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… Read more

Big Data, Cloud Based Performance Apps, Drive Interest In Additional Investment

Redwood City, California based Tidemark announced that it raised $24 M in Series C funding from Redpoint Ventures, Greylock Partners, Andreessen Horowitz, and Dave Duffield.  Key points include:

• Redpoint Ventures leads the round and Geoff Yang joins the board. To date Tidemark has raised $35M with $6.3M in its Series A and approximately $5M in its Series B.  Tidemark will add Geoff Yang, a founding partner of Redpoint Ventures to the company’s board of directors.
  
  Point of View (POV): Redpoint Ventures has had a great history with investments in enterprise software and cloud computing.  Success stories include Concur, Documentum, Fanfare, FileNet, Heroku, Metreo, Polycom, Responsys, Sybase, and Zimbra.  More importantly, current board of director Phil Wilmington, the former CEO of OutlookSoft and co-CEO of PeopleSoft, has been named Executive Chairman of the company.

• Funding will enable Tidemark to expand both sales efforts and expand initial EPM use cases. Today Tidemark offers a suite of EPM applications that include metrics management; strategic, financial, and operational planning, budgeting, and forecasting; and profitability modeling.  With additional funding, Tidemark plans to build out its enterprise sales force and target the growing market for business intelligence systems that address both big data and real-time data driven decision management.
  
  Point of View (POV): Tidemark’s solution provides forward looking analysis and real-time performance management.  While the first set of use cases address the cloud based enterprise performance management market, the core software provides a key foundation in bringing applications away from transactional systems and into a new world of engagement and experience systems.  Key features include parallelized in memory analytics, native cloud data integration, native HTML 5 interface, mobile first UI, and real-time collaboration.

The Bottom Line For Customers: Tidemark Brings Real-Time Data Driven Decisions To The Cloud

The rise of big data, aging BI systems, and the need for cloud based approaches lead many organizations to rethink their business intelligence (BI) and business analytics strategies.  As BI continues to evolve from fragmented and historical reporting to pervasive, predictive, and real-time decision support, an organization’s success increasingly depends on the support for an expanding information matrix.  Tidemark represents the next class of solutions that can address the big data challenge in the cloud, while delivering real-time and actionalbe solutions that are easy for line of business users to consume in a social, mobile, and collaborative fashion.  Consequently, organizations such as Acosta and US Sugar are already moving in this direction.

The Bottom Line For Technology Vendors: Expect Investors To Increase Funding For Enterprise Class Solutions

The buzz and rage over the past three years has focused on consumer plays in the valley.  However, activity in the past six months suggest that investors are making the shift to enterprise focused start-ups.  Why? With 1 out of every 1000 consumer plays making a successful exit, the pivot to enterprise appears to be a safer and less crowded bet.  Investors and enterprise class technology companies can expect 2012 to be an exciting year of mergers, acquisitions, investments, and IPO’s.

Your POV.

Are you ready for next gen analytical apps? If you are an existing EPM user, what will make you make the switch? Are your current applications cutting it?  Got a question?  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

Related Research:

• Research Report: Rethink Your Next Generation Business Intelligence Strategy
• Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation
• Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone
• Monday’s Musings: 10 Essential Elements For Social Enterprise Apps

Reprints

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

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, see the full client list on the Constellation Research website.

Copyright © 2012 R Wang and Insider Associates, LLC All rights reserved.

President, Computer Economics and Strativa, Inc. Computer Economics and Strativa, Inc.

Frank Scavo is skilled at formulating and communicating IT strategy, developing the business case for new systems, and facilitating the selection of enterprise systems, such as ERP, CRM, and supply chain management. He is also an expert in benchmarking IT spending and staffing levels for end-user IT organizations. Frank was one of the first tech bloggers, beginning in 2002 with his launch of the Enterprise System Spectator providing independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them. Frank has been quoted as an IT expert in numerous business and industry publications such as the New York Times, Wall Street Journal, Computerworld, CIO Magazine, ZDnet, eWeek,… Read more

Over at Computer Economics, we've just published our 2012 IT Salary Report, as we've been doing for over 20 years.

The headline this year is that IT workers in the U.S. will only receive a 2.8% pay increase, at the median, as shown in the Figure nearby. Even organizations at the 75th percentile are budgeting for only a 3.0% wage increase for IT professionals. That lags well behind the 3.4% rise in the Consumer Price Index for the 12-month period through November 2011.

A short summary of these top line trends can be found a post on the Computer Economics website.

Influence of Industry Sector on IT Pay Scales

Although the general trend for U.S. IT salaries is interesting, what I find more interesting is an analysis of factors that affect IT salaries. After we published this report this morning, we received a media inquiry from a reporter covering healthcare IT. She wanted to know, did we have any data on IT salaries specific to the healthcare industry?

Fortunately, this year for the first time, we provided an analysis of IT salaries by industry sector, based on data we acquired from the U.S. Bureau of Labor Statistics. These "pay relatives" by industry sector complement those that we also provide for over 400 metropolitan areas.

So, to answer her question directly: according to the industry sector data, IT compensation in the healthcare sector is about 82% of the national median. For example, if you are a desktop support technician in the healthcare industry, you can expect to make only 82 cents on the dollar, compared to desktop support personnel nationwide.

A Misleading Statistic

These "pay relatives" by industry sector can be misleading, however. In this example, healthcare organizations tend to be located in all metropolitan areas, both urban and rural, that vary widely in their cost of living. Other industries--financial services firms for example--tend to be concentrated in large metropolitan areas, like New York, Boston, and San Francisco, which have higher cost of living indexes. Low and behold, when we look at the pay relative for the finance and insurance sector, we see that it is 104% of the national median.

So, in our opinion, IT workers in financial services firms on average across the U.S. are paid more than their counterparts in healthcare organizations, not because financial services firms pay more, but because they tend to be located in metropolitan areas with higher costs of living.

Implications for IT Managers

Therefore, if you are using the Computer Economics salary tables to evaluate pay scales in your organization, you are better off to put most of your emphasis on the geographic cut of the data than the industry sector cut.

There are exceptions to this rule, of course. For example, business analysts or applications developers with experience implementing electronic medical records are in high demand right now. Healthcare organizations will likely need to pay a premium to recruit and retain IT professionals with this experience. Likewise, financial institutions are likely to be at the top of the pay scale for IT security professionals with experience in financial transaction processing environments. In the applications area, IT management, business analysis, and other business-oriented positions, industry-specific experience almost always commands top dollar.

But for most other IT positions, such as data center operations, system administration, help desk, desktop support, and other jobs that are not highly industry-specific, consider the geographic dimension as the most important in benchmarking IT pay scales. Essentially, if the person holding the job can move from one industry to another, with little or no retraining, the pay scale for that job is highly dependent on the geography, not the industry.

