due to cost of administration of any supplier, with a switch to multi year call off awards so the results may be surprising).

Build a simple model to show these parameters of the current situation in a manner that suits your enterprise point of view and the metrics discovered. This is the current base from which to calculate improvements. Do not forget to search for items normally regarded as out of scope and not included in the ‘annual’ procurement process.

2. Carry out a series of analytics that refine the emerging picture of exactly how your enterprise expenditure is made up. Some key factors are usually; 

• Split the expenditure between items that directly add value to your products and market versus items that support the administration of your enterprise. Administrative support purchases can be the lowest risk starting point to trial Digital Business Procurement, but the big rewards come from increased competitiveness, or margin improvement, in the product area
• Determine separately firstly the amount of expenditure and the number of orders that are subject to competitive bidding individually, and secondly orders on an annual basis with multiple call offs that are not subject to individual competitive bids. Orders place in multi year bid awards stretching over more than one year should be excluded as non-competitive!
• Use the information from b) to produce a graph for product-based expenditure with number of orders on one axis and value of individual order on the other axis. Overlay this graph with data as to individually competitively bid orders, and annually awarded contract call off orders.
• Look for the anomalies that will comprise of the first round of targets in terms of amounts and sizes of orders, then carry out a detailed analysis of these orders to really understand the details and determine if these are realistic targets.

This is obviously an exercise to carry out with the Procurement department so it must be about jointly established objectives. This is the focus and those responsible should be clear on this even though at an Enterprise level this may form part of a strategic move towards Digital Business. Attempts to integrate this directly with the sales strategy towards increased flexibility in the market place, or simply a further move in strategic cost reduction plans, should not muddle the prime purpose.

Procurement professionals want to find ways to improve purchasing costs by making better use of their knowledge and experience, and are generally frustrated by the lack of time to focus on this due to the amount of time spent on  ‘bid administration’. Introducing Digital Business Procurement with dynamic bidding services reduces the ‘administration’ element and allows the to focus on finding new, more competitive sources. In parallel the dynamics of Digital Business Procurement model allow trials of improved purchasing profiles, using different parameters such as changing trading volume to establish how this might impact price as an example, and rapid analysis of results to provide feedback for further improvement.

In fact its difficult to find any reasonable argument not to start to actively investing your Enterprise Procurement profile to establish the potential gains. Most Enterprises will quickly be able to build a case with a worthwhile target to make a trial transformation of Procurement using an external BPO provider worthwhile. Add the low levels of internal disruption with equally low risk factors through using a Services approach and it is truly a single easy to quantify game changing move in the adoption of Digital Business!

IBM Interconnect – Disruption dictates digital enablers embedded in all IBM does

Founder, capioIT
calitolIT

Phil is the founder of capioIT, a research analyst firm focussed on driving change in the analyst and research market through innovation and collaboration, with a strong focus on IT services and BPO strategies in the Asia/Pacific region. He has 17 years' experience in corporate strategy, consulting and market intelligence, gained in a diverse range of organisations and industries. Prior to founding capioIT, he established the Australian and Services business units at Springboard Research. Prior to Springboard Research, Phil was responsible for driving analyst firm IDC's research in the services marketplace across the Asia/Pacific region. During his 6 years at IDC, Phil led a large multi-national team of analysts across a range of IT related services with a particular focus on IT…...

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In late February 2015, IBM held their first global Interconnect event in Las Vegas. All major software brands were bought together (with analytics in a support role) to highlight the future of IBM from a software perspective. Clearly given the difficult nature of key aspects of the overall business for IBM, Interconnect represented the future if IBM is to be successful, not just software products.

The key strategic take away from capioIT’s perspective was the level to which IBM has embedded cloud, and analytics into every software product and solution that IBM and its (still) often overlooked partners will take to market.

It is clear that when talking cloud, IBM is heavily betting on the hybrid cloud model as the future. Alongside cloud and analytics, mobility (both with, and without, the benefit of the Apple relationship) and security is increasingly embedded in all that IBM will do.

A note on security, IBM needs to make more noise about security. Clearly the overall IBM portfolio is so vast (and often can be cumbersome) that it is not hard for even an offering as deep as security to get overlooked. Expect more attention from IBM towards promoting security capability through 2015 and into 2016.

The most critical enabler for the IBM shift to embed traditional definitions of digital into all that it offers is the acquisition in June, 2013 of SoftLayer. Without underestimating the billions that IBM has historically spent on acquisitions, or more recently, earned through asset disposal, this was the best $2 billion that IBM has invested in several years.

