New Analysis - Amazon AWS spricht jetzt Deutsch - The cloud wars reach Germany - will European customers adopt the cloud?

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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Not as a big surprise – it was rumored for some time – Amazon AWS today announced that it has opened another AWS region, based in Frankfurt, Germany.

So let’s digest the press release in our typical style:

SEATTLE--(BUSINESS WIRE)--Oct. 23, 2014-- (NASDAQ:AMZN) — Amazon Web Services, Inc. (AWS, Inc.), an Amazon.com company, today announced the launch of its new AWS EU (Frankfurt) region, which is the 11th technology infrastructure region globally for AWS and the second region in the European Union (EU), joining the AWS EU (Ireland) region. All customers can now leverage AWS to build their businesses and run applications on infrastructure located in Germany. As with every AWS region, customers can do this knowing that their content will stay within the region they choose. The newly launched AWS EU (Frankfurt) region comes as a result of the rapid growth AWS has been experiencing and is available now for any business, organization or software developer to sign up and get started at: http://aws.amazon.com.

MyPOV – Good move by Amazon, another continental European region was more than overdue. Ireland was a good start, but does not have the network capability like e.g. Frankfurt, which hosts one of the largest internet exchange points with DE-CIX. And that probably beat out Amsterdam, another popular European cloud data center location. Kudos to Amazon not just to announce the region to come at date xyz – but have it available for business today.

All AWS infrastructure regions around the world are designed, built, and regularly audited to meet rigorous compliance standards, including ISO 27001, SOC 1 (Formerly SAS 70), PCI DSS Level 1, and many more, providing high levels of security for all AWS customers. AWS is fully compliant with all applicable EU Data Protection laws, and for customers that require it, AWS provides data processing agreements to help customers comply with EU data protection requirements. More information on how customers using AWS can meet EU data protection requirements can be found on the AWS Data Protection webpage at: aws.amazon.com/de/data-protection. A full list of compliance certifications, and a whitepaper on how customers using AWS can meet BSI IT Grundschutz, can be found on the AWS compliance webpage at: http://aws.amazon.com/de/compliance/.

MyPOV – As usual AWS does a great job around security and data privacy concerns – which are always important – but even more sensitive in Europe and there Germany. Not surprisingly – the very first question to Andy Jassy came in regards of data security: What if the US government wants the data? Jassy responded that first of all customer need to encrypt, and only in the ‘rare’ case of a court order AWS will take action. Jassy says it has not been an issue today… Europeans will revisit and test that, I am sure. (See the link to the video below, Q&A starts at 15 minutes).

The new AWS EU (Frankfurt) region consists of two separate Availability Zones at launch. Availability Zones refer to datacenters in separate, distinct locations within a single region that are engineered to be operationally independent of other Availability Zones, with independent power, cooling, and physical security, and are connected via a low latency network. AWS customers focused on high availability can architect their applications to run in multiple Availability Zones to achieve even higher fault-tolerance. For customers looking for inter-region redundancy, the new AWS EU (Frankfurt) region, in conjunction with the AWS EU (Ireland) region, gives them flexibility to architect across multiple AWS regions within the EU.

MyPOV – A key move by AWS to right away start with two availability zones, taking away the potential next concern not to move load to the public cloud. By having two zones in Germany, AWS becomes right away viable for new (local) customers.

“Our European business continues to grow dramatically,” said Andy Jassy, Senior Vice President, Amazon Web Services. “By opening a second European region, and situating it in Germany, we’re enabling German customers to move more workloads to AWS, allowing European customers to architect across multiple EU regions, and better balancing our substantial European growth.”

Many German customers are already using AWS including Talanx, in the highly regulated insurance sector. Talanx is one of the top three largest insurers in Germany and one of the largest insurance companies in the world with over €28 billion in premium income in 2013. “For Talanx, like many companies that hold sensitive customer data, data privacy is paramount,” says Achim Heidebrecht, Head of Group IT, Talanx AG. “Using AWS we are already seeing a 75% reduction in calculation time, and €8 million in annual savings, when running our Solvency II simulations while still complying with our very strict data policies. With the launch of the AWS region on German soil, we will now move even more of our sensitive and mission critical workloads to AWS.”

Hubert Burda Media is one of the largest media companies in Europe with over 400 brands and revenues in excess of $3.6 billion. JP Schmetz, Chief Scientist of Hubert Burda Media, said of the announcement, "Now that AWS is available in Germany it gives our subsidiaries the option to move certain assets to the cloud. We have long had policies preventing data to be hosted outside of German soil and this new German region gives us the option to use AWS more meaningfully."

MyPOV – Always good if you can hit the ground running and having two known local customers and brand names as early customers. Will be great to see how fast existing German AWS clients will move to the German AWS region.