A full description of the Computer Economics 2012 IT Salary Report, with free sample pages is available.

Related Posts

IT Budgets vs. Tech Industry Spending: What's the Difference?

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… Read more

Social Media Explained In 140 Characters (More or Less)

Some time back a tweet went out describing what all the tools were (Figure 1).  I modified this a bit and now use it in alot of presentations to audiences around the world.  More than 80% of the conference organizers usually are fine with this slide.  Take a look and tell me what you think.

Figure 1. Social Media Overview

Your POV

So here’s the deal, some conference organizers won’t let me use this slide because they are worried about being politically correct or appropriate.  I’m curious to see what you think as I crowd source an answer for a current client? Is this appropriate or not?

Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

Please let us know if you need help with your Social CRM/ Social Business efforts.  Here’s how we can assist:

• Assessing social business/social CRM readiness
• Developing your social business/ social CRM  strategy
• Vendor selection
• Implementation partner selection
• Connecting with other pioneers
• Sharing best practices
• Designing a next gen apps strategy
• Providing contract negotiations and software licensing support
• Demystifying software licensing

Related Research

• Seven Basic Privacy Rights Users Should Demand For Social Business
• Introducing the 43 Use Cases Of Social Business
• Best Practices: Applying The Seven Deadly Sins To Successful Gamification
• Trends: 5 Engagement Factors For Gamification And The Enterprise
• Monday’s Musings: Balancing The Six S’s In Consumerization Of IT
• Monday’s Musings: A Working Vendor Landscape For Social Business
• Product Review: Google+, Consumerization of IT, and Crossing The Chasm For Enterprise Social Business
• Monday’s Musings: Using MDM To Build A Complete Customer View In A Social Era
• Monday’s Musings: Mastering When and How High End Brands Should Use Daily Deal Sites Such As Groupon
• News Analysis: Salesforce.com Acquires Radian6 For $316M
• Monday’s Musings: Q1 2011 State of Social CRM and CRM From An EMEA Point Of View
• Best Practices: Applying Social Business Challenges To Social Business Maturity Models
• Research Summary: Software Insider’s Top 25 Posts For 2010
• Best Practices: Five Simple Rules For Social Business
• Research Report: Constellation’s Research Outlook For 2011
• Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation
• Research Report: Next Gen B2B and B2C E-Commerce Priorities Reflect Macro Level Trends
• News Analysis: Jive Fills Warchest, Ready to Battle Enterprise Software Giants And IPO?
• Tuesday’s Tip: Applying The Five Stages Of Adoption Towards SCRM Projects
• News Analysis: Lithium’s Acquisition of Scout Labs Ups The Ante in Social CRM
• News Analysis: Biz360 Acquisition Signals Attensity Group’s Move Into Social CRM
• Monday’s Musings: Avoiding Failure In Social CRM Projects Requires Ecosystem Coordination
• Research Report: The 18 Use Cases of Social CRM – The New Rules of Relationship Management
• News Analysis: Siperian Acquisition Vaults Informatica Into An MDM Leadership Position
• News Analysis: Jive and Radian6 Partner – Great For Business, But Could Fragment IT Systems
• Event Report: Salesforce.com Pushes Social CRM Technology — But Don’t Expect Companies To Be Successful With Tools Alone
• Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone
• Personal Log: Altimeter Group – Helping Organizations Bridge The Technology Obsolescence Gap
• Monday’s Musings: 10 Essential Elements For Social Enterprise Apps

Reprints

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

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, see the full client list on the Constellation Research website.

Copyright © 2012 R Wang and Insider Associates, LLC All rights reserved.

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… Read more

Public Outrage Grows Over Lax Privacy Polices At Popular Social Networking Sites

Recent actions by social networking leaders in the market place have brought new attention to a user’s privacy rights.  Despite the fact that these sites provide a freemium service to users, abuse and arrogance of a user’s privacy rights combined with user ignorance has led to not only a public outrage, but also increasing action from privacy advocacy groups to petition government agencies.  Three public examples include:

• Google+ Search Plus Your World controversy. The recent decision by Google to feature personalized search results from one’s contacts has generated an uproar.  While users may opt out of receiving search results based on personal data, users can’t block information found by their Google+ contacts including those that are +1 pages, messages, contacts, and videos.  Despite the personalization benefits to users and the fact Twitter and Google could not agree on terms on real-time search, the forced march and prioritization raises concerns over a user’s rights.  Consequently, the Electronic Privacy Information Center (EPIC) has asked the US Federal Trade Commission (FTC) to investigate Google’s practices.
• Facebook Timeline uproar. When Facebook recently rolled out their new Timeline feature, users expressed outrage.  Though Timeline simplified access to a user’s profile, the lack of time to make changes, suddenness of announcement, and confusion over public versus private data furthered complaints.  The constant stream of privacy changes without user control led to EPIC’s petition to the FTC and Facebook’s settlement. Facebook’s market dominance (see Figure 1.) and public proclamation that “The Age of Privacy Is Over” should lead to greater scrutiny by privacy advocates.
• LinkedIn Ads backlash. Rolled out in June 2011, LinkedIn exposed the products and services of interest to members for use with advertising. Advertisers could then display which members “endorsed” products and services from an advertiser.  The lack of solicitation from an opt-in process led to a backlash from users and LinkedIn backing down to consumer pressure.

Figure 1. US Social Networking Sites Market Share By Page Views

Consumers and Businesses Should Expect and Demand Seven Basic Privacy Rights

As adoption grows, the potential for abuse exponentially increases.  Exposure of location based services (LBS) can lead to safety concerns from a stalking and burglary perspective.   Ignorance on how user generated content is used can lead to the unwanted public sharing of private information such as pictures, conversations, and relationships.

To protect a user’s right as well as create a trust environment required for success in social business, business and consumer users should demand that vendors deliver seven key rights:

1. Default opt-out on sharing private information. Basic profile information not limited to name, gender, email address, birthday, address, contact information, contacts, and relationships should be defaulted to opt out.  Default opt out should apply to user generated information such as messages, photos, audio, and video.
2. Transparency in how personal information is used. Social networking sites and other social business concerns should detail what information will be shared.  Users should know if their information will be sold and if so to whom.
3. Advanced notice on new changes to privacy options. Social networking sites should provide adequate warning when new features impact a user’s privacy preference. The duration for advanced warning should be commensurate to the amount of time required for a user to opt out or make changes to avoid involuntary exposure.
4. Affirmative consent for overriding privacy preferences. Users must opt-in to changes in privacy.  The default option should be opt-out. the recent EPIC Facebook Privacy Complaint  FTC Complaint and settlement reinforces the requirement for affirmative consent and provides good guidance on privacy rules.
5. Access prevention to user’s data upon account deletion.  Information about a user should be locked down when an account is deleted.  This information should not be used in aggregate statistics or data.  Only the user should be allowed to resurrect an account.
6. Export provision for user generated data. Customers should own their data and take it with them as needed.  A mechanism to export user created information should be provided to the user.  Doc Searls and the Project VRM community has been advocating Personal Data Stores for quite some time and this will be the necessary requirement for social business to make it to the next level.
7. Deletion of all data upon user’s request. Should a user request a hard delete, users should be granted this option for a permanent delete with all information removed from all files.