As part of the $1.2B investment in cloud capabilities IBM has significantly increased the number of data centre locations in the 20 months since the acquisition to approximately 40. These have included new nodes in Australia, Canada, India and Italy in 2015. Clearly the IBM localised approach is designed to differentiate from other IaaS and PaaS providers who have taken a more centralised location approach. Despite IBM’s recent struggles with internal scale and complexity, the localised data centre location ability is one area where the scale of IBM provides clear benefits.

The other key investment that IBM is integrating to drive support clients efforts with digital disruption is Bluemix. Bluemix is the IBM PaaS that it has been positioned as “The Digital Innovation Platform”. With a strong IBM focus and investment in the Cloud Foundry, it is driving the Bluemix platform to attract enterprise alignment and developer support

The Bluemix centred engagement between IBM and Citibank has been designed to accelerate Citibank’s ability to compete with new disruptive banking platforms. Citibank also gains the ability to augment an innovative culture within its digital and competitive ecosystem.

The innovation on show from IBM at Interconnect is not a panacea to the ills that have impacted IBM for the past couple of years. Whilst it is arguable that IBM has been countering the decline of the legacy vendor better than cross country rival HP, it is still a company with several troubled elements that may take too many quarters to unwind to satisfy the market. For every Watson, (the IBM innovation benchmark) there is a heavily burdened legacy infrastructure outsourcing business and a failure to address key market opportunities eg ealesforce.com solutions.

Unfortunately, IBM has still not nailed the partner ecosystem. This aspect needs to be genuinely and mutually enhanced particularly from the software point of view.

 Capture Point

Whilst IBM still has significant internal and external issues, it is clear that IBM will innovate to drive success. That is the approach that IBM has always attempted and it rarely knows any other way. All it has to go now is to get customers, clients and the ecosystem on board to provide the market with the tools to drive the digital disruption that is the new normal.

White House Cyber Security Summit Misses The Point

Steve Wilson

Former Vice President and Principal Analyst
Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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This is Part 2 of my coverage of the White House #CyberSecuritySummit; see Part 1 here.

On Feb 13th, at President Obahama's request, a good number of the upper echelon of Internet experts gathered at Stanford University in Silicon Valley to work out what to do next about cybersecurity and consumer protection online. The Cyber Security Summit was put together around Obama's signing a new Executive Order to create new cyber threat information sharing hubs and standards to foster sharing while protecting privacy, and it was meant to maintain the momentum of his cybersecurity and privacy legislative program.

The main session of the summit traversed very few technical security issues. The dominant theme was intelligence sharing: how can business and government share what they know in real time about vulnerabilities and emerging cyber attacks? Just a couple of speakers made good points about preventative measures. Intel President Renee James highlighted the importance of a "baseline of computing security"; MasterCard CEO Ajay Banga was eloquent on how innovation can thrive in a safety-oriented regulated environment like road infrastructure and road rules. So apart from these few deviations, the summit had a distinct military intelligence vibe, in keeping with the cyber warfare trope beloved by politicians.

On the one hand, it would be naive to expect such an event to make actual progress. And I don't mind a political showcase if it secures the commitment of influencers and builds awareness. But on the other hand, the root causes of our cybersecurity dilemma have been well known for years, and this esteemed gathering seemed oblivious to them.

Where's the serious talk of preventing cyber security problems? Where is the attention to making e-business platforms and digital economy infostructure more robust?

Personal Information today is like nitroglycerin - it has to be handled with the utmost care, lest it blow up in your face. So we have the elaborate and brittle measures of PCI-DSS or the HIPAA security rules, rendered useless by the slightest operational slip-up.

How about rendering personal information safer online, so it cannot be stolen, co-opted, modified and replayed? If stolen information couldn't be used by identity thieves with impunity, we would neutralise the bulk of today's cybercrime. This is how EMV Chip & PIN payment security works. Personal data and purchase details are combined in a secure chip and digitally signed under the customer's control, to prove to the merchant that the transaction was genuine. The signed transaction data cannot be hacked; stolen identity data is useless to a thief if they don't control the chip; a stolen chip is only good for single transactions (and only if the PIN is stolen as well) rather than the mass fraud perpetrated after raiding large databases.

It's obvious (isn't it?) that we need to do something radically different before the Internet of Things turns into a digital cesspool. The good news for privacy and security in ubiquitous computing is that most smart devices can come with Secure Elements and built-in digital signature capability, so that all the data they broadcast can be given pedigree. We should be able to know tell for sure that every piece of information flowing in the IoT has come from a genuine device, with definite attributes, operating with the consent of its owner.

