Telefónica Digitizes Its Operations In Service Of The Customer

Fred Giron

With Dan Bieler

Like many organizations, Telefónica is going through a digital transformation. Our new case study “Telefónica Digitizes Its Operations In Service Of The Customer” investigates the approach that Telefónica has taken to prepare for digital transformation, including the impact of its transformation strategy on its customer experience, its operational setup, and its organizational transformation. Here are three key insights:

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Telefónica Digitizes Its Operations In Service Of The Customer

Dan Bieler

With Fred Giron

Like many organizations, Telefónica is going through a digital transformation. Our new case study “Telefónica Digitizes Its Operations In Service Of The Customer” investigates the approach that Telefónica has taken to prepare for digital transformation, including the impact of its transformation strategy on its customer experience, its operational setup, and its organizational transformation. Here are three key insights:

  • Collaboration between IT and business on customer journeys results in a qualitative dialogue. Telefónica’s CIO office no longer has a technology discussion with business leaders. Instead, they have a debate about business outcomes.
  • “Doing” matters more than “talking” about digital transformation. Telefónica’s CIO office has not tried to sound smart about digital transformation. It does not talk a lot about cultural transformation. Telefónica’s CIO office wants the culture change to be visible rather than intellectual.
  • Cultural issues are becoming more important as the digital transformation evolves. Telefónica has communicated, in detail, the need for and the approach to digital transformation to local operations as well as to all the channels to get business buy-in.
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Where Is Artificial Intelligence In Forrester's Tech Market Numbers? It's Hiding

Andrew Bartels

I have gotten some inquiries about where spending on artificial intelligence and cognitive technologies occur in our tech market numbers (see, for example, "US Tech Market Outlook For 2017 And 2018: Mostly Sunny, With Clouds And Chance Of Rain").  The short answer is that we include them in our data on business intelligence and analytics, though so far  spending on these technologies is still small -- probably than a billion dollars for 2017.

But even as artificial intelligence spending grows, it is likely to remain small in terms of visibility.  That's because artificial intelligence solutions are likely to be functions in existing software products, and not something that firms buy directly.  Put another way, the biggest buyers of AI will probably be software, services, and hardware vendors, who use AI to help their products and services work better.

There is precedence for this pattern in the BI and analytics market.  My Forrester colleague Boris Evelson has been collecting data from the leading BI vendors as to the percentage of their revenues that they get from end customers versus from OEMs (original equipment manufacturers).  On average, about 10% of these vendors' revenues come from sales to OEMs.  And that could well be understated, because vendors like IBM, Microsoft, Oracle, or SAP don't provide data on the explicit (or more likely implicit) value of their analytics products that are used in their applications.

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Product Development Must Evolve for the Internet of Things

Nate Fleming

Traditional physical products and machinery are steadily being replaced by connected products and assets that shift business models and augment customer relationships with digital experiences and data.  But creation of these products is a major challenge for traditional product companies. The process of building connected products is complex, requiring new software development skill sets, accelerated product release cadences, and innovative software tools and proccesses that meet the needs of IoT product organizations.  For traditional product companies to make the transition to a digital product development organization and successfully create connected products they will need to focus on the following five initiatives:

  1. Create an open partner ecosystem that amplifies product value.
  2. Organize for continuous product improvement through software updates.
  3. Adapt agile development and planning processes to physical product development.
  4. Embrace flexible requirements and contracting for iterative projects.
  5. Build an extended team of broad and deep t-shaped skillsets.

Adaptation and execution on these initiatives will be difficult requiring executive buy in, core shifts to company cultures, partnership with services firms, reskilling, and change management initiatives.  For a deeper dive on this topic and actionable steps to take in the transformation to a digital product development organization, see the Forrester report The Internet Of Things Propels Product Development Into The Digital Era.

C-Level Business Executives Are Playing A Bigger Role In Tech Spending, But CIOs Still Remain Dominant

Andrew Bartels

Tech buying in business and governments is clearly shifting from the sole or primary control of the CIO and the tech management organization and into the hands of business leaders.  But how much is this happening? Anecdotal comments and surveys – including Forrester’s own Business Technographics surveys – suggest that most tech purchases are now controlled by business executives.  However, in our just-published report, “C-Suite Tech Purchasing Patterns,” Forrester’s analysis shows that the shift of tech buying from the CIO to business executives is much less dramatic, with just 5% of all new tech purchases fully controlled by business by 2018.  Moreover, this shift varies dramatically by C-level executive. CMOs and eCommerce heads have the highest proportion of new project spending under their control, but CFOs, COOs, supply chain heads, and heads of customer service are much less likely to go it on their own.

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Forrester Projects US Tech Market Will Grow By Around 5% In 2017 And 2018

Andrew Bartels

Forrester has just published our updated forecast for the US tech market for 2017-2018 (see “US Tech Market Outlook For 2017 And 2018: Mostly Sunny, With Clouds And Chance Of Rain”). We are forecasting growth of 4.8% in 2017 and 5.2% in 2018 for US business and government spending on tech goods, services, and staff. This forecast assumes moderate US economic growth (2% to 2.5% real GDP growth, 4% to 4.5% nominal GDP growth). Considering  this economic outlook, our updated 2017 forecast is slightly less positive than our December forecast (4.8% vs. 5.1%) for US budget growth in 2017, with our new 2018 forecast pointing to a modest improvement next year.