The Bottom Line:  Will Users Trade Privacy For Convenience In An Era of Social Business?

Convenient features based on personalization provide a rich opportunity for both consumers, brands, and enterprises to take advantage of social media and social networking tools.  Despite Mark Zuckerburg’s foolish cry that the “Age of Privacy is Over” and the ongoing confusion between what information is public or private, Social Business can not succeed unless trust is ensured.  Trust is the key platform as we shift from transaction to engagement and ultimately personal fulfillment systems.

Consequently, users must remain vigilant in protecting their privacy and not take a fatalistic attitude that privacy is over.  In fact, users should push hard to take a stance to preserve their rights to be offline as a counter measure. Vendors, social networking sites, and enterprises must do their part and ensure trust among their stakeholders (e.g. employees, customers, partners, suppliers, etc.) or expect more public backlash. Privacy is not over.  The fight has just begun and ultimately users will win.

Your POV

Are you ready to defend your privacy rights?  Got a story where your privacy rights have been trampled? Need help reviewing your privacy policy against the Seven Basic Privacy Rights?  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

Please let us know if you need help with your Social CRM/ Social Business efforts.  Here’s how we can assist:

• Assessing social business/social CRM readiness
• Developing your social business/ social CRM  strategy
• Vendor selection
• Implementation partner selection
• Connecting with other pioneers
• Sharing best practices
• Designing a next gen apps strategy
• Providing contract negotiations and software licensing support
• Demystifying software licensing

Resources

20120113 Information Week – Thomas Claburn “Google+ Search Controversy Grows”

20120112 ZDNet: Identity – John Fontana “FTC Asked To Probe Google+, search Integration”

20111219 ZDNet: Social Business – Rich Harris and Eileen Brown “Facebook Timeline privacy concerns deepen as rollout begins”

20111215 PC World – Jill Duffy “10 Things You Should Know About Facebook Timeline”

20110812 ComputerWeekly – Warwick Ashford “LinkedIn Bows To Pressure Over ‘Social Ads’ Privacy Concerns”

20110623 Mashable – Todd Wasserman “New LinkedIn Ads Leverage Recommendations And Follows”

20110109 ReadWriteWeb – Marshall Kirkpatrick “Facebook’s Zuckerberg Says The Age of Privacy is Over”

Related Research

• Introducing the 43 Use Cases Of Social Business
• Best Practices: Applying The Seven Deadly Sins To Successful Gamification
• Trends: 5 Engagement Factors For Gamification And The Enterprise
• Monday’s Musings: Balancing The Six S’s In Consumerization Of IT
• Monday’s Musings: A Working Vendor Landscape For Social Business
• Product Review: Google+, Consumerization of IT, and Crossing The Chasm For Enterprise Social Business
• Monday’s Musings: Using MDM To Build A Complete Customer View In A Social Era
• Monday’s Musings: Mastering When and How High End Brands Should Use Daily Deal Sites Such As Groupon
• News Analysis: Salesforce.com Acquires Radian6 For $316M
• Monday’s Musings: Q1 2011 State of Social CRM and CRM From An EMEA Point Of View
• Best Practices: Applying Social Business Challenges To Social Business Maturity Models
• Research Summary: Software Insider’s Top 25 Posts For 2010
• Best Practices: Five Simple Rules For Social Business
• Research Report: Constellation’s Research Outlook For 2011
• Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation
• Research Report: Next Gen B2B and B2C E-Commerce Priorities Reflect Macro Level Trends
• News Analysis: Jive Fills Warchest, Ready to Battle Enterprise Software Giants And IPO?
• Tuesday’s Tip: Applying The Five Stages Of Adoption Towards SCRM Projects
• News Analysis: Lithium’s Acquisition of Scout Labs Ups The Ante in Social CRM
• News Analysis: Biz360 Acquisition Signals Attensity Group’s Move Into Social CRM
• Monday’s Musings: Avoiding Failure In Social CRM Projects Requires Ecosystem Coordination
• Research Report: The 18 Use Cases of Social CRM – The New Rules of Relationship Management
• News Analysis: Siperian Acquisition Vaults Informatica Into An MDM Leadership Position
• News Analysis: Jive and Radian6 Partner – Great For Business, But Could Fragment IT Systems
• Event Report: Salesforce.com Pushes Social CRM Technology — But Don’t Expect Companies To Be Successful With Tools Alone
• Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone
• Personal Log: Altimeter Group – Helping Organizations Bridge The Technology Obsolescence Gap
• Monday’s Musings: 10 Essential Elements For Social Enterprise Apps

Reprints

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

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, see the full client list on the Constellation Research website.

Copyright © 2012 R Wang and Insider Associates, LLC All rights reserved.

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… Read more

Business Leaders Often Poorly Prepared For Cloud/SaaS Contract Negotiations

Business leaders often take great care in building their Cloud and SaaS strategy, only to have many of the benefits of flexibility and agility hampered by overlooking details in their cloud contracts.   In conversations with over 200 cloud customers in 2011, key reasons include:

• A common belief that SaaS and Cloud contracts are simple
• Lack of software contract negotiations and procurement experience
• Failure to review previous departmental contracts now in renewal mode
• Limited access to SaaS and Cloud contract expertise

Avoid These Common Mistakes In Cloud Contracts

While SaaS/Cloud contracts are considerably less complicated, buyers should remember that even Cloud/SaaS software contracts still require some careful planning.  Lessons learned from over 1200 software contract negotiations highlight five common mistakes made in cloud contracts.