The technical building blocks for a properly secure IoT are at hand. Machine-to-Machine (M2M) identity modules (MIMs) and Trusted Execution Environments (TEEs) provide safe key storage and cryptographic functionality. The FIDO Alliance protocols leverage this embedded hardware and enable personal attributes to be exchanged reliably. Only a couple of years ago, Vint Cerf in an RSA Conference keynote speculated that ubiquitous public key cryptography would play a critical role in the Internet of Things, but he didn't know how exactly.

In fact, we have have known what to do with this technology for years.

At the close of the Cyber Security Summit, President Obama signed his Executive Order -- in ink. The irony of using a pen to sign a cybersecurity order seemed lost on all concerned. And it is truly tragic.

In 1998, Bill Clinton and his Irish counterpart Bertie Ahern signed an US-Ireland communique on e-commerce. At that time, the presidents used smartcards. Then in 2003 -- still early days -- Bill Gates espoused the importance of chip technology for authentication.  Within weeks, several notebook computers were released with integrated smartcard readers, but service providers chose not to use the stronger security options. Instead of leading a new wave of decent security, banks and governments muddled through with passwords and then password generators or text messages. Mainstream e-business missed a huge opportunity through the 2000s to embed smart authentication in the day-to-day user experience.

We probably wouldn't need a cybersecurity summit in 2015 if serious transaction security had been built into the cyber infrastructure over a decade ago.

The Future of Data – An Ultra Brief Summary

I wrote a lengthy report on the future of data… due to several reasons I never got around to publishing it  (yet — I’d like to eventually, but now needs some updating).

I would like to share some excerpts from this report – such as the one below.  Please let me know your thoughts and it might encourage me to publish it (might, might, might… might).

Data has been touted over the years as many things: the blood the corporation, the main asset, the most valuable part of IT’s responsibilities – and lately as “Big Data”: a vast collection consisting of real-time data that comes from all walks of life and technology.

Regardless of how it is viewed, labeled, or categorized data remains the most important component of organizations finding and defining value for interactions between stakeholders and customers.

There are, however, two aspects that merit notice and make this very different from any other time: analytics and experiences.

The Value of Analytics

Without any processing, analysis and understanding of the hidden value inherent to data it actually is nothing more than a collection of one-and-zeroes in a storage device (or transport, if it must be interpreted life from the network as opposed to picked up from storage).  The purpose of data is to be combined with other elements, mixed-and-mashed in myriad ways, and its secrets unhidden.

This is actually one the most valuable advances of the recent years: the speed of processing, the understanding of the data, the advances in storage and management, and the better knowledge of how to manage data yielded amazing advances in real-time analytics and the use of predictive analytics (or, better yet – anticipatory analytics).

Now all we need are the tools to use it properly.

This is where most of the analytics vendors that get it are working on: data visualization, data-prep, data-scrubbing and more of those tools are losing their IT-centric, consultant-deployed models and embracing the rise of the citizen programmer.  Indeed, letting the stakeholders and the users directly access the data they need to conduct analytics and manipulate the data via graphical driven interfaces is removing the need for the “data scientist” and letting more and more organizations use their data better.

This is translating into better insights, better results, and better processes being deployed in organizations – and all this is the tip-of-the-spear for the digital transformation investments that will explode in the next few years.

All They Want is Experiences

The era of the customer is upon us.  Customers are more empowered and better prepared now that at any other time in history.  Armed with online communities, other customer’s reviews, and access to infinity resources via the internet they are smarter, better educated, and more knowledgeable than organizations.  As a result, they are calling the shots in the interactions between organizations and them: deciding when and where they interact, and (more importantly) what they want to get form the interaction.

This last point is critical: most organizations are not prepared to deliver those outcomes (in the form of experiences) because they don’t have access to the right information.

Information management I shaping up to be the critical investment priority for organization in the next decade and the three elements that make up information (data, knowledge, and content) are shaping up to get generous budgets allocated to them.

Of course, it is not simply about having the right information, or knowing where to find it, but also of making sure the right data is matched with the proper content and complemented with the necessary knowledge to provide a complete, personalized, and optimized answer to the customer’s question or inquiry.

The understanding of how information is created (how data is analyzed, knowledge generated, and content maintained at the very least) is what is going to be driving infrastructure investments for IT in the next 2-3 years (and longer) as they adjust to the new reality of having to manage information using technology.

What do you think? Am I way off?

Capgemini – all about making innovation a habit

pending

Guy Courtin was formerly Vice President and Principal Analyst at Constellation Research covering Matrix Commerce and how the Internet of Things drives the evolution of commerce.  Guy has over 15 years experience in the technology space and specifically in the supply chain space. Most recently he was the Vice President of Research at SCM World. Where he focused on the service providers that empowered supply chains. Prior to SCM World, Guy held numerous senior positions. He was responsible for product marketing at RSi, a retail supply chain solution provider. There managed RSi’s go to market strategy around their leading cloud based supply chain solutions. He also spear headed Progress Software’s supply chain group. Where he was responsible for driving revenue and market share as well…...