Academics in Germany were also quick to welcome the new region, “The arrival of an Amazon Web Services Region in Germany marks an important occasion for the German business and technology community,” said Prof. Dr Helmut Krcmar, Vice Dean of the Computer Science Faculty, and Chair of Information Systems at the Technical University of Munich. “We work with a number of DAX listed companies in Germany. Many have been holding off moving sensitive workloads to the cloud until they had computing and service facilities on German soil as this could help them comply with their internal processes. This new region from AWS answers this and we expect to see innovation amongstGermany, and Europe’s, companies flourish as a result.”

MyPOV – Always good to have academic endorsement in Europe, particularly Germany. If the professor says it…

More than eight years of growth

For more than eight years AWS has changed the way organisations acquire technology infrastructure. AWS customers are not required to make any up-front financial or long-term commitment. They can turn capital expense into variable operating expense, scale quickly and seamlessly by adding or shedding resources at any time, get to market much more quickly with new and critical ideas, and free up scarce engineering resources from the undifferentiated heavy lifting of running backend infrastructure—all without sacrificing operational performance, reliability, or security. This has led to many customers adopting the AWS platform in Europe and around the world.

As AWS has grown, the company has continued to focus on delivering cloud technologies to customers in an environmentally friendly way. The new AWS EU (Frankfurt) region enables customers to run on carbon-neutral power. This is AWS’ third carbon-neutral powered region.

MyPOV – Amazon has the know how to run carbon neutral, Frankfurt will be the 3rd carbon neutral location. Good move for the ‘tree huggers’ in Germany and raises the game vs. local competitors. Getting a carbon neutral stamp for cloud sites and ISVs is already a trend Europeans are looking for on web sites.

The new region adds to AWS’ existing cloud computing investments in Europe. The AWS business is supported by teams of Account Managers, Solutions Architects, Technical Support Engineers, and various other functions, helping customers in Germany, and across Europe use the cloud. Amazon also has Development Centers in Germany, Romania, and The Netherlands developing next generation technologies to support the AWS business.

>> MyPOV – Good presence by AWS, but it will need to do even more in terms of short term outreach, similar like the recently opened AWS Loft in San Francisco (I had the opportunity to attend the opening) and longer term with academic outreach.

Developers and businesses can access AWS from the new Frankfurt region beginning today, including Amazon Elastic Compute Cloud (Amazon EC2), Amazon Elastic Block Store (Amazon EBS), Amazon Simple Storage Service (Amazon S3), Amazon Glacier, Amazon Relational Database Service (Amazon RDS), Amazon Redshift, AWS OpsWorks, Amazon DynamoDB, Amazon Kinesis, AWS CloudHSM, Amazon Elastic MapReduce (Amazon EMR), Amazon Virtual Private Cloud (Amazon VPC), AWS Direct Connect, Amazon CloudSearch, Amazon CloudWatch, AWS Elastic Beanstalk, AWS CloudFormation, AWS CloudTrail, AWS Storage Gateway, AWS Identity and Access Management (IAM), Amazon Simple Queue Service (Amazon SQS), Amazon Simple Notification Service (Amazon SNS), Amazon Simple Workflow (SWF), Auto Scaling, and Elastic Load Balancing. More details on each of these services and specific pricing for each is available at: http://aws.amazon.com/products/.

MyPOV – Could head start on services – someone needs and will dig down into what is missing and why. And AWS will have to address when the service will be available in Germany.

A number of ISV technologies are also available to customers today from the new AWS EU Frankfurt region including: Canonical, Red Hat, SUSE, Trend Micro, Twilio, Acquia, Apigee, Bitnami, Esri, Infor, SAP, and Siemens. More details on running each of these technologies on AWS can be found at: https://aws.amazon.com/marketplace.

MyPOV – Very good point, as AWS enables ISVs to address the European / German market now and allows these partners to solve data residency, privacy and performance concerns.

Jassy and Geier at the launch webcast

Analysis Points

• Germany is popular – There have been a number of announcements to open data centers in Germany – see e.g. Salesforce.com this summer (why is always Munich the location of the announcements?). It will be interesting to see if it is competitive pressure, a slowing growth in North America or a readiness by European / German companies to put their load to the cloud – or a combination of al of them.
   
• Amazon AWS has moved the bar – With the entrance of AWS in the core European markets, there will be a increased pressure on the local providers to up services and lower prices. Germans love low general retail prices (and e.g. Walmart never was successful in Germany) – so let’s see if that can be transported to the cloud pricing, too. Amazon is expected to cater to that (compatible) mind set.
   
• The enterprise cloud is coming – As recently blogged, services for enterprises and concerns of cloud usage are being more and better addressed by providers. In the Amazon AWS context the recently announced AWS Directory Services is another proof point towards this trend. 

Implications, Implications

Implications for AWS Customers

This is very good news for AWS customers who get an AWS region in the center of the largest world economic region. Come to that, we have not seen prices for the region, but given AWS nature, they will be competitive. AWS customers running other regions have now more addressable market and will help AWS sell capacity in the region for similar reasons.