1. Blindly including support costs with the contract. While Cloud/SaaS contracts automatically bundle maintenance and updates into the subscriptions, customers often do not realize that they do not have to buy support.  In fact, vendors are not allowed to require customers to buy support with subscription.  Avoid going for the highest level support upon initial contract signing.  This option can always be added at a later date.
2. Failure to negotiate flex up provisions. Most contracts begin with a small number of users in a departmental setting.  However as usage grow, most enterprises just add additional users without securing upfront discounts potentially leaving 1000′s of dollars on the table.  In contracts, remember to secure discounts for 2x, 3x, and 4x, your initial usage.
3. Forgetting to negotiate flex down. As with securing discounts for adding usage, the true test of elasticity occurs when companies flex down usage.  Negotiate the ability to reduce usage by 10%, 20%, and 30% without incurring penalties.
4. Paying upfront without a discount. While many Cloud/SaaS vendors prefer annual agreements and annual payment upfront, savvy Cloud/SaaS buyers prefer to pay in more frequent cycles such as monthly and quarterly.  Should a Cloud/SaaS provider seek upfront payment, negotiate a discount commensurate to your hurdle rate.
5. Not trading refrenceability for success. Customers often jump at the ability to serve as a referenceable client without ensuring that the software has been deployed.  Agree to serve as a reference only after the software has been deployed.  One common strategy, trade referenceability for prioritization of key features into the next release.

As Cloud/SaaS contracts emerge as the norm, buyers should keep abreast of other changes.  Stay tuned for the 2012 Cloud/SaaS Customer Bill of Rights to be published Q1 2012.

Your POV.

Need help with your software contract?  Contact us throughout the vendor selection process.  We can help with a quick contract review or even the complete vendor selection.  Let us know your experiences.  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

How can we assist?

Buyers, do you need help with your apps strategy and vendor management strategy?  Trying to figure out how to infuse innovation into your tech strategy? Ready to put the expertise of over 1200 software contract negotiations to work?  Give us a call!

Please let us know if you need help with your next gen apps strategy efforts. Here’s how we can help:

• Providing contract negotiations and software licensing support
• Evaluating SaaS/Cloud options
• Assessing apps strategies (e.g. single instance, two-tier ERP, upgrade, custom dev, packaged deployments”
• Designing innovation into end to end processes and systems
• Comparing SaaS/Cloud integration strategies
• Assisting with legacy ERP migration
• Engaging in an SCRM strategy
• Planning upgrades and migration
• Performing vendor selection

Related Resources And Links

20100419 Tuesday’s Tip: Dealing With Pesky Software Licensing Audits

20090714 Research Summary: An Enterprise Software Licensee’s Bill of Rights, V2

20101214 Tuesday’s Tip: Dealing With Vendor Offers To Cancel Shelfware And Replace With New Licenses

20100308 Monday’s Musings: Decoupling Support From Maintenance – What Apps Vendors Can Learn From Microsoft Dynamics

20100222 Monday’s Musings: Why Users Should Preserve Their Third Party Maintenance Rights

20100104 News Analysis: SAP Revives Two-Tier Maintenance Options

20090210 Tuesday’s Tip: Software Licensing and Pricing – Do Not Give Away Your Third Party Maintenance And Access Rights

20090709 Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!

20091222 Tuesday’s Tip: 10 Cloud And SaaS Apps Strategies For 2010

20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value

20091102 Best Practices: Lessons Learned In What SMB’s Want From Their ERP Provider

20091006 Tuesday’s Tip: Why Free Software Ain’t Really Free

20090504 News Analysis: Oracle Waives Fees On Extended Support Offerings

20080909 Trends: What Customers Want From Maintenance And Support

20080215 Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness

20090405 Monday’s Musings: Total Account Value, True Cost of Ownership, And Software Vendor Business Models

20090324 Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs

20090223 Monday’s Musings: Five Programs Some Vendors Have Implemented To Help Clients In An Economic Recession

20091012 Research Report: Customer Bill of Rights – Software-as-a Service

20090910 Tuesday’s Tip: Note To Self – Start Renegotiating Your Q4 Software Maintenance Contracts Now!

20090721 Tuesday’s Tip: 3 Approaches To Return Shelfware

20090127 Tuesday’s Tip: Software Licensing and Pricing – Now’s The Time To Remove “Gag Rule” Clauses In Your Software Contracts

Reprints

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

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

Copyright © 2012 R Wang and Insider Associates, LLC All rights reserved.

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… Read more

Welcome to an on-going series of interviews with the people behind the technologies in Cloud Computing.  The interviews  provide insightful points of view from a customer, industry, and vendor perspective.  A full list of interviewees can be found here.

Adam Rogers – Senior Vice President and Chief Technology Officer, Ultimate Software

1. Tell me in 2 minutes or less why Cloud Computing is changing the world for your customers

Adam Rogers (AR): Ray, let’s call it like it is. Cloud isn’t really disruptive – it’s already  disrupted – and we’ve made that transition over the past 10 years.  The new frontier for enterprise software is building systems that conform and cater to the user and how they want to work.  Let’s use Amazon as an analogy. A core difference between Amazon and the dozens of other e-commerce sites that competed for mind share in the 2000′s is that they realized early on that doing great work on behalf of the PERSON was more important than the URL or the consumer product segment.

Our customers benefit from cloud computing by taking advantage of business solutions for managing their people, instead of dealing with the cost and expense of IT. Second, because we handle all upgrades, they gain access to the latest functionality and don’t get trapped in a legacy on-premise solution that is outdated. There’s no barrier to upgrading. However, you’ve heard this all before. Honestly, these are really table stakes in business software today.

What Cloud is transforming for our customers is their ability to tailor the solution to their specific needs. For example, Google wanted us to handle the administration of payroll and the system-of-record, but they wanted to maintain the user experience of their internally developed GHR system. By connecting Ultimate to GHR through the Cloud, they can deliver a familiar user experience for their people while taking advantage of our backbone.

Importantly, small businesses gain access to enterprise systems at an affordable price point because:

1. If done right, it allows smaller businesses access (via affordability) to what used to be very expensive enterprise applications.

⁃ up front through the economies of scale well-architected systems create, enterprise class software can be sold at much less expensive price points than previously.

⁃ ongoing costs are contained.. and running in world-class data centers that only fortune 1000 companies could previously afford.

2. It brings the benefits of consumer software (constantly improved, modern user interfaces and simple) to enterprise customers who demand secure, stable and reliable applications.

We moved to cloud computing and SaaS 10 years ago because we felt it was good for our customers but in the end it also opened up the market to smaller customers with much smaller IT budgets. This is obviously great for our business model but very rewarding to know we can offer a world-class solution to what used to be out of reach to many companies.

2. What makes cloud computing disruptive?

(AR): Disruption typically has two major components. The first is cost and the second is making products available to a new class of customers.

Cloud computing has not only reduced the cost of business software, it has also made sophisticated systems available to organizations that previously wouldn’t have been able to afford to purchase and maintain those products. I think that’s a fairly obvious outcome at this point as discussed already.