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Last week I decided to escape the snowy and brutal winter that has blanketed Boston and head to a sunny and warmer location – Chicago. Ha, clearly I am suffering from cabin fever. The reality is Chicago was warmer and had barely any snow, but enough about the weather.

What brought my colleague Ray Wang and me to Chicago was to visit Capgemini and attend their well-organized analyst day. The theme over the two days was pretty clear – innovation is the future for Capgemini. Easy to proclaim, difficult to execute. So can Capgemini live up to their lofty proclamation? Only time will tell but here are three take-aways that indicate they are on the right path:

• Instilling the closed loop process to innovation: Innovation cannot be a one time event, something that falls into a to-do list that we can check off as complete and move on to the next task. Being able to innovate must be something an organization takes on as a habit. Similar to exercising – going to the gym or for a swim is okay as a one-time event, but making it a habit is where we draw the greatest benefits. Capgemini emphasized the importance of infusing a habit of innovating with not only their clients but within their own organization. They highlighted work they did with many of their customers to constantly seek and execute on innovative needs. One such customer is one of North America’s largest agriculture co-operatives, who highlighted two large-scale workshops they had leveraging Capgemini’s Accelerated Solutions Environment facilitated process. These resulted in some important changes as well as greater innovative process for the companies 17 divisions. The framework from Capgemini is simple but requires discipline and rigor to stay with the process:
  • Discover – These are where the in person sessions are vital to flesh out where the needs are and what can be implemented.
  • Devise – Think of this as the fail fast segment. Implement quickly and learn quickly as to what works and will not.
  • Deploy – Take the successes from the prior stage and begin to deploy across the board.
  • Sustain – This is the key closed loop element. This cannot be a one-time project but must constantly build on itself. Sustain brings you back to the Discover phase.
• Failure is just as important as success: It could be argued that failure is the foundation of success. The whole notion of “fail fast” is what allows you to get to the successes sooner. Capgemini highlighted an example of working with a large CPG to exploring greater efficiencies via using Google glass. Unfortunately, the project did not achieve the goals. But fortunately for all the parties involved they absorbed plenty of learning from the experience. As Capgemini stated, just because the project did not catch on, does not mean it will not resurface down the road. The use of the technology for the original goal did not get adopted, but the learning that came from the process was successful. Capgemini’s customer shelved what would have been a large expenditure, Google was provided with the feedback to improve their product and the findings from the experience provide the basis for potential similar projects in the future. As a client stated during the conference “The toe stubs are where innovation comes from.” Which is why the next take away is crucial to the innovation journey.
• Long term relationship, not speed dating: Capgemini clearly displayed that their mind set is to develop and maintain long-term relationships with their customer base. They truly want to be seen as a partner for their customers and not only as firefighters being brought on to put out fires. Capgemini highlighted a number of clients Hydro One, Syngenta, Jamba Juice and Coca Cola to name a few. Wanting to create a long term business relationship is the goal of most companies, regardless of their industry. But it is clear for companies such as Capgemini, Accenture, KPMG and TCS to name a few, the days of large one off projects to implement large package applications are dwindling. That revenue stream cannot be sustainable. Becoming a trusted advisor to navigate the continually shifting technology and business process landscape could provide a more reliable revenue stream. It certainly will not be easy, but marriage never is!

It is clear that Capgemini recognizes the needed to move from being an integrator to a trusted advisor. They provided some thoughts and some voice of the customer that seems to point to Capgemini being on the right path. However it will be interesting to see if they can make this innovation partnership a large enough chunk of their business. They did mention during the session that they did see lots of business from merger and acquisitions. These feel like firefighting opportunities. Companies need to consolidate systems and processes after a business event, but does that translate to long-term partnerships? To be determined.

The new model for innovation is about delivering a stream of innovation not just one great idea. The right strategic direction for the company, but the journey will not be without major difficulties. But nothing worth achieving is simple.

On pure maths and innovation: An open letter to the editor of The New Yorker, February 2015.

Steve Wilson

Former Vice President and Principal Analyst
Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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An unpublished letter to the editor of The New Yorker, February 2015.

My letter

Alec Wilkinson says in his absorbing profile of the quiet genius Yitang Zhang ("The pursuit of beauty", February 2) that pure mathematics is done "with no practical purposes in mind". I do hope mathematicians will forever be guided by aesthetics more than economics, but nevertheless, pure maths has become a cornerstone of the Information Age, just as physics was of the Industrial Revolution. For centuries, prime numbers might have been intellectual curios but in the 1970s they were beaten into modern cryptography. The security codes that scaffold almost all e-commerce are built from primes. Any advances in understanding these abstract materials impacts the Internet itself, for better or for worse. So when Zhang demurs that his result is "useless for industry", he's mispeaking.