Implications for AWS partners

Very good news for ISVs, too – they are now viable in central Europe and in Europe’s largest market. From an enterprise perspective I am sure some execs at e.g. Infor will be ramping up growth projections in Germany.

Implications for AWS competitors

It’s time to get a central European, and maybe even German data center. Locality matters for the cloud both from statutory, regulatory, privacy and pure performance concerns. German enterprises will push prices and AWS will help, so the ‘good times’ for local providers with rich margins are likely counted. Amazon has done the (usual) good job on security, so additional local security certifications will not be a (temporary) barrier to entry or justification to keep prices up.

Overall MyPOV

A good move by AWS to open a region in Germany. Amazon will get some great load already by moving its own retail platform to the region. Not surprisingly (from the little we know), all product dependencies of Amazon running Amazon on AWS are addressed from its products available in the Frankfurt region right now. This could have performance advantages that Amazon may exploit, all the way to its Prime streaming offerings. So let’s not forget this is not only Amazon bringing AWS to cloud customers, but also bringing Amazon directly in the largest European market. I would not be surprised if Amazon will explore new products, services and best practices in Germany before the US, exploiting high internet penetration, very good network infrastructure and the affluent Germany buyer, who enjoys a lot of free time at their hands.

On the AWS side this is a key move for Amazon to position AWS into a similar market leading position like in the US. The next quarters will show how well AWS will capture European and German businesses – as the German AWS MD Marin Geier said ‘die Wolke ist in Deutschland angekommen’ (= the cloud has arrived to Germany). But it is one thing for the cloud to be in Germany, the next one is to get German / European enterprise load on it. But one step at the time, in the meantime a key date for the adoption of cloud in Europe / Germany.

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More on AWS

Digital Business in Smart Cities using the Internet of Things

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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Not a glib title, but reality, though maybe difficult to see as the three topics tend to be treated separately. Digital Business usually means private sector, whereas Smart Cities even at the level of improved user access to ‘retail’ style services, is very much Public sector. As a result adding increased awareness through the Internet of Things, IoT, is usually focused around one or the other. Sadly this isolation has the makings of an expensive mistake as maturity brings the Internet of Things, IoT, and the resulting data access into wider, shared usage.

Research report now available: The Foundational Elements for the Internet of Things (IoT)

Common shared data definitions and discoverable catalogues are already being established, and your Digital Business needs to participate or your Enterprise will suffer in lonely isolation!

To illustrate this consider the terminology we unwittingly use, and consider the remark made by the Head of Digital Strategy and Economics at Future Cities a large UK Government program that is creating real working initiatives.

“We talk of The Internet of Things, but everything I see is An Internet of Things based on different approaches. This will ensure that the required ongoing up scaling and integration to increase awareness by using multiple devices will be difficult. We are already creating problems that will result in future values being restricted and limited”.

Stand back; look at the bigger picture that is developing of a smart city created around the smart ‘coordination’ of major resources used by any number of Digital Business and Citizens. Consider carefully the question of where, and how, an integrated Smart City gets its information to be ‘aware’. The city may have its own sensing, as will the private Enterprises, but surely they will need to share and integrate information as well? What happens to logistics as an example? Will distribution companies plan delivery routing based only on their data, or will it be dynamic routing based on up to the minute information from the city? Where do citizens fit in this in terms of their working, commuting, shopping and entertainment patterns? Surely all areas where any Digital Business will want to be equally ‘aware’ and integrated with data in order to be ‘smart’ in their responses.

Perhaps you doubt that Government and Private Sector have enough in common to result in the creation, and use, of any data of value. As the customers of Digital Business and citizens of a Smart City are most likely the same that’s not a bad starting point, but the following three positioning statements may make it clear that there is much more in common;

·      Digital Business uses technology for connectivity to, and the ability to use, a wide variety of information sources to increase its competitive capability in the eyes of its customers.

·      Smart Cities uses technology for connectivity to, and the ability to use, a wide variety of information sources reduce the cost and improve the perceived value in the eyes of its citizens.

·      Both are looking to delight their (shared?) customers/citizens and both see the increased awareness that Internet of Things, IOT, brings as a key element in gaining constant real time feedback of the environment.

Put this way its hard to see the difference in core drivers, and hence in core technologies, but there are key differences in focus, and investment, that should allow both public, and private, sectors to gain from each others efforts. There are short-term boosts and longer-term gains around ensuring that the Internet of Things, IoT, will develop as a singular shared environment, with common data. Any Business or Technology manager should have seen enough examples of investments that failed to pay off due to choosing, or not making a conscious choice, of what became the common standardized approach.

Start now to find and use standards, if you wait then further you are along a path the harder, (and more expensive), it is to get back to rejoin the mainstream.