What is less obvious, but more important in the long term, is that Cloud computing means we can — for the first time, really — combine applications that are tailored to the person and the device (an iPad, for example) with a robust administrative system on the back end. Those applications can be really small, and highly tailored, while still connecting to the core. That means users don’t have to deal with a lot of complexity, they can just focus on the work at hand — while still participating in the company’s core system.

This is disruptive because as the end of the day, this is great for consumers and customers but to execute, it really flips all accepted thinking on it’s side.

- Now we have to update our software early and often – the consumers demand this kind of cadence to realize the value. Consumers are using consumer applications and consumer devices and demanding that same elegant experience from their Ent Apps. GenX/Y’s are taking over the executive offices and making decisions on business software.

- Think about what it takes to do that… it’s an agile/iterative development process with continuous integration and deployment. That’s a simple sentence that is a multi million dollar investment for development teams. It took us years to make this turn.

- Finally it’s disruptive because you have to be comfortable in the state of “blowing in the wind”. Typical enterprise companies built loyalty through ridiculously expensive upgrades and data that was so locked down you had to syphon your data out discretely if you were thinking about switching vendors. Now you MUST, absolutely MUST deliver a steady flow of functionality and make your data available and accessible via standard web protocols. That’s a scary situation for many established vendors. It’s disruptive because that’s what our customers want. That’s what we are giving them. But many won’t.

3. What is the next big thing in Cloud Computing?

(AR): The intersection of consumer applications (more than just social) into Enterprise data. SaaS and cloud moved your data to the [potentially] accessible cloud. Soon it will be about making sense of all that data in the cloud. So Enterprise SaaS vendors will be forced to make their data accessible. That’s uncomfortable position for many traditional enterprise software companies who always felt the “hoarding” of their data is what kept customers paying their maintenance bills. So now the data must be “freed” and accessible through standard formats. And not only that, just like Gen X/Yers started bringing iPhones and Skype into the Enterprise without “permission”, we will need to be able to mash our Enterprise data up with consumer applications (especially social). Why not allow identity management via Facebook?

For example, take Apple with iOS5 is delivering their notification center — one place for the person to direct all their important action items. It is our job to plug into that if the user wants us too. Same with social streams. People don’t want 10 different streams, they might want a couple… so how do we publish and subscribe into those places where a user already works. Instead of taking an application-centered view, it is time to take a person-centered view. Cloud lets us do that.

4. What are you doing that’s disruptive for Cloud Computing?

(AR): Ultimate has grown to 2200 customers because of the inherent disruptive power of Cloud computing and SaaS. And we’re just at the start of this transition as an industry. But we have to keep looking forward. I’m not ready to share details yet, but let’s just say that business applications–even Cloud applications–have really been all about interrogating the user in order to capture data that matters for administering the company. We believe that era is over.

5. Where do you see technology convergence with Cloud?

(AR): Connections between applications and information is happening at the device and person level. The iOS5/iPad example is a great one. I want to create my own work environment, bringing together the information I need in the context that makes sense to me. With powerful devices and hyper-connective cloud-based applications, we can really make that happen which is exciting. And when you get the itch to start talking about technology, you really have to be careful.

In Silicon Valley, there is a never-ending focus on architecture, technology and administration. So much in industry is in discussion about why Cloud, SaaS, Mobile is great.

- These are means to an end. That end is great solutions for people. Apple gets this. They invent experiences instead of marketing processor speeds and USB ports.

6. if you weren’t focused on Cloud Computing what other disruptive technology would you have pursued?

(AR): - Definetely something in the field of medicine. I was studying biomedical engineering before switching to electrical and going down the computer/software path. As much as modern medicine has progressed there seems to be so much more room for massive technology advances.. Both in administering how we traverse through the hospitals/doctor’s offices and when we are in surgery.

7. What’s your favorite science fiction gadget of all time?

(AR): Dr. Who’s Tardis. What could be better than seeing how awesome the technology will be 1000 years from now?

Source: BBC

Your POV

What do you think? Got a question for Aaron?  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

The Tech Vendor series is closed.  To be considered for the Business and Tech Innovators series, please reach out to Elaine (at) ConstellationRG (dot) com.

Reprints

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

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, see the full client list on the Constellation Research website.

Copyright © 2011 R Wang and Insider Associates, LLC All rights reserved.

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… Read more

New Funding Shows Strength In Social Business Market And Lithium’s Business Model

Emeryville, California based Lithum Technologies announced today that it raised $53.4M in financing.  The lead round is from New Enterprise Associates (NEA). Other investors include SAP Ventures.

• NEA leads the round with Peter Sonsini joining the board. Peter‘s been active with ecommerce play BeachMint, community platform BuzzMedia, ruby development player Engine Yard, and cloud player Eucalyptus.  Of note all “existing Lithium investors, including Benchmark Capital, DAG Ventures, Emergence Capital, Greenspring Associates, Shasta Ventures and Tenaya Capital” participated in this D round.
  
  Point of View (POV): NEA’s traditionally gone in early and invested with visionary entrepreneurs.  However, this play fits along its second investment thesis for venture growth equity opportunities.  NEA’s track record bodes well for Lithium should they decide to go the IPO route.  More importantly, NEA provides Lithium with a vast network of resources for both sales, business development, and expansion.

• Lithium’s executed well amidst an increasingly competitive landscape. Lithium has shown growth into key verticals including auto, consumer products, financial services, retail, technology, telecommunications, and travel and leisure.  Key wins and expansions include BskyB, McDonalds, Nestle, Nissan, SuccessFactors and Telstra.
  
  Point of View (POV): Expansion into key verticals, improvement in SaaS upgrade technology, and the addition of enterprise class executives such as Rob Tarkoff, Ed Van Siclen, and Jim Drill show a seriousness to take the company to the next level.  The social business sale is starting to expand beyond the CMO role and across other line of business executives.  As the sale touches across the enterprise, the new management team is better positioned  to address the needs of CIOs, CFO’s, and other line of business execs as well as agency and system integrator partners.  More importantly, Lithium can expect consolidation in the market and increased competition from Jive, Salesforce.com, IBM, and others to heat up.

The Bottom Line For Customers: New Financing Validates Your Investment With Lithium Technologies

The strength and size of the additional financing validates Lithium’s position in the market place and bodes well for both existing customers and prospects.  Lithium intends to expand its role in defining the social customer experience.  This round of additional financing enables Lithium to:

• Support new social business use cases
• Expand into new markets such as digital agency ecosystem and growing geographies
• Invest in more research and development
• Fund future acquisitions
• Improve service delivery for existing customers

The market place is about to consolidate and the additional funding ensures stability at Lithium as well as reaffirms its position among the leaders in social customer experience and the broader category of social business.