The online version of the article is subtitled "Solving an Unsolvable Problem". The apparent oxymoron belies a wondrous pattern we see in mathematical discovery. Conundrums widely accepted to be impossible are in fact solved quite often, and then frenetic periods of innovation usually follow. The surprise breakthrough is typically inefficient (or, far worse in a mathematician's mind, ugly) but it can inspire fresh thinking and lead to polished methods. We are in one of these intense creative periods right now. Until 2008, it was widely thought that true electronic cash was impossible, but then the mystery figure Satoshi Nakamoto created Bitcoin. While it overturned the conventional wisdom, Bitcoin is slow and anarchic, and problematic as mainstream money. But it has triggered a remarkable explosion of digital currency innovation.

A published letter

Another letter writer made a similar point:

As Alec Wilkinson points out in his Profile of the math genius Yitang Zhang, results in pure mathematics can be sources of wonder and delight, regardless of their applications. Yet applications do crop up. Nineteenth-century mathematicians showed that there are geometries as logical and complete as Euclidean geometry, but which are utterly distinct from it. This seemed of no practical use at the time, but Albert Einstein used non-Euclidean geometry to make the most successful model that we have of the behavior of the universe on large scales of distance and time. Abstract results in number theory, Zhang's field, underlie cryptography used to protect communication on devices that many of us use every day. Abstract mathematics, beautiful in itself, continually results in helpful applications, and that's pretty wonderful and delightful, too.

David Lee
Sandy Spring, Md.

On innovation

My favorite example of mathematical innovation concerns public key cryptography (and I ignore here the credible reports that PKC was invented by the Brits decades before but kept secret). For centuries, there was essentially one family of cryptographic algorithms, in which a secret key shared by sender and recipient is used to both encrypt and decrypt the protected communication. Key distribution is the central problem in so-called "Symmetric" Cryptography: how does the sender get the secret key to the recipient some time before sending the message? The dream was for the two parties to be able to establish a secret key without ever having to meet or using any secret channel. It was thought to be an unsolvable problem ... until it was solved by Ralph Merkle in 1974. His solution, dubbed "Merkle's Puzzles" was almost hypothetical; the details don't matter here but they were going to be awkward to put it mildly, involving millions of small messages. But the impact on cryptography was near instantaneous. The fact that, in theory, two parties really could establish a shared secret via public messages triggered a burst of development of practical public key cryptography, first of the Diffie-Hellman algorithm, and then RSA by Ron Rivest, Adi Shamir and Leonard Adleman. We probably wouldn't have e-commerce if it wasn't for Merkle's crazy curious maths.

A Great Initial User Experience Is Critical

Alan Lepofsky

Vice President & Principal Analyst
Constellation Research

Alan Lepofsky - VP and Principal Analyst, Constellation Research. With almost two decades of experience in the collaboration software industry, Lepofsky helps organizations improve the way their employees work together to get their jobs done. Lepofsky’s primary research area The Future of Work, focuses on: integrating collaboration and business processes (Purposeful Collaboration), structuring work via Social Task Management, leveraging analytics and digital assistants to work more productively, the strategic impact of mobile computing on business transformation, and measuring workforce culture based on Digital Proficiency instead of age. Twitter: @alanlepoLinkedIn: https://ca.linkedin.com/in/alanlepo     , Title: Big IdeasIntelligent Collaboration: The Intersection of…...

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As they say, you only get one chance to make a first impression. 

Well, spreadsheet/database vendor Airtable gets a 9/10 for creating an amazing first time user experience that helps guide you through getting started. To help you successfully use their product, they:

• Start you off with a virtual user manual complete with short training videos
• Pre-populate your home page with a few default databases
• Display pop-up guides as you work that highlight key features and functions
• Provide incentives/awards for running through the tutorial, installing mobile applications and inviting colleagues

Airtable provides one of the best first impressions I've ever had with a product. All software vendors, from startups to enterprise software giants should strive to emulate this level of user experience.

PS: Why not a 10/10... because the Guide Book does not (currently) resize with the browser.

HP acquires Aruba – The wireless networking provider – not the Caribbean island

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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On the morning of March 2nd 2015 the long rumored acquisition of Aruba Networks by HP came through with the official press release (find it here). 