Would your Digital Business on its path to add intelligence with the Internet of Things, IoT, make use of an appropriate standard if you knew of its existence and relevance? Perhaps introducing HyperCat, a rapidly emerging ‘standard’ way of making the Internet of Thing devices usable that has grown out of Government backed Smart City programs might provide the necessary encouragement.  Thinking of large scale city wide deployments by many different venders, and users, has led to the need to sort out the common data models at an early stage. This is an area where government investment in the Internet of things, IoT, is valuable, and for private sector Enterprises its difficult.

But its not just Government Smart City projects that are driving HyperCat, there are more than forty technology providers from long established players who are the global leaders, through to young start-ups that are changing the game with new capabilities. A good clear explanation of HyperCat is provided on a slide set to found here whilst for more on the HyperCat consortium including members see here.

Why adopt this for your Digital Business growth into, and deployment of, Internet of Things, IoT, devices? Four strong basic commercial considerations;

1.    Is it really in your budget to have to research how to do this area of the technology and then document your own definitions?

2.    When you manage a procurement for IoT, or increasingly likely when looking for access to sensors as services, how much purchasing time and expense will it save by using a Standard as a benchmark for bids?

3.    Perhaps most importantly of all, how much integration risk, cost and time will your enterprise save by ensuring that it is using, and operating to, a common defined approach?

4.    By definition IoT devices will be low cost and be deployed, or accessed and used, in huge numbers. It simply wont be possible to accept the level of system integration costs appropriate to internal IT. IoT, like the Internet and the Web, is a plug and play standardized environment.

You can rightfully challenge as to whether HyperCat is the right standards and what will happen if something better emerges in three years time. The truthful answer is nobody knows, but right now its formed enough, and supported enough to make it useable for many Internet of Things, IoT, pilots and deployments. What happens if something newer, and different does supersede your enterprise HyperCat deployment? Then it is likely to be better to have to implement a single gateway between HyperCat and the new environment rather than having to work out piecemeal integration for a series of devices and services.

Increase your knowledge of deploying, and reading data, from Internet of Things, IoT, devices and take the time to read up about HyperCat. Take a long look around to see if there are any other standards that you can use. Remember this is all about a common integrated environment and work on approaching your deployments with this in mind.

Just don’t treat it as a traditional IT project and extend your existing architectures and methods that suit a closed internal Enterprise IT project. There are too many differences to take into account!

Research report now available: The Foundational Elements for the Internet of Things (IoT)

Musings - Are we witnessing the rise of the enterprise cloud?

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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• Notice Period - Short term notice periods, the longest acceptable being 3 months.
   
• Data Ownership – Enterprises own their data and can use and retrieve it as they wish, with no penalties.
   
• Glocal Coverage – both the ability to deploy global and local capabilities – depending on data governance requirements and enterprise preference.
   
• Server Physicality – Enterprises may abstract resources, and maybe fine with a certain degree of virtualization, but there must be also the option for certain loads to see, touch, run the servers the application runs on (aka knows as bare metal).
   
• Physical Separation – As required enterprise cloud providers may have to offer the physical separation of network, storage and compute resources (managed cage).
   
• SLAs & Optional Services – The vendors must be ready to support the service levels that enterprises use today for their on premise loads and be able to support a premium on top of that in order to motivate the switch to cloud and dissolve the concerns around loss of control when moving to the cloud. Optional Services help enterprises to move, run, monitor and operate the cloud environment.
   
• Cost Transparency – Enterprises need to pay their bills and they do that through budget allocation. If they cannot plan budgets, analyze consumption, cross charge for services – they will look for cloud vendors that enable that.

Weekly Recap - Week ending October 17th 2014

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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• Time to look what analytics really means - a manifesto - read here
• Alan Lepofsky's (@alanlepo) presentation at Dreamforce - see it on slideshare here
• IBM and SAP partner, put the HANA Enterprise Cloud (HEC) on top of IBM Cloud (CMS & SoftLayer) - read here
• My event report of Salesforce's Dreamforce conference, all about customer success, Analytics (no real ones - see above) Cloud and Lighting framework - read here
• The Dreamforce Takeaways Hangout with Natalie Petouhoff (@drnatalie), Alan Lepofsky and Ray Wang (@rwang0 - via email) - see it here
• My HR Tech 2014 takeaways Hangout - see it here (with my highlights of 29 vendor briefings + reminders on where I see Oracle, SAP & Workday).

• EMC acquires Cloudscaling by Ben Kepes (@benkepes) (and congrats to 100 half marathons in 2014!)

Fashion Observation of the week

• Brian Sommer in Jeans (again!), and more remarkably no tie (!) 

Digital Business; Mastering New Financial Controls

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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Do your new, and exciting, moves into Digital Business make money? Well of course they do, or you wouldn’t be doing them, but is it really that simple? Many first steps don’t seem to be making as much money as expected, and do you really feel in full financial control of this new business activity with all its new technology based components? At the heart of this is a simple fact; I have yet to meet, or even hear of, a CFO from a traditional Enterprise who could put together a really accurate spreadsheet for a Digital Business unit.