The Bottom Line For Technology Vendors: Expect Consolidation Across The Vendor Landscape In 2012

Activity around social business deals have accelerated in the last three months. Jive’s IPO has provided this market category with a catalyst for continued investment.  More importantly, key fundamentals such as increasing customer adoption, continued market share gains by start-ups and pure-play vendors, and interest by established software vendors indicate the beginning of a mergers and acquisition cycle in 2012.  Technology vendors can expect deals and partnerships as each of the Social Business software categories: Customer engagement, SCRM/ External Communities, Enterprise 2.0/Internal Collaboration, and Social Middleware combine to address the 43 use cases of social business.  The market can expect the following combinations:

• Established CRM vendors to add social offerings
• Social middleware vendors to move up the stack
• Consolidation of SCRM players with Enterprise 2.0 communities
• Expansion of SCRM vendors into other CRM areas

Figure 1. Expect Consolidation Across The Vendor Landscape In Social Business For 2012

Your POV.

Are you ready for Social Business? If you are a Lithium customer, what do you think?  Got a question?  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

Please let us know if you need help with your Social CRM/ Social Business efforts.  Here’s how we can assist:

• Assessing social business/social CRM readiness
• Developing your social business/ social CRM  strategy
• Vendor selection
• Implementation partner selection
• Connecting with other pioneers
• Sharing best practices
• Designing a next gen apps strategy
• Providing contract negotiations and software licensing support
• Demystifying software licensing

Related Research:

• Monday’s Musings: Balancing The Six S’s In Consumerization Of IT
• Monday’s Musings: A Working Vendor Landscape For Social Business
• Product Review: Google+, Consumerization of IT, and Crossing The Chasm For Enterprise Social Business
• Monday’s Musings: Using MDM To Build A Complete Customer View In A Social Era
• Monday’s Musings: Mastering When and How High End Brands Should Use Daily Deal Sites Such As Groupon
• News Analysis: Salesforce.com Acquires Radian6 For $316M
• Monday’s Musings: Q1 2011 State of Social CRM and CRM From An EMEA Point Of View
• Best Practices: Applying Social Business Challenges To Social Business Maturity Models
• Research Summary: Software Insider’s Top 25 Posts For 2010
• Best Practices: Five Simple Rules For Social Business
• Research Report: Constellation’s Research Outlook For 2011
• Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation
• Research Report: Next Gen B2B and B2C E-Commerce Priorities Reflect Macro Level Trends
• News Analysis: Jive Fills Warchest, Ready to Battle Enterprise Software Giants And IPO?
• Tuesday’s Tip: Applying The Five Stages Of Adoption Towards SCRM Projects
• News Analysis: Lithium’s Acquisition of Scout Labs Ups The Ante in Social CRM
• News Analysis: Biz360 Acquisition Signals Attensity Group’s Move Into Social CRM
• Monday’s Musings: Avoiding Failure In Social CRM Projects Requires Ecosystem Coordination
• Research Report: The 18 Use Cases of Social CRM – The New Rules of Relationship Management
• News Analysis: Siperian Acquisition Vaults Informatica Into An MDM Leadership Position
• News Analysis: Jive and Radian6 Partner – Great For Business, But Could Fragment IT Systems
• Event Report: Salesforce.com Pushes Social CRM Technology — But Don’t Expect Companies To Be Successful With Tools Alone
• Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone
• Personal Log: Altimeter Group – Helping Organizations Bridge The Technology Obsolescence Gap
• Monday’s Musings: 10 Essential Elements For Social Enterprise Apps

Reprints

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

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, see the full client list on the Constellation Research website.

Copyright © 2012 R Wang and Insider Associates, LLC All rights reserved.

Constellation Orbits Constellation Research, Inc.

Elizabeth is a well-recognized industry-leading analyst. She was previously Vice President and Principal Analyst at Constellation Research.  Prior to Constellation, Elizabeth spent eleven years at Forrester Research as vice president and principal analyst.  She has managed large consulting projects for business and government organizations and provides technical insight and guidance to business and government organizations on their communication issues. Prior to her role as an industry analyst with Communication Initiatives and Forrester Research, Elizabeth held senior management positions with IBM, ROLM and Siemens ICN where she was a senior manager for strategic planning and alliances. Expertise Elizabeth’s expertise includes in-depth knowledge of unified communications,… Read more

Unified Communications (UC) has reached mainstream adoption with approximately two thirds of businesses engaged or actively planning UC upgrades.  However, most organizations prioritize UC applications, such as integrated messaging, conferencing, video, presence and IP telephony but do not necessarily connect all UC applications into a UC framework at the same time.  During the coming year we will see the continued advancement in UC acceptance and adoption, as UC is a key factor in enabling real time connectivity and supporting multi-modal applications for anytime, anywhere  communications.   Key trends I see dominating the UC space during the coming year include:

