Salesforce.com to acquire Radian6

Tags: cloud computing, customer care, social media

On March 30, Salesforce.com entered into a definite agreement to acquire Radian6. Radian6 provides customers with a platform that monitors social media. Radian6 products include an engagement platform that helps organizations connect with communities and individuals, and an analytics platform that helps organizations track and analyze their social media activities. The total deal is valued at $326 Million USD. According to announcement by Salesforce.com Radian6 will be integrated into CRM unit. The main benefits of the acquisition will be:

• Sales and Service Cloud:  Social media monitoring is becoming a requirement for companies. By combining Radian6's social media monitoring and engagement platform with Sales Cloud and Service Cloud, companies will be able to gain real-time social intelligence on their customers, and improve decision making.
• Salesforce Chatter: Radian6 and salesforce.com will create the bridge between public social networks, like Facebook, Twitter, YouTube, blogs and online communities, and Salesforce Chatter. As a result, Chatter feeds will now be able to contain both internal conversations and external social media conversations.
• Force.com Platform: Developers will be able to build apps that leverage Radian6 social media monitoring capabilities. In addition, the integration of Radian6 with Force.com will benefit midmarket companies by helping them enhance their marketing and sales capabilities through the use of social media. 

IDC believes that the integration of social media into Enterprise applications, specifically CRM will become increasingly important in the coming years. While widespread adoption of enterprise social business software is still immature, and many IT executives are still unsure of the ROI that these initiatives can generate for an organization, IDC believes that social business software is poised to experience rapid growth across Asia enterprises. The dramatic rise in the use of social media is having far reaching effect on how enterprises manage their brands and interact with customers. Over the past several years, as social media has evolved, enterprises have become more interested in using it as not only another marketing channel but also a valuable way to gain customer intelligence.  IDC believes that this trend will continue into the foreseeable future.

From an AP perspective, IDC believes that if Salesfoce.com can successfully integrate the Radina6 social monitoring tools with their cloud based CRM solution they will be in a good position in this region. Currently cloud is one of the more talked about technologies in AP. By combining social media into their CRM platform, Salesforce.com will be able to further differentiate their CRM approach from their competitors.

Finally, IDC believes that enterprises should be looking for ways to integrate social media with their current CRM solutions. If done successfully, organizations will be able to capture customer complaints and compliments, as well as track competitors, customer's sentiments, and market responses. Empowering this information with analytics will bring enormous benefit to Asia enterprises, as well as help them better understand customer needs and predict future buying opportunities.

Daniel-Zoe Jimenez also contributed to this post.

Cloud War in Asia Takes New Twist as Service Providers Fight for Dominance

Tags: cloud computing, datacenters, managed services

For many cloud industry watchers, there is no greater guilty pleasure than watching from the sidelines as service providers battle it out for cloud supremacy. There is nothing dreadfully wrong with blind ambition especially when it keeps every single cloud provider on the edge. PacNet recently displayed its cloud ambitions with the opening of its Sydney datacenter and its chief executive boldly stated that the datacenter is part of PacNet's goal of becoming the region's third largest datacenter or cloud player by 2019. This followed the opening of its datacenter facilities in Singapore and Hong Kong over the last 18 months. The first phase of the Sydney datacenter covers approximately 4,500 sq ft and when finished, it will be able to scale up to 41,000 sq ft. Currently, PacNet leases about 100,000 sq ft of datacenter space in the region but its long-term plans are to own the datacenters facilities outright.  It is also specifically targeting the SMB space for both public and virtual private cloud services. In another development, Savvis announced that it was partnering with Bharti Airtel in India in an arrangement that will enable Savvis to sell its cloud services and a whole range of managed IT services via Bharti's large datacenters in India. This partnership specifically targets enterprises that are expanding into India. These services will be rolled out through the Bangaluru datacenter in early 2011 with expansion into other datacenters located in Delhi and Pune.Both announcements are precursors to what IDC believes will be expected from service providers over the next 24 months in the region. However, blind ambition can often lead to blind folly and the endless building up of datacenter footprint across the region can be one of them, especially since pure cloud and hosting services are not sustainable long-term models.  Therefore, IDC believes that the Bharti and Savvis alliance is particularly interesting for a number of reasons.