That’s quite a challenge, and I would like to hear that I am wrong, but why would an experienced CFO, be able to do this? It is an accepted fact that Digital Business is a giant game changer so why would the majority of the factors in the new Digital Business model spreadsheet be the same as the old business model? Sure, at a head line level there are all the common factors for any business, but lets dig down below starting with the question are you using the same basic spreadsheet as for the rest of the business as a starting point?

Probably, after all it has been built up over the years in increasing detail and accuracy to reflect your enterprise and its Business. However simple aspects like the apportionment of the overheads are quite likely to be wrong, does the new Digital Business really make use of the same elements as the older traditional business? Has the Finance Department carried out a realistic reappraisal, or is it a case of more revenue spreads the load and helps the whole business? These are all understandable issues and as the Digital Business grows the CFO and Finance department will get round to investigating them in line with normal management of costs.

Dig deeper and two key differences emerge; the first is that Digital Business models are usually based on Operational Expenditure, or OPEX, and the traditional business model is based on Capital Expenditure, or CAPEX; the second is that OPEX means buying in ‘Services’ to support a variable trading model, an entirely new business activity and set of costs.

The Board is full of enthusiasm for the shift from CAPEX to OPEX, in the IT department the shift in ownership of expensive IT assets is looking good, may be even the overheads are getting adjusted too. But the Sales and Marketing departments pressing ahead into Digital Business are into using OPEX based services in a far deeper and wider manner than the IT Department simply because this is what Digital Business is built upon. New Technologies used in a new and innovative manner to create a Business dependent on external suppliers of OPEX services. There is not too much of the old IT operating model here, nor of the old business model, and yet where is the corresponding change in the Financial management?

So back to my opening paragraph; Its very difficult for a CFO to itemize exactly what these new, usually technology based services are, together with correct benchmarks for budgeting. Now add the further complication of how you link the purchased services to the revenue producing activities to ensure accurate financial reporting with the ability to have genuine financial management. This is new, complex territory that requires the newly constructed Digital Business plan to be matched by an in depth technology review of functionality provisioning and linkages.

An Enterprise Board will have built a sophisticated set of Financial Controls for its existing business, but in its Digital Business most of the major operational factors are technology based, in a completely new and different set of costs!

The Technology Industry is already experiencing this, with two visible results, the obvious moves to introduce new products, no, not so much products, but ‘services’, and the headline grabbing rearrangement of their own businesses. The latter often makes more sense if viewed against this point of two different business models leading to two different financial, management and even shareholder returns. Thinking in this way can make it more interesting and instructive to look more closely at these changes.

But it’s the first point about changing what they are selling, and how they are delivering it, that really needs careful examination in the context of your own enterprise as these ‘services’ will be entering your business. The question is visibly and managed, or, invisibly and building up hidden distortions in financial management.

My colleagues at Constellation Research have done a great job of analyzing Oracle, Salesforce.com, et al as the ‘customer events’ season reaches a climax, and I suggest reading their reports on the technology suppliers your enterprise is using with the points of this blog in mind. In my own case I reported on Cisco InterCloud service being a potential game changer in how Business and Financial Management could be brought to use of external cloud services.

Crowd sourcing private sector surveillance

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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A repeated refrain of cynics and "infomopolists" alike is that privacy is dead. People are supposed to know that anything on the Internet is up for grabs.

In some circles this thinking turns into digital apartheid; some say if you're so precious about your privacy, just stay offline.

But socialising and privacy are hardly mutually exclusive; we don't walk around in public with our names tattooed on our foreheads. Why can't we participate in online social networks in a measured, controlled way without submitting to the operators' rampant X-ray vision? There is nothing inevitable about trading off privacy for conviviality.

The privacy dangers in Facebook and the like run much deeper than the self-harm done by some peoples' overly enthusiastic sharing. Promiscuity is actually not the worst problem, neither is the difficulty of navigating complex and ever changing privacy settings.

The advent of facial recognition presents far more serious and subtle privacy challenges.

Facebook has invested heavily in face recognition technology, and not just for fun. Facebook uses it in effect to crowd-source the identification and surveillance of its members. With facial recognition, Facebook is building up detailed pictures of what people do, when, where and with whom.

You can be tagged without consent in a photo taken and uploaded by a total stranger.

The majority of photos uploaded to personal albums over the years were not intended for anything other than private viewing.

Under the privacy law of Australia and data protection regulations in dozens of other jurisdictions, what matters is whether data is personally identifiable. The Commonwealth Privacy Act 1988 defines "personal Information" as: "information or an opinion (including information or an opinion forming part of a database), whether true or not, and whether recorded in a material form or not, about an individual whose identity is apparent, or can reasonably be ascertained from the information or opinion".

Whenever Facebook attaches a member's name to a photo, they are converting hitherto anonymous data into personal information, and in so doing, they become subject to privacy law.