Three main themes define our updated forecast:

1.    Steady US real economic growth will support moderate growth for US business and government spending. Despite the weak 0.7% real GDP growth in the first quarter of 2017, economic forecasts have slightly improved since our post-election update, bolstered by renewed US business confidence. US consumer spending remains strong, as a result of reduced energy costs and low unemployment. We now think it unlikely that the Trump Administration's tax and spending policies in practice will lead to higher growth rates, nor that its actual trade policies will lead to lower growth. However, clouds in the economic outlook could emerge as the effects of rising interest rates, US housing vulnerability, weak US exports from the strong dollar, and anticipated cutting of US government spending take place.

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Cloudera IPO Highlights The Big Data And Hadoop Opportunity

Jennifer Adams

Last week, Cloudera successfully completed an IPO, raising $259 million of equity capital, including the over-allotment option. Shares were priced at $15 per share and traded up to over $18 per share on the first day of trading, giving investors a 20%+ return.

Cloudera describes itself as a company that “empowers organizations to become data‑driven enterprises in the newly hyperconnected world.” Cloudera, founded in 2008, was the first commercial Hadoop player and is a Leader in Mike Gualtieri and Noel Yuhanna’s The Forrester Wave™: Big Data Hadoop Distributions, Q1 2016.

Last August, Forrester published its first Big Data Management Solutions Forecast, 2016 To 2021 (Global). In our forecast, we highlighted Hadoop as the fastest-growing sector, at a 32.9% CAGR over the 2016 to 2021 period. We estimate that firms will spend nearly $800 million on Hadoop and Hadoop-related services in 2017 and that this will grow to $2.3 billion by 2021.

In its S-1 filing, Cloudera reported revenues of $109 million, $166 million, and $261 million in the years ending January 31, 2015, 2016, and 2017, respectively. This represents 52% year-over-year growth in 2016, accelerating to 57% year-over-year growth in 2017. Cloudera’s customer base is primarily Global 8000 companies, accounting for 73% of revenues.

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In the war for talent, traditional enterprises must pick fights they can win

Paul Miller

19th century chemical plant in Scotland

(St. Rollox Chemical Works in Scotland by D.O. Hill, 1831. Image source: Wikipedia)

The world of work is changing, with my colleague JP Gownder among those doing a great job tracking the shift.

Despite — or perhaps because of — digitisation, robots, globalisation (and its opposite), and a less loyal workforce, competition for digital talent is high. The darlings of Silicon Valley slug it out, paying ever-higher salaries and offering ever-more excessive perks, in desperate bids to grab talent from one competitor. And then they engage in an even more desperate bid to dissuade them from jumping ship when the next offer comes in.

Spare a thought, then, for the poor traditional enterprise. It needs pretty much the same digital talent. But it can rarely afford the same rapidly inflating salaries. It is unlikely to have as cool a brand. A cubicle and a dress code is — unfairly — assumed to be more likely than an in-house chef or stock options.

And yet, in some recent research I did, these staid, lumbering, stuffy giants of yesteryear are putting up a great fight… and often winning.

There’s plenty they — and you — can do. There’s plenty they are doing. And a lot of it comes down to challenging the assumption that every great digitally savvy employee wants to live their life at a Valley startup. That’s simply not true.

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Accelerate Your Digital Momentum At Forrester’s Digital Transformation Mumbai 2017

Ashutosh Sharma

Forrester’s annual flagship India event Digital Transformation Mumbai 2017 is almost here. This exclusive event has grown over the years to become one of the most anticipated events for India’s senior business leaders.

At last year’s event, we presented the right operating model for organizations to support their digital transformations: the customer-obsessed operating model. Our audience let us know the model resonated because it is easy to understand and business leaders could relate it to their day-to-day activities. More importantly, it challenged their thinking about what digital transformation in the age of the customer should be: It’s not about reducing costs or improving operational efficiency, but about driving customer obsession.

In 2017, we plan to take that thinking further. We will talk about the role of digital operational excellence (DOX) in delivering great customer experiences (CX). We have researched quite a few companies that are hiring senior leaders to head their digital projects or CX initiatives who grasp the value of great CX in winning, serving, and retaining customers. However, our research shows that the activities that go on below the line of visibility are not well understood in terms of their importance to delivering great CX. This area is where DOX lives.

This event will present Forrester’s thought leadership on how enterprises need to focus on both digital CX and DOX as they embark upon their digital transformations. In addition, we will highlight the most common blind spots firms encounter and outline the “how-to” of digital transformation with great industry examples.

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Reflections On Huawei’s Analyst Summit 2017 — Past, Present, And Future

Dan Bieler

In April 2017, Huawei hosted its annual Analyst Summit in Shenzhen, China. Huawei’s financial year 2016 was remarkable as the group grew revenues by 32% to US$ 75 billion, making Huawei the largest global network solutions vendor by revenues, way ahead of its traditional competitors Cisco, Nokia, and Ericsson. This calls for some reflections about Huawei’s journey, its past achievements, and its current focus areas. This will help us to understand where Huawei might be heading in the future.

I have been following Huawei for over 10 years. Over this short timeframe, I have seen Huawei grow into the largest global telco network infrastructure vendor, becoming a leading global smartphone manufacturer, migrating from a low-cost hardware manufacturer toward an innovative product developer, ramping up its service capabilities, moving into delivering products and services to the enterprise segment, and pushing into software development.

These achievements underline that Huawei has achieved an awful lot since rising from its humble beginnings as a producer of phone switches in Shenzhen in 1987. For years, its core competitors have underestimated the capabilities and determination of Huawei to succeed. At the Huawei Analyst Summit 2017, I picked up three key focus areas for Huawei in 2017:

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