 

So let’s dissect the press release News Analysis style:

PALO ALTO, Calif. and SUNNYVALE, Calif., Mar. 2, 2015 — HP (NYSE: HPQ) and Aruba Networks (NASDAQ: ARUN) today announced a definitive agreement for HP to acquire Aruba, a leading provider of next-generation network access solutions for the mobile enterprise, for $24.67 per share in cash. The equity value of the transaction is approximately $3.0 billion, and net of cash and debt approximately $2.7 billion. Both companies’ boards of directors have approved the deal.

MyPOV – This marks the first acquisition under CEO Meg Whitman, who previously prescribed a ‘pause’ on the acquisition side. We have been a critic of the strategy as HP clearly needed more R&D and product innovation, due to the lack of innovation production under the long tenure of former, former CEO Mark Hurd. The on / off though has hurt e.g. the Software group that has not been growing organically as it should.

Aruba is a Sunnyvale-based industry leader in wireless networking with approximately 1,800 employees. The company had revenues of $729 million in fiscal 2014, and has reported compound annual revenue growth of 30 percent over the last five years.

MyPOV – Aruba Networks (going forward just Aruba) – has capitalized well on the need and convenience of Wifi in the enterprise world. In the ‘cloud only’ enterprise we see only a need for Wifi on premise, as the whole networking market and market place will be transformed. It is good to see HP capitalizing on this trend early. How the market has changed is that HP acquired the venerable 3COM back in 2010 for 2.7B. And that included 3COM IP from 30+ year’s history, including network security and more.

Aruba boasts a highly regarded innovation engine and specialized sales, marketing and channel model, complementing HP’s leading networking business and go-to-market breadth. Together, HP and Aruba will deliver next-generation converged campus solutions, leveraging the strong Aruba brand. This new combined organization will be led by Aruba’s Chief Executive Officer Dominic Orr, and Chief Strategy and Technology Officer, Keerti Melkote, reporting to Antonio Neri, leader of HP Enterprise Group. With this move, HP will be uniquely positioned to deliver both the innovation and global delivery and services offerings to meet customer needs worldwide.

MyPOV – Good for HP to keep the Aruba team in play, but life will be different than ever before for the former Aruba employees. The way how they adopt and make either life better (and hopefully not worse) is going to be key to watch in the next quarters. Aruba related revenue should grow as HP gives Aruba access beyond what the (estimated) 300+ Aruba sales team could reach.

With the shift to mobile, enterprise networking needs are exceeding the capabilities of legacy infrastructure. At the same time, organizations are shifting rapidly to mobility-centric workplaces for their employees, guests, customers and students. The next-generation 802.11ac Wi-Fi standard is critical in enabling this trend. This new technology will support the faster speeds and access to cloud applications that end-users expect. Enterprises need comprehensive, integrated and secure networking solutions to help them transition legacy systems to the wireless edge. Today’s announcement directly addresses these market trends.

MyPOV – Agreed – we only see new buildings and forward looking clients skipping the wired LAN infrastructure for complete wireless network setups. Wireless networks usually pay in a few quarters when measuring ease of use and productivity gains for employees. More nifty ROI strategies exist with offloading corporate mobile plans over to Wifi as needed.

“Enterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of IT,” said Meg Whitman, Chairman, President and Chief Executive Officer of HP. “By combining Aruba’s world-class wireless mobility solutions with HP’s leading switching portfolio, HP will offer the simplest, most secure networking solutions to help enterprises easily deploy next-generation mobile networks.”

MyPOV – HP needed to bring some value to the acquisition – but I am not sure how much value the HP (former 3COM etc.) switch technology can add as the wired past required very different switches than the mobile / Wifi consumption presence. Start to think about load…

“Together with HP, we have a tremendous opportunity to become an even greater force in enterprise mobility and networking,” said Mr. Orr. “This transaction brings together Aruba’s best-of-breed mobility hardware and software solutions with HP’s leading switching portfolio. In addition, Aruba’s channel partners will have the opportunity to expand their businesses with HP offerings. Together, we will build on Aruba’s proven ‘customer first, customer last’ culture, creating an innovative, agile networking leader ideally positioned to solve our customers’ most pressing mobility, security and networking challenges.”

MyPOV – Great plans, good luck with that. And kudos to mention the partner network – will be interesting to see how the new HP / Aruba will deal with overlaps, capacity, conflicts etc. – see below in the implication section.

HP and Aruba believe that by combining complementary product portfolios and go-to-market approaches they will be able to accelerate revenue growth and strengthen the financial performance of the combined HP Networking business, and create a leading competitor in the $18 billion and growing campus networking sector. Overall, HP expects the acquisition to be accretive to earnings in the first full year following close.

MyPOV – Well congrats today – the work starts tomorrow. HP will have to make sure it does not break Aruba culture and drive and Aruba needs to learn to be part of a large mega enterprise. Both obvious things at hand – but way too often broken in the high tech takeover world.