And yet too many people still underestimate the privacy implications of face recognition. Some technologists naively claim that faces are "public" and that people can have no expectation of privacy. And yet the words "public" and "private" don't even figure in the Privacy Act.

If a government was stealing into our photo albums, labelling people and profiling them, there would be riots.

HR Tech Conference 2014 - Holger Mueller's Takeaways

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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• Achievers,
• ADP (Progress Report - here)
• Cloudpay
• Equifax (Equifax Workforce Solutions Event Report - here)
• FinancialForce 
• Findly
• FurstPerson
• Halogen
• HireVue (HireVue Digital Disruption First Take - here)
• Hireology
• IBM (Connections First Take - here)
• Infor (Infor Inforum Event Report - here)
• Jabra
• Jobvite
• Kronos (KronosWorld (2013) Event Report - here)
• Lumesse
• Mercer
• NGA HR (Analyst Summit Progress Report - here)
• onesource VIRTUAL
• Paychex
• Qualtrics
• Sentric
• Skillsoft (the acquisition of SumTotal Market Move blog post is here)
• Smashfly
• Randstad Sourceright
• Technomedia
• Towers Watson
• Haufe Umantis
• Visier

Constellation Research Video Takeaways from Salesforce Dreamforce 2014

Vice President and Principal Analyst, Constellation Research
Constellation Research

Role: Vice President and Principal Analyst focusing on the IOT of Customer Experience and how the cloud is driving more flexible, agile, and robust customer service and customer experiences. In-app or in device customer service is the future. Coverage Areas: Next Generation Customer, Digital Marketing Transformation Bio: As a Vice President and Principal Analyst at Constellation Research, Inc, Petouhoff works with Fortune 100 and 500’s Senior Leadership teams to create strategic customer experience (marketing, sales and service) solutions which engage customers, build brands and grow businesses. Combining her experience as a former Forrester software analyst, PWC systems integrator and change management consultant, Petouhoff leads executive workshops to discuss to not only…...

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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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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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• Salesforce positions as the Customer Success Platform
• Salesforce launches its 6th cloud (after Sales, Marketing, Service, Communities and Apps) - it is the Analytics Cloud
• Salesforce announces the Lightning framework to build applications faster. 

• Look at Analytics Cloud value proposition - The Analytics cloud with $125 for a regular user and $250 for a professional user comes with a steep (list) price. What is the value / cost relationship for your enterprise, start from here.
• Consider (existing) alternatives - It is very likely your enterprise has already a place where 3rd party information is brought together for insights, so have a look at that and compare it with Salesforce's Analytics Cloud. 
• Take stock and plan for 2015 - Look at what systems you have, but also look larger and include people and training and then start planning for 2015.
• Revisit Collaboration - Don't look at Chatter and Collaboration as stand alone, but bring them into business processes across sales, marketing and engineering (and more) to make them more efficient. 

Event Report – Salesforce Dreamforce – A Customer Success Platform, Analytics and Lighting – but really Salesforce is re-platforming

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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I had the opportunity to attend the Dreamforce conference in San Francisco this week. The conference has only gotten bigger, and probably better. There are more Salesforce customers, developers and partners than ever before and the force multiplier was visible and palpable all across the conference.

So let’s take a look at the top 3 takeaways, which was not a too difficult a task as Salesforce did not announce too much, but more about that later.

1. The Customer Success Platform – Slogan or Credo? – The leitmotiv of this year’s Dreamforce is (the conference is not over as I blog this) and was all about Salesforce positioning its offerings as a Customer Success Platform. Last year it was the customer customer pitch. Some time ago it was Social Business. So every year Benioff and team need to come out with something new (and ideally bigger) – but as an analyst covering next generation applications – platform matters. And Salesforce thinks that with its 6 clouds (Sales, Marketing, Service, Communities, Apps and Analytics (new see below) it has all the ingredients to ensure customer success from a platform perspective. And certainly Salesforce has a formidable collection and market share of CRM capabilities, I leave it to my colleague Alan Lepovsky to comment on the attractiveness of the Community cloud, and I will comment below on the (new) Analytics cloud.

As far as the vehicle of a customer success platform I’d say there are many more business functions that need to fall in place to make a customer successful, notably the ‘back office’ functions that Salesforce does not have but partners for. And more importantly, in my view, people make the difference – they are part of the equation of customer success, too. But let’s give Salesforce the benefit of the doubt, it would be great to see one of the yearly leitmotivs stick more than 12 months for the vendor, and platform should be to a certain point timeless and always matter.
 

2. The Analytics Cloud – This is the 6th cloud that Salesforce has added – and was the most substantial product announcement of the conference. From a minimalist point of view one could say that this is the next generation of the existing reporting capabilities of Salesforce. And these were by no means bad, did the job, were included in the license and were (and are) good enough to power millions of users in their reporting needs every day. But one key challenge for Salesforce’s existing reporting has been the addition of 3rd party data and most of CRM information becomes only meaningful when put into context of all information the enterprise produces and uses (incl. the ‘back office’ – see above). 