Managed services is an important part of the evolving cloud story. The public (including virtual private) cloud market is approximately US$1.8 billion in 2011, which pales in comparison to the US$36 billion ICT outsourcing and managed services market. Cloud services by itself will not sustain any service provider, unless volume and streamlined delivery can drive profitability, potentially possible in the SMB space, this is the unvarnished truth. The challenge and goal for service providers are to provide intelligent infrastructure solutions and managed services with a cloud solution. IDC believes that there is a wealth of opportunities in this area as cloud services have brought in a new set of ICT management complexities as organizations struggle to manage a hybrid mix of services that include on-premise cloud environment and public cloud. The Bharti and Savvis combination is clearly targeted towards providing enterprises that are expanding into India with a comprehensive range of ICT managed and cloud services with Savvis leveraging Bharti datacenters in India. IDC expects more service providers across the region to see better value from peering opportunities and hence announce partnerships of this nature that will strengthen their positioning in key markets.

Next step will see service providers tie up with system integrators. IDC believes that system integrators have everything to gain by partnering with service providers. The Savvis and Bharti partnership shows how two entities can come together to provide a holistic cloud and managed services solution. Currently, adoption in the region is limited because of the uncertainty surrounding risks and rewards of cloud services. System integrators and IT vendors have a role to play by educating the highly skeptical CIOs who are looking for a safe path to cloud computing that will address the potential risks associated with security, availability, performance and can demonstrate the return of investment. Leading system integrators can step in and provide the consulting services that many CIOs are looking out for and IDC believes that few service providers have the deep capabilities in house. Service providers should realize immediately that system integrators can provide an excellent channel to market for their cloud services and have to understand that these system integrators can provide a much higher level of consultancy services that they ever can. Currently, IDC has not seen any service provider in the region who has actively reached out to system integrators. IDC believes this could potentially be the best weapon or trump card that service providers can use to flatten its competitors.

A rush to build datacenters without a broader innovative and long-term roadmap will lead to profitability disaster for the service providers.  PacNet's announcement of its new datacenter followed Macquarie Telecom's Sydney datacenter launch in early 2011. While its ambition to be the third largest datacenter player in the region by 2019 is admirable, without a more cohesive strategy and vision, this ambition can really be discredited and it is cataclysmically tantamount to nothing in the long run. The worst thing about it is that it is a capex heavy extravagance that sells services whose margins are fast eroding. This is the danger not only for PacNet but for service providers across Asia who has so far showed little clarity as to how they can fully exploit cloud beyond the basic service that it provides. It is in many ways still early days in cloud and service providers are still finding their way to make and sustain profitability. However, inertia is never a luxury afforded to anyone in ICT and service providers really need to shape up before the industry moves on or they will find themselves sitting very uncomfortably in the sidelines as nothing more than supporting players. Service providers are attracted to cloud because it is essentially about delivering ICT services over the network, something they do best. However, they also need to be reminded constantly that its true potential lies beyond that and it's really everything that has been discussed here. Being relegated to supporting players in this industry will be the most ironic perverse outcome of them all. 

You can send comments/feedback directly to the author at aho@idc.com

Cloud Computing in Financial Services: Sentiments from the Ground

Tags: asia/pacific, banks, cloud computing, it priorities

From our conversations with banking executives in the past month, we note their observation that the industry has over time repositioned outsourcing as cloud computing, even though technology has advanced well enough to differentiate both. The rebranding of the politically contentious outsourcing to cloud computing continues, not only in financial services but in other sectors as well. Relative to outsourcing, cloud computing is a new term, and is less defined, confusing critics in the meantime. The initial feedback on cloud computing, however, shows less openness by the industry toward cloud computing in general but more toward private cloud — so there is a mad scramble to talk about private cloud too, never mind the notions of application service provisioning, or virtualization, or hosted services that may be accurate descriptions of what is actually being undertaken.

All these attempts to come up with something new to talk about belie a profound transformation in how banks prefer to consume and pay for technology. As purse strings tightened amid the down cycle, IT executives found that a modular approach to the consumption of IT was more easily justifiable to the board. However, even as economic pressures have eased, we still see continued interest in utility-based consumption of technology — the model has proven to be not just a stopgap measure, it is increasingly becoming the norm.

From a business case standpoint, the on-demand model (i.e., elimination of significant upfront costs, and expenditures more closely aligned with operational usage) has created strong interests in shared, utility-style service provisioning options, especially among the smaller players. Interestingly, small-tier institutions in Australia, Indonesia, and the Philippines have pressed for cloud computing–style solutions, even for their core systems and processes. The attraction stems from a desire to avail of broader and deeper technology capabilities in line with the needs of the organization, without having to incur the hefty price points of proprietary solution offerings.

In essence, financial institutions are taking to results-based principles in IT spending: "I pay for what I need and require." We see this not only in time- and materials-based pricing, SLA-based and performance-based contracts, but also in other pricing permutations to account for risks taken (by either the bank or the third party, or both) or business objectives met. So, whatever the term that is being pushed — whether it be cloud computing, or utility processing, or "new outsourcing" — it should align with the pay-as-you-go, use-as-you-please, and results-based principles that have gained ground.

Still, the debate over the relevance of cloud computing in financial services is yet to be resolved. Just when there were signs the industry was starting to buy into the business case for cloud adoption, high-profile incidences of service failures and operational outages that involved third parties have proved damaging to confidence in innovative delivery of IT. In characteristically reactive and high-handed fashion, the regulatory response has served to diminish appetite for risks associated with third-party management of sensitive data, operating infrastructure, and technology assets, regardless of underlying benefits. The recent notice from the Australian Prudential Regulation Authority (APRA) hit the nail on the head — cloud computing has to be managed similar to outsourcing and offshoring. From the notice, the industry benefitted from a clearer definition of the regulatory framework vis-à-vis cloud computing, including considerations and contingency plans required when banks take on innovative IT delivery.

As regulatory positions gain more clarity, internal guidelines on cloud computing are expected from super-regionals and international players that aim to build cross-country technology platforms. These too will give further momentum to the take-up innovative IT delivery models. They will present best practices and critical decision factors to the industry at large. Banks, especially those from less developed markets, will also look to greater availability of bandwidth and improvement of network infrastructure to push discussions on cloud computing along.

Cost Management Continues to Rank High on the Agenda of APEJ Public Sector in 2011

Tags: cloud computing, economic crisis, economic stimulus, government, innovation, public policy

In our latest report, “IDC Government Insights Asia/Pacific (Excluding Japan) Public Sector 2011 Top 10 Predictions”, we identified the top 10 predictions for 2011 that will heavily influence the direction and magnitude of IT investment of APEJ public sectors this year.

Although the APEJ economy has emerged noticeably stronger in the last few months, the public sector will be continuing its search for products and services that provide the best bang for the buck to better manage spending in 2011. Governments in the region are expected to channel their IT budgets to initiatives that give them the best deal for the dollar in four areas: operational efficiency, business-IT alignment, risk management and citizen-centricity.

In 2011, optimistic sentiments will be propelling the APEJ economy forward, transforming it to a market with tremendous growth potential. We believe this will change the global economic dynamics into one that is "multipolar".

In recent years, the rollout of various economic stimulus packages in the region have greatly increased infrastructure spending in the public sector and brought about notable transformations in the information and communications technology (ICT) landscape. This has led to advanced economies opening themselves to competition in ideas and experience from rising markets.

To create and cluster “hot spots” for the technology industry, APEJ governments are increasingly providing the soft and hard national infrastructure to create sustainable cities. This includes creating a critical mass of advanced knowledge sources (universities, and advanced public and corporate research labs), and attracting venture capital investments, entrepreneurial talents, knowledge workers, specialized professional services and sophisticated end users. Governments are also empowering institutions with capabilities to enforce intellectual property rights.

 To cope with progressively more borderless and collaborative business environments, APEJ public sector organizations need to achieve functional ICT integration and operational transformation agility.

Here are the highlights of the report:

• As the world economy evolves into one that is “multipolar”, the APEJ public sector is expected to surge ahead with a strong 7.1% year-on-year