Implications, Implications, …

Implications for Customers

As usual with acquisitions customer needs to look at securing existing build out and roadmap commitments. We advise to quickly look at the acquisition nature for the individual plans – they could be beneficial or a threat. In the case of a threat quickly go back to both vendors to commit to roadmap product plans, services. For a roadmap commitment make sure the right executives from HP are in the room to make the commitment. If advantages can come from the HP portfolio, quickly negotiate switch outs and replacements at defined conditions to long term purchase plans.

Implications for Partners

Partners to both vendors are in a good spot, but make sure to bring in the synergies and chart the value proposition accordingly. Reach out to HP for partnership re-assurance.

HP Partners only – Understand your Wifi strategy and reach out to HP to determine your partner contract. As a fallback look for replacement product strategy for Wifi.

Aruba Partners only – Make sure HP understand the unique value your organization brings to the table and make sure that is seen and understood by HP executives ASAP. As a fallback look for competing products.

Implications for Competitors

Time to chart the future Wifi strategy, there are a few – but not too many vendors left. As of now they will likely command a premium, so plan and move shrewdly. Also expect more entrenched partnerships to be created and use that to your advantage.

Implications for HP / Aruba

HP will have to make sure the two company cultures merge well and remain an agile and key player in the Wifi market. Easier said than done. Aruba will have to make sure to retain key employees to make the acquisition a success. Not every Aruba employee will be ‘thrilled’ to become a HP employee.

MyPOV

Kudos to HP and Whitman to go back out on the acquisition trail, something in my view the company has abstained for too long. If they company was able to execute them given all the work management has with the separation into Enterprise and Consumer, is of course something Whitman needs to make the call. But in my view HP cannot wait longer for getting a more attractive product portfolios in place that it does not have the time (and in networking even maybe not the talent) to develop organically. The challenge now moves from having eliminated whitespace to make the acquisition work.

And finally- why was this an enterprise and not consumer acquisition? If every HP printer is a wifi terminal powered by Aruba… ok heading for the Caribbean now.

 

An Aruba beach (not part of the acquisition...)

Find more coverage on the Constellation Research website here.

----------

More about HP

• News Analysis - HP acquired Eucalyptus - Genius or Panic on Page Mill road? Read here
• News Analysis - Today's Billion in Cloud Investment is HP's and goes to Helion - read here
• A tale of two cloud GAs - Google & HP - read here
• The cloud is growing up - 3 signs from the news - read here
• To HAVEn and have not - or: HP Bundles away - read here

2012, 2013, 2014 & 2015 (C) Holger Mueller - All Rights Reserved

Five Life and Leadership Lessons From The Billionaire's Club

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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Over the past year, I’ve had the pleasure of speaking with 19 billionaires.  I took the opportunity to ask them for their life lessons and leadership advice.  Because these uber successful individuals came from varied backgrounds and industries, I was expecting many different answers.  However, I was proven wrong.  In fact, the majority of their conversations fit into five common nuggets of wisdom:

Insights Remain Consistent Among The Uber Successful

1. You can never think big enough.  Despite how big you think or how large a problem you hope to solve, there is always a bigger one ahead.  Don’t let the challenge keep you back.  More importantly, don’t let yourself go unchallenged.
2. Do not settle for second best.  Life is short.  Don’t be a maniac but expect more from yourself and others around you.  If you keep high standards, you’ll be surrounded by others who keep high standards in business and life.
3. Remember all you ever have is your health.  When you realize you are on borrowed time, then you’ll change how you live.  Health should never be taken for granted.  Start thinking about how to prolong and improve your quality of life in your 30’s and 40’s not your 60’s.
4. Invest in your offspring and next generation.  Many wish they spent more of their times shaping the next generation including their kids.  Most felt they did not do a great job while focused on their career. Some even suggested that you not have kids unless you are ready to invest the time.
5. Find out who your real friends are earlier than later.  Many mentioned that you only know who your real friends are when you are poor, sick, and unemployed.  Surround yourself with people you can trust with real friendships, not business or social interests.

Do these resonate with you?  What do you think?

Your POV.

Got some nuggets of wisdom to share?  Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

Resources

The post Quips: Five Life and Leadership Lessons From The Billionaire’s Club appeared first on A Software Insider's Point of View.

Enterprise Healthcare Management (EHM): Healthcare Meets Analytics

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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The Healthcare Affordability Crisis Can Be Addressed With EHM Solutions

An affordability crisis has created chaos in the employer-provided healthcare market. With $620 billion in employer-paid costs to U.S. healthcare in 2014 and an annual increase that ranges from 4.7 percent to 10.3 percent a year, employers seek both improved utilization of programs and cost reductions. In addition, 55 percent, or more than half of all Americans, receive healthcare benefits from employer-sponsored programs. 