The Wave technology that powers the Analytics Cloud puts that concern away, it’s easy now to import 3rd party data, put it into context and visualize it. For the latter, visualization, Salesforce has done a superb job – the graphical rendering of data is fast, smooth, responsive and almost dazzling. Not sure how much of that performance was demo – especially on the mobile devices (yes it was again build mobile first – what else) – but if performance will be only half as good in real life than what it was a Dreamforce – then kudos to the Salesforce engineering team behind the Analytics cloud.

On the flipside, the Analytics cloud is not ‘true’ analytics, those class of software that takes actions or at least recommends them in a priority sequence (more here). As a matter of fact – following that definition – it is not analytics at all, but visualizations and reporting. Nothing wrong with that and it certainly creates value for Salesforce customers. Critical is the high list price of $125 for a regular and $250 for a power user per month – that is a lot of money for a first version product, but we all understand it’s before discount. 

Salesforce was also very uptight on the technology behind Analytics Cloud, the versions going from open source (Cassandra, Riak, HBase), to existing platform (Oracle) all the way to proprietary (a row format store with flexible pointers). Not sure why Salesforce has been so secretive in this area – the product launch is imminent and the cat fill be out of the bag soon. It’s a first version, and by default capabilities will only be upgraded. Talk about dimension tables wakes up good old Data Warehouse memories – and the product is not ready to handle large amounts of non-SQL data. Equally predictive analytics capabilities are missing, but I was repeatedly was assured they are on the roadmap.

Finally Salesforce is leaving all the ‘heavy’ lifting to partners, and with that I mean the ETL functions to get data from 3rd party systems. Using the OData protocol opens the Analytics Cloud well for SAP and Microsoft applications, not so much for Oracle applications, but it’s a good start. Involving all these partners make the Analytics Cloud powerful and allows to move it to market fast, but in day to day life it will make it hard to purchase license wise and operate complexity wise. But then Salesforce realistically did not have a chance to build 3rd party interfaces themselves – so partnering is a good and smart (short to medium term) strategy.

3. The Lightning framework – Once you have a new platform like Salesforce has with Salesforce1 – then you need to work on getting developers more productive. Enters Lighting, which allows to easily build mobile, tablet and desktop applications on Salesforce1. As a matter of fact it is so easy, that Salesforce has probably empowered business users and system administrators to build some Salesforce applications. If Salesforce can really make this user community productive building applications, it has achieved a breakthrough in the industry and re-invented how (simple) business applications can be build. And though the demos have that potential and Salesforce has realized that – we will have to see in real life how many non-programmers are up to the task. But certainly there is a lot of potential here.

The Lightning Frameowork Overview

On the flipside out of briefings with the relevant development execs – it has become clear, that Salesforce has not thought (yet) about layering access in Lightning. Usually you see vendor proprietary, vendor vertical, ISV and then customer customization layers. In this version one, users will copy components, which quickly can become an oversight and code maintenance problem. But it is early days, first version and Lighting starts out with a lot of promise.

Tidbits

• Industries – Salesforce has launched a common industry product group under the leadership of enterprise software veteran John Wookey. We attended a briefing on the new effort and Wookey and team can hit all the vertical messages well (we heard healthcare, finance and government) but it is not clear how all will be build (consider the layering concern from above) but a roadmap will come soon.

• Europe – It is clear that Salesforce needs to grow beyond North America and Europe seems to be the prime target, with European customers being show cased in the keynotes and even executives from the German Coca-Cola bottler on main stage. And we heard that the UK data center is coming very soon, the German one later, all good moves to overcome the European cloud angst. 

• Developers – Developers were central users Salesforce needs to woo in 2013, but that was less a topic this year. Nonetheless the developer zone in Moscone West is vibrant, developers are excited, another hackathon is under way and I had a chance to see Adam Seligman launching the new Trailhead know how transfer tool. As with any new platform - training and education are crucial. 

More platform innovation that helps attract developers

• Work.com – With Wookey off in charge of verticals, work.com has become part of the ‘platform’ which is managed by Linda Crawford. We had the chance to meet with Crawford and it is clear that if Salesforce ever had any larger Talent Management ambitions, they are gone by now. The focus now is to improve CRM user performance, natively embedded into their transactional applications. The quid pro quo argument would be, that Salesforce needs to build or acquire learning capabilities – something to be seen. And it is certainly a worthy and valuable cause to improve sales performance while not reducing sales active time for CRM users. 

MyPOV 

It all fits well where Salesforce is right now, as we have seen it many times in enterprise software history: First you need the platform (Salesforce1), then you build reporting on it (Analytics Cloud) and then (or in parallel) you think of developer productivity (Lightning), next comes horizontal product (in 2015) and verticals (roadmap coming soon, see above). 