• Continued Investment at a moderate pace.  Based on Constellation Research 2011 UC survey there is a decline in the rate of future investment after 2011.  This is most likely due to tighter budgets for IT spending and an indeterminate economic recovery.  However, in areas that offer direct short-term payback, companies will continue to invest in UC upgrades.   According to this same survey 64 percent of respondents report a positive ROI investing in UC and another 30 percent broke even on their investment within two years.  This positive response to UC upgrades should promote the continued adoption of UC during 2012 based on the need for increased business productivity and agility.
•  Increased use of tablet across the enterprise.   Tablets support a wide range of application and serve many functions that previously required a PC.   In many areas, such as retail and healthcare that require mobile employees have immediate access to data, tablets are a cost-effective means to help workers become more accessible and  productive.  Not all IT managers favor the additional data and application management needed to support tablets but the demand for them will counter their reluctance for additional device upkeep.   Although less fully featured than a PC, I expect tablets to become a replacement for many occupations currently requiring mobile access to data.
• Smart devices continue on parallel path.  Most UC vendors offer dedicated UC features for integrating cell phones and smart devices into a common UC framework.   However, there does not appear to be a strong uptake with business on mobile UC integration.  One drawback is that mobile UC integration often requires the installation of client software for the management of its features.  With smartphones and tablets offering many features that connect the employees to their company, such as email access, Internet access, directories, and texting many do not see the need for UC integration. However, UC features such as presence, access to corporate directories, security controls and seamless routing of business calls to mobile devices offers an incentive for others to make this investment.  Mobile policy will be split between companies that want better control over their employee mobile devices and companies who support employees’ personal devices with partial reimbursement plans.
• Virtualization to the desktop.  Unlike the widespread adoption for data, virtualization for voice and video has come to market more slowly due to concerns regarding high reliability and availability for voice and video.  It was not until last year that vendors announced virtualization for several UC applications.   Progress in this area continues and Mitel moved one step ahead recently announced a virtual UC suite for its softphone. Most likely other vendors will follow this initiative.  A softphone on a virtual desktop infrastructure (VDI) will reduce the number of landline phones in the office as many workers will use virtual softphones and smart phones as primary voice communication devices.  
• Social software UC integration.  Companies are adopting social software for communicating with employees and many view it as a better alternative to email and other forms of internal communications.  Enterprise social software promotes collaboration and supports faster decision making by promoting the sharing of information on an immediate basis.  Due to its ease of implementation and customization, enterprise social software will become a major application for business communications.   Integration of social software into a UC framework supports additional features to facilitate knowledge exchange, such as access to experts, presence and directory integration.
• Mobile applications increase in range and usage.  Mobile applications provide easy access to many features that business users commonly seek, such as audio and Web conferencing, video conferencing, file sharing, and information posts and business communities.  Business applications on mobile devices enable a collaborative experience and facilitate connections due to ease of use to launch the application and ability to share information on an immediate basis across communities of interest.  Additionally, the growth in mobile applications will also create the need for more support for customers using a company’s mobile application.
• Cloud services for UC.   As additional UC applications are moving to the cloud, companies have more choices in their adoption of UC applications.  Cloud services today offer a full range of UC applications on a subscription basis and offer scalable and affordable solutions.  Many companies will adopt  a hybrid approach to cloud services and deploy both cloud and premise based UC.  Examples of hybrid deployments are using cloud services for conferencing, video, messaging and premise based services for telephony.
• Name change for Unified Communications- I predict that unified communications will be renamed by vendors to indicate its new expansiveness and unification of media types. New enhancements and services that improve business connectivity and agility put more emphasis on the business advances made possible with UC application than on the software and servers that deliver this solution.  As vendors increase support for openness and interoperability new terminology may better indicate the full possibilities for UC.

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… Read more

Maslow’s Hierarchy Of Needs Provides Prioritization Of An Individual’s Needs

In 1943, Abraham Maslow put forward his paper A Theory of Human Motivation. Eleven years later in 1954, Maslow went into detail on his hierarchy of needs in his book titled Motivation and Personality. The framework outlined five needs from the most fundamental or “deficiency needs” at the bottom and ended in Meta motivational needs towards the top (see Figure 1.).  At the highest level – self-actualization, the individual would focus on the needs to better society.

Figure 1. Maslow’s Hierarchy Of Needs

Source: Wikipedia

A Business Hierarchy Of Needs Provides A Model To Prioritize Business Strategy

While Maslow’s research explained what would drive and motivate individuals, applying the model to organizations yields a powerful framework for business prioritization. Why? Today’s next gen C-level executives face an onslaught of business priorities that must address the organization’s basic needs from regulatory compliance to higher level needs that include the management of the brand.  The business hierarchy of needs uses an analogous framework to Maslow’s.  Using the framework, business priorities and related projects can be aligned with the five levels that include (see Figure 2):

1. Brand. The brand describes a promise to stakeholders. The brand is more than the collection of products or services offered by the company.  The brand encompasses an emotional value, an aspiration, and the public face of a business strategy.  The brand can be viewed as a person, product, organization, and symbol for the company.
2. Strategic differentiation. Organizations seek strategic differentiation to achieve a desired reputation, create a defensible competitive advantage, and influence preferential behaviors in the value chain.  Tools include positioning strategy, design thinking, and innovation programs.
3. Revenue growth. Revenue growth reflects the initiatives used to drive new customers, revenues, and market share for the organization.  Revenue growth is also known as top line priorities.
4. Operational efficiency Operational efficiency priorities focus on reducing costs, improving existing performance, and optimizing existing landscapes.  Operational efficiency is also know as bottom line priorities.
5. Regulatory compliance.  Regulatory compliance is a base need.  Organizations must comply with legal requirements.  In addition, organizations may want to avoid legal suits, causing injury, or failing to meet a commitment.

Figure 2. Constellation’s Business Hierarchy Of Needs

The Bottom Line: Use The Business Hierarchy Of Needs For Business Prioritization

As with Maslow’s framework for motivation, the business adaptation delivers a framework for all c-level execs to:

• Align projects and priorities using the five categories in the framework
• Budget resources, funding, and investments in a portfolio management model by type of business need.
• Craft a strategy and portfolio mix based on business models and business need
• Develop a methodology to include in overall corporate strategy
• Evaluate with regular frequency for opportunities to improve

Your POV.

Are you ready to reassess your strategy efforts by business hierarchy of need?  How do you plan to allocate your resources and time for each need?

Take the survey and find out what your peers are doing today and in 2012.  As a survey respondent, you’ll get a copy of the results.

or do it here:

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… Read more

The Shift From Transaction To Engagement Ushers A New Era For Businesses.

As organizations enter the evolution from transactional systems to engagement systems, a shift is happening in business (see Figure 1).  Engagement requires a different design point and business model for success.  Engagement must account for sense and response, massive social scale, conversation, new user experiences, real-time, multichannel networks, and other factors.

Next generation C-suite leaders not only build for engagement, but also design for the next era of experiential systems which apply context to deliver agility and flexibility.  These shifts have massive impacts on the societal, technological, economical, environmental, and political landscapes.  In fact, these shifts to experiential systems drive the 10 mega business trends to watch for in 2012 and beyond (see Figure 2).  Of note, they can also be aligned with Constellation’s Business Hierarchy Of Needs prioritization framework (see Figure 3).

