Forrester Research

  • February 14, 2013
  • Old pal, Chris Kanaracus (who covers enterprise software and general technology breaking news for The IDG News Service) has a story in InfoWorld yesterday which is very interesting in that it describes the current dynamics of the enterprise software business.

    Just to convolute things, the article is about a recent report from Forrester Research, which describes the lackluster adoption of Oracle Fusion Applications.  I get the impression that Forrester is telling a cautionary tale and getting ready to, um, “put out the fire and call in the dogs” where Fusion is concerned.  But, really, what were they or anyone else expecting?  Take a look at the opening paragraphs:

    “Oracle spent years developing its next-generation Fusion Applications and finally put them into general availability nearly a year-and-a-half ago, but some new evidence suggests that it’s been less than successful at enticing customers to move up.

    Two-thirds of 139 Oracle applications customers surveyed by Forrester Research said they had no plans to implement Fusion Applications, while another 24 percent said they didn’t know whether they would, according to a new report out this week.

    The article goes to great lengths to document how customers are more or less standing pat on their existing systems and waiting for someone else to make the next move.

    Well, what did we expect?

    The thesis of the report (which I have not seen) seems to be that customers are not flocking to the new, new thing and that therefore Oracle messed up — must be marketing’s fault (Louie, round up the usual suspects.).  Much the same critique could be levied on SAP but I am not going there right now because most of what I have to say applies there too.

    Rather than being some aberration, this is exactly what you’d expect in a mature market.  Think of it from the customer’s side.  The old saw that companies spend money for only two reasons — to make more of it or to save it — applies here.  Existing customers have the older model of the non-Fusion Oracle applications and they are installed, running and paid for.


    In the recession that we’re still dealing with there are many ways to save money, notably by not hiring or laying off workers, that don’t involve spending new bucks to replace what’s already working.  There are also precious few ways to make new money and the record corporate earnings gushed over in the financial press stem largely from penny-pinching — layoffs, reduced head count and not investing in the future, which is exactly what Oracle is facing in its customer base.  But this is typical mature market behavior even in the best of times.  In order to get someone to buy the new thing, your new offering has to be much, much better than what’s already in the barn or nothing happens.  So, no matter what Oracle does to promote Fusion, it’s facing an uphill climb.

    We don’t have to dwell on the mature market though and the Forrester Report unintentionally shines a bright light on why it’s so important to innovate not just within a product cycle but way beyond it.  Our pathological obsession with quarterly results makes it very hard to get out of the box and go beyond the product cycle but that’s what the idea of Blue Ocean Strategy is all about.  Dell is a great proof point for this given its recent effort to go private.

    Another great example, if you’re not tired of hearing about it, is  They’re not in the replacement business except for replacing Oracle and SAP legacy systems with their cloud offerings.  More to the point, Salesforce has an elongating history of Blue Ocean thinking, of not simply trying to replace old functionality with new stuff that does the same thing but a bit cheaper.

    Salesforce still has issues with market adoption of its newer offerings.  But notably, customers are trying to figure out how to best apply them, which is very different from whether or not the new items can pay for themselves with cost savings.  When companies discuss Salesforce’s Blue Ocean products they’re having very different discussions about what the future holds and how they will encounter it.

    So while I don’t think the Oracle Fusion news is very remarkable, I do think it’s time for them and just about every other enterprise software company to do the same — to think about the future and build a bold vision.  Their last bold visions are now aging products, today’s legacy systems.  Time to saddle up.

    Published: 11 years ago

    I spent the best part of last week cruising up and down Silicon Valley checking in with customers and would be clients.  The consensus from this non-scientific survey is that business is better than OK and most people are expecting this year to be the best in a while.  Of course there is a cloud—literal and figuratively—to go with that silver lining.  After all, we’re bouncing off a long fall to what’s still a soft bottom.

    Business is good enough out there that many companies can’t find enough qualified people.  Ted Elliott, CEO of Jobscience, sometimes refers to it as a skills gap with many older workers not having all of the skills that newer companies seek.  People with all the requisite skills are rare and valuable and Elliott refers to them as “unicorns” because they’re so hard to find and, yes, he’s got and app for that.

    While you might say that such gaps are generational and common it’s still noteworthy that a generation ago the gap was between laid off steel workers and service sector job requirements.  Today it’s between laid off tech workers and new tech job openings.

    Interestingly, if you have a Ph.D. especially in a science or math, there’s no job shortage especially if you like to work at IBM.  A recent story in the New York Times said that IBM hires more math Ph.D.s than anyone else in the world.  You could have figured that out from all of the patent applications they file.

    What’s been interesting to me in the last couple of weeks has been the intersection of big data, IBM’s quest for brains and a recent report from Forrester Research.  The report in question is a project led by Phil Murphy titled: “BT 2020: To Thrive In The Empowered Era, You’ll Need Software, Software Everywhere.”  I can’t critique it because I don’t have the $499 necessary to read it but I also happen to think that’s right, but what kind of software?

    The report talks about the coming reality that software is and will be even more ubiquitous in the future and interestingly it posits the emergence (according to Forrester) of “cloud cartels”—large corporations dedicated to serving the processing and storage needs of the future.  We’re talking more about big data than about running ERP in the cloud.  With some 22 billion attached devices by 2020 (also according to the report) spitting out second by second data, a lot of processing and storage will go to machines understanding machines.

    I can buy all that but what I find harder to internalize is that the short list of winners quoted in the Times story about the report includes “Amazon, Cisco Systems, Google, I.B.M., Microsoft, Oracle and a few competitors.”