The cookie cutter approach of re-platforming, something Salesforce (and most other vendors) does not talk about publicly, but that’s what is happening behind the scenes at Salesforce in my view. As such Salesforce is going through a building year with little new and additional business functionality to show, but that should change in 2015 and 2016. As usual roadmaps would be good to have, once the cat is out of the bag (it almost is). And a little more transparency how things are build would also be good, being in the ‘cloud’ is not a good enough answer for technical architecture details anymore. 

It’s 2014 by now, not 2004 anymore.

Earlier today Alan, Natalie and me recorded our takeaways in a hangout - watch it here:

More on Salesforce.com:

• Constellation Research Summary of Salesforce Dreamforce 2014 - read here
• Research Summary - An in depth look at Salesforce1 - Better packaging or new offerng? Read here.
• Dreamforce 2013 Platform Takeaways - All about the mobile platform - or more? Read here. 
• Platform ecosystems are hard - Salesforce grows it - FinancialForce shrinks it - read here.
• Our take on Salesforce.com Identity Connect - from three angles - Identity, CRM and PaaS - read here.
• Takeaways from the Salesforce and Workday Strategic Partnership - read here.
• Act II - The Cloud changes everything - Oracle and Salesforce.com - read here.
• How many Pivots make a Pirouette? Salesforce's last Pivot - read here.

Dreamforce 2014 #DF14: Benioff Announces Customer Success Platform

Vice President and Principal Analyst, Constellation Research
Constellation Research

Role: Vice President and Principal Analyst focusing on the IOT of Customer Experience and how the cloud is driving more flexible, agile, and robust customer service and customer experiences. In-app or in device customer service is the future. Coverage Areas: Next Generation Customer, Digital Marketing Transformation Bio: As a Vice President and Principal Analyst at Constellation Research, Inc, Petouhoff works with Fortune 100 and 500’s Senior Leadership teams to create strategic customer experience (marketing, sales and service) solutions which engage customers, build brands and grow businesses. Combining her experience as a former Forrester software analyst, PWC systems integrator and change management consultant, Petouhoff leads executive workshops to discuss to not only…...

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One of the many scoops at Dreamforce this year is the announcement of the Customer Success Platform. The idea behind what Salesforce is offering is that companies and brands need a way to connect with their customers in new ways. There are nearly trillions of devices, apps, cars, cameras, watches, etc… that could be connected. The thought being that– if everything was connected, brands could deliver better experiences that were more relevant. The result of that is to drive customer loyalty, advocacy and referrals and long-term customer lifetime value.

Salesforce has 6 core technologies: mobile, connected products, 1 to 1 capabilities for the marketing customer journey, social, data and apps. And they want brands to be able to manage it all on one platform- theirs. They showed several difference examples: GE for analytics, Coke for building mobile applications and Honeywell for sales, marketing, service, community and engagement.

Salesforce is also taking about the data divide and wants to put an end to it by making it easier to for the business people and the people who manage data to see it visualized. While that is empowering to the business users to be able to create applications, it could be an issue for IT to maintain it… and security, and… So we’ll see if things get better or worse. It will help IT get more relevant and perhaps end the cycle of departments like Customer Service suffering from the Rodney Dangerfield Affect… they just don’t get enough respect so their requests end up at the end of the IT list… Something’s gotta give… to make business run better and make customers return.

Wondering what to do once you have sold a SaaS product? Customer Success Platforms are there to help you make sure you maintain the relationship throughout the customer lifecycle so that renewals are easier. And what will be interesting is to see how the various players in the Customer Success Management field fair. If you are looking at this area there’s some of the companies you’ll want to consider: GainSight, ServiceSource and Totango… to mention a few.

What is confusing to many is what does the term “Customer Success Platform” mean? To some it means a platform to build your customer journey on and have all apps, data, devices, etc connect. To others it means managed services and/or a platform to manage a SaaS software sale after the sale – i.e., during its whole customer lifetime- way before renewal time…

It’s important for vendors to do the work to make sure the messaging is not confusing, to understand who they are selling to and very deliberately show their benefits. This means doing the persona selling buying exercise – i.e., for each persona you are selling to, know what keeps them up at night and how does your solution or platform solve that. The benefits are very different for various roles, CIOs, CEOs, CMOs, SVP of Customer Service, etc…

I’ve been writing about Customer Experience for nearly 20 years and while the technology has gotten much better, exactly what technology one needs and for what department has gotten more confusing each year. The idea of serving your customer has not changed. It’s needed and wanted more than ever. It’s important to distinguish what each vendor brings to the table for what roles and why they should be considered. It’s not an easy thing to sort out all the “very” similar marketing messaging.

I will be creating some Vendor Profiles to help our end users figure what the best choice is for their company.

@DrNatalie

VP and Principal Analyst Covering Marketing, Sales and Service to Deliver Better Customer Experiences.