Figure 1. Move from Transaction To Personal Fulfillment Systems

1. Regulation gets worse and more expensive. Public outrage at a slew of government policy failures, the public sector debt crises, and a global sentiment against big business around the world will drive an increase in regulations.  Despite promises by politicians around the world for less regulation, a barrage of hidden taxes continue to be imposed by government bodies around the world.  In fact, Americans pay up to $1 trillion every year in stealth regulatory taxes.  Regardless of political point of view, global adoption of International Financial Reporting Standards (IFRS) and carbon trading proposals will also drive up costs.  Organizations must prepare for this continued regulatory assault as elected officials hope the passage of more regulations will result in their reelection.
   (Level 1: Regulatory Compliance – Business Hierarchy of Needs)
2. Consumerization of IT must be enterprise class or businesses will fail. The recent Harvard Business Review post titled, “Coming to Terms with the Consumerization of IT” (CoIT), identifies six factors for the basis of balancing enterprise class requirements.  Businesses want IT to be simple, scalable, and sexy.  While the pendulum is definitively shifting towards business, Consumerization of IT requires enterprise class IT to ensure technologies to be safe, secure and sustainable. Success requires a natural equilibrium between business needs and IT requirements for key areas such as social, mobile, cloud, big data, and unified communications.  If IT is too strict, business fails. If business fails to have a level of discipline in technology adoption, IT can not keep up with the lack of standards and scale.
   (Level 2: Operational Efficiency – Business Hierarchy of Needs)
3. Organizations who master data visualization gain the advantage of speed. New data visualization tools will improve internal and external communications.  The convergence of big data, unstructured social and mobile information, and machine to machine data will provide a treasure drove of data for business analytics.  However, the flood of data will result in poor signal to noise ratios.  Unfortunately, more data does not mean more information.  Consequently, data visualization will provide a key tool to efficiently communicate complex information to stakeholders such as employees, customers, partners and suppliers.  The systems change the future of work by allowing users to create, share, collaborate, and broadcast new visualizations models.  In this case, an image is worth an exabyte of data.
   (Level 2: Operational Efficiency – Business Hierarchy of Needs)
4. New growth comes from monetizing the complete ownership life cycle. The low margins and limited barriers of entry for many products and services force organizations to rethink their business models.  In fact, many organizations have painfully discovered that products remain excuses to sell value added services and business model disruption is now a way of life.  Consequently, new business models include value added services such as installations, after market warranties, inclusion in communities, and exclusive experiences.  New business models also take advantage of new disruptive technologies and the shift to cross channel commerce.  For example, profitability at a company such as Best Buy mostly comes from these new value added services, not the product.  Thus, the goal shifts from selling products to winning market share in the overall ownership lifecycle.
   (Level 3: Growth – Business Hierarchy of Needs)
5. Social shifts from B2B/B2C to people to people (P2P) networks. Emergence of extremely viral people to people (P2P) networks forever changes the notion of the customer. Adoption of social media, social networks, and mobility drives the death of B2B and B2C as we know it.  Why? How we interact increasingly depends on context.  For instance, a bad experience at work with a certain brand of laptop bleeds over to the consumer side.  A great experience with consumer products has driven the rise of bring your own device (BYOD) to work and Apple’s success in the enterprise.  As a result, context in the form of roles, relationships, location, business process, time, and other factors determine how we engage.  These factors drive the new rules of business based on the rise of people to people (P2P) networks.  Growth will come from how organizations manage these new P2P networks to their advantage. 
   (Level 3: Growth – Business Hierarchy of Needs)
6. Battle for growth must include new global customer bases. Market place competition requires organizations to find the largest base of growing, profitable customers.  Competition for top growth status in stagnant developed markets could result in a strategic mistake.  For example, in the burger wars, Wendy’s has gained market share on Burger King in the United States.  At first glance, Burger King may seem to be failing.  However, Burger King’s recent efforts focus on rapidly growing markets in Latin America and Asia Pacific. Why? They plan to grow in the 18 to 34 age segment.  More importantly, the US market is a shrinking market while the emerging markets provide a green field alternative for fast food and high level growth.
   (Level 3: Growth – Business Hierarchy of Needs)
7. Strategic differentiation begins with great design. Strategic differentiation provides a desired reputation, creates a defensible competitive advantage, and influences preferential behaviors in the value chain.  In a market of rapid commoditization of products, shrinking product cycle times, and global delivery of services, organizations can barely create and sustain market differentiation.  However, experiential design provides a tool for greater strategic differentiation. Organizations who invest in differentiation and integrated systems thinking can improve their brand value.  Differentiation tools include positioning strategy, design thinking, and innovation program that drive next generation customer experience.
   (Level 4: Strategic Differentiation – Business Hierarchy of Needs)
8. The corporate digital divide only grows larger. The gap in profits, innovation, and market share will continue to widen between the companies who adopt disruptive and emergent technologies and those who choose to stay the course.  In some sense, average is over and organizations who strive for average will fail to survive.  Unlike the Occupy movement, organizations should strive to be in the 1%.  Why? There’s only room for the top 3 to 5 in any market segment.  Those in the 99% will crumble under market forces and cease to exist.
   (Level 4: Strategic Differentiation – Business Hierarchy of Needs)
9. Market leaders know how to manage their innovation agenda. Market hype over disruptive technologies such as social, mobile, cloud, big data, and analytics will continue.  However, a good number of early adopters have achieved success.  Therefore, organizations must not only understand when and which technologies to adopt, but also when and which technologies to pass on.  Successful organizations will manage their innovation agenda as a partnership between business, IT, and legal.  Those who establish a governance model for innovation will succeed.  One approach is to adopt the DEEPR disruptive technology adoption framework.  The DEEPR methodology establishes a disruptive technology governance council in the “R” or realization stage.
   (Level 4: Strategic Differentiation – Business Hierarchy of Needs)
10. The brand remains king (or queen). Organizations with strong brands will continue to command greater margins, larger market shares, survive economic downturns, and higher market caps.   Consequently, organizations must redefine, defend, and continue to position their brands. The brand describes a promise to stakeholders. The brand is more than the collection of products or services offered by the company.  The brand encompasses an emotional value, an aspiration, and the public face of a business strategy.  The brand can be viewed as a person, product, organization, and symbol for the company. 
    (Level 5: Brand – Business Hierarchy of Needs)

Figure 2. 10 Mega Business Trends For 2012

Figure 3. Constellation’s Business Hierarchy Of Needs

The Bottom Line: Pace Of Change Continues To Accelerate In 2012

In business, the only constant is change.  Unfortunately, the pace of change continues to increase.  Organizations who fail to manage this change will cease to exist in the next 24 to 36 months.  The 10 mega trends reflect the seismic shift happening in society, technology, environment, economy, and politics.  Business leaders should quickly factor these mega business trends into planning for 2012.  Importantly, organizations should weigh and factor trends based on their business hierarchy of needs.

Your POV.

Are you ready for 2012? Which mega business trend appeals to you the most?  Got one we missed?  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

Reprints

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

Required Reading

Note: For more on these mega trends and the move to customer engagement, read the latest from Paul Greenberg. A must read for 2012!

CRM 2012 Forecast: The Era Of Customer Engagement, Part 1.

Resources and Related Posts

20110303 Harvard Business Review – R “Ray” Wang “The Four Personas Of The Next Gen CIO”

20110713 Harvard Business Review – R “Ray” Wang “Coming to Terms With The Consumerization Of IT”

20111020 Harvard Business Review – R “Ray” Wang “Moving From Transactions To Engagement”

20110822 A Software Insider’s Point of View – R “Ray’ Wang “Monday’s Musings: Balancing The Six S’s In Consumerization Of IT”

20101004 A Software Insider’s Point of View – R “Ray” Wang “Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation”

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