While early solutions provided transactional management and benefit design, newer solutions have incorporated insight and analytics to improve not only the efficacy of healthcare for employees, but also identify new opportunities. These opportunities not only reduce costs, but also create new programs based on usage patterns, identify opportunities to improve health and wellness, and allow employees to balance out the cost versus quality equation.

Enterprise Healthcare Management (EHM) is a new category of software that helps organizations select, deploy, manage, and influence the outcomes of their healthcare investments to align with business goals such as incentivizing employees to make responsible healthcare decisions; guiding employees to obtain and maximize available benefits; improving visibility into healthcare efficacy for employee and employer; reducing unnecessary or inappropriate care; and revealing usage patterns that could result in new programs.

Constellation expects this category to play a key role in improving the future of work by improving the efficacy of health benefits programs while driving down cost through transparency.

Insights into the Future of Cloud-Based EHM

Signs the healthcare system is not working efficiently:

1. Steadily rising cost of healthcare. Healthcare costs increase on average from 4.7 percent to 10.3 percent a year. While costs go up, quality remains consistent to worse for some employees.
2. Massive underutilization and disproportionate usage of benefits. The lack of insight into program efficacy leads to underutilization and waste.
3. Increasingly complicated regulatory compliance. The Affordable Care Act (i.e. ACA or Obamacare) has created a complicated tangle of healthcare policies and services. Compliance becomes increasingly costly and difficult.
4. Growing complexity of benefits programs. Public and private benefits overhauls led to complexities. These overhauls add costs for or organizations that lack a platform to address the resulting complexities.
5. Rising number of integration challenges. More technology, more integration problems.

Enterprise Healthcare Management Strategically Addresses Health and Welfare of Employees

Recent Constellation inquiries and advisory discussions with clients reveal that both healthcare costs and efficacy of health and wellness programs remain top of mind for CEOs, CFOs, and Chief People Officers. Given the pending retirement of Baby Boomers, the changing business models across industries, and the increasing pace of change, the ‘war for talent’ has intensified across all industries in the United States.

Enterprise Healthcare Management (EHM) helps organizations select, deploy, manage, and influence the outcomes of their healthcare investments so they better align with business goals. Common business objectives of EHM solutions include:

1. Incentivize employees to make responsible healthcare decisions. EHM solutions enable employees to evaluate cost and quality when making healthcare decisions.
2. Encourage employees to maximize available benefits. The best EHM solutions will provide employees access to eligibility and benefit information in an intuitive UX. No more digging, no more ambiguity. Information is available anywhere, anytime.
3. Improve visibility into healthcare efficacy for employee and employer. The most beneficial EHM solutions deliver healthcare usage data to employers, so they may improve the health and productivity of the workplace.
4. Reduce unnecessary or inappropriate care. Using insight and analytics, organizations can identify where and when care was delivered and identify how care can be optimized and when care is excessive or unnecessary.
5. Reveal usage patterns that could result in new programs. Data, insights, and employee engagement can drive future programs based on patterns of use. Applying context that includes location, time, role, gender, relationship, marital status, and other indicators can proactively drive new programs.

Preorder Disrupting Digital Business, published by Harvard Business Review Press In Q2 2015.  Learn more.

The Constellation View: EHM Addresses the Healthcare Affordability Crisis

EHM is a critical technology that will enable organizations to not only survive the massive changes in healthcare, but also succeed as companies are making a shift from:

• Cost to value
• Employer-defined benefit to employer contribution
• Single carrier to multi-carrier private exchanges

The healthcare affordability crisis faced by employers impacts organizational productivity, creativity, and competitiveness. For example, many studies estimate that the average cost of healthcare for active and retired U.S. auto workers is around $1,700 a vehicle, while foreign companies operating in the U.S. pay only $250 per active worker. The lower costs come from not paying the healthcare of retirees.

U.S. healthcare spending was estimated at $3.1 trillion in 2014. Of that massive number, employers paid $620 billion. Add in the confluence of changing payment models, provider shifts, and consumer behaviors, and the private health insurance market faces massive disruption in the next 36 months. While ‘fixing’ the healthcare system requires systemic change, EHM will provide the technological support to organizations navigating the massive transitions ahead.

Resources:

Insights into the Future of Cloud-Based EHM

Your POV.

Ready to take on healthcare costs and improve health outcomes with technology?  Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

Resources

The post Research Report: Enterprise Healthcare Management (EHM) – Healthcare Meets Analytics appeared first on A Software Insider's Point of View.