    While those are all good names the list fails to mention any of the companies that started it all such as  The report reveals an assumption that though the data center might be moving to the cloud the fundamental software paradigm isn’t changing.  But I disagree.  In my little corner of reality I think about things that haven’t been invented yet that are going to need all of that processing horsepower.  Many of the companies not making the short list have a foot on the ground in the Valley and they are exciting for the novelty of the solutions they envision.

    The Times article, and to a degree the report, support the kind of linear thinking that I have always criticized because the forecast looks more like a scientific experiment that keeps all variables constant save one.  But in the real world systems are dynamic (yes, IT is a system) and change cascades through systems leaving no stone unturned—exactly the opposite of straight line forecasting.

    If Forrester is right, and I think they are but perhaps for different reasons, then much of the processing power in the cloud will not be taken up by mundane ERP and CRM applications but by applications demanding computational answers to figure out what people want and need and what the connected devices need as well.

    I am certain that the actual processing will be as different from that conducted by today’s applications as a fish swimming is different from a bird flying.  I’ve lately been reading Isaacson’s “Steve Jobs” with great interest in the emphasis that Jobs put on the customer experience.  Interestingly, while the book spends a great deal of time on the customer experience it is almost mute about loyalty and promoting it.  Not that it matters—Jobs fixated on the customer and got loyalty and then some.  Yes, we need more software in our civilization but it’s time not just to think different but to think bigger, if you ask me.

    Published: 12 years ago

    Forrester Research has been heating up the marketplace lately with a string of interesting reports and forecasts that impact CRM and the front office generally.  One that I saw, “Capitalizing on Live Video Chat” by Diane Clarkson, August 23, 2011 talks about the bright future of using video rather than text (obviously) chat in sales, service and support.

    I like the video chat idea and I can see many important applications for it, especially in a world that Thomas Friedman over at the New York Times thinks of as “Hot, Flat and Crowded.”

    Another report out just last week “Social Enterprise Apps Redefine Collaboration,” speculates that the social software market will be worth $6.4 billion in 2016 up from a mere $600 million last year.  I read about the report in a PCWorld article by Juan Carlos Perez of IDG News.

    Something in Perez’s fine article caught my eye and made me think:

    “Simultaneously, demand for unified communications and collaboration (UC&C) products that offer IM, audio calls, online meetings and video conferencing, will start to drop overall in 2014 because, unlike enterprise social software, they don’t help employees discover peers outside of their work groups with expertise they need to tap, according to Forrester’s report “Social Enterprise Apps Redefine Collaboration,” published this week.

    I used to be in awe of anyone who could make such bold predictions about market growth until I tried it myself.  There is a methodology to this sort of madness, which you need to adopt or you will go crazy since nobody has a crystal ball.  The method boils down to assuming the future will be like the past.  A famous and colorful Boston DJ of the 1970s and 80s (I know that dates me doesn’t it?) Charles Laquidara, used to summarize it at the end of his show as, “If the creek don’t rise, if the good lord’s willing, if there ain’t a melt down and if no one pushes the little red button.”

    In other words you have to assume straight-line continuity from today through the period you are forecasting.  Good luck with that.  Our recent experience with “Black Swans” is enough to tell us that straight-line projections are feeble at best.  I’m not saying the people at Forrester aren’t hard working or sincere in their research.  It’s just that this kind of prognosticating can go to Hades in a handcart without much of a push.  Still, for most things it’s the best that we have.

    But back to that quote.  My reading of the tea leaves says that UC&C will not shrink at all and will most likely grow after possibly being repositioned, here’s why.  It appears that the analysis may not take into account the escalating price of gasoline and other transportation fuels.  Fuel prices drive the economy these days because there is no slack left in the system.  In prior decades when supply got tight prices might have gone up a little but then producers, seeing opportunity for increased profits, began pumping more oil and exploring for even more but that’s over.

    Today when economic activity drives energy demands up, higher prices are the result and no one talks about opening the spigot further because production is at one hundred percent and demand is out stripping it.  That’s why, even in this economy gas is over three bucks per gallon and partially why American Airlines filed for bankruptcy last week.  For a very good analysis of this situation read Chris Steiner’s book “$20 per Gallon.”

    So my view of the future is a bit different.  I think it is entirely possible that the social software market will overshoot the $6.4 billion projection (by an integer factor of 3 to 5) and that UC&C isn’t going anywhere but north.  The two technologies do different things and there is a market for both.  While social software is becoming invaluable in sales, marketing and service, UC&C will, I think, grow into a niche that is still expanding.

    According to Steiner’s book, as fuel prices continue to escalate we will find our travel options reduced meaning fewer connecting and short distance flights and that will drive demand for online meetings and video conferencing as well as online conferences.  We’ll drive more but at, say, $12 bucks the SUV/land ark will be a quaint part of history and we’ll drive only when necessary replacing face to face meetings with virtual meetings.  Add to that the much lower costs for telecommunications services that UC&C can provide and I think we’ll see increased demand for these systems.

    You might think that the cost of transportation could simply be built into a company’s pricing models and that those costs would simply be reflected in higher prices.  But that approach will simply drive an inflation spiral and make everyone’s products unaffordable.  Transportation is going to eat into margins and the only way to fight the inevitable is to reduce demand for energy in your business processes.

    To summarize, energy prices and energy availability are the Black Swan in our future.  Straight-line projections are often helpful for sorting out the future within a paradigm but we are entering a new paradigm.  In this case projections that do not take into account the cost of energy will only provide a false sense of security.  Worse, they can cause us to sleep when we ought to be planning and implementing solutions for a very different future.

    Published: 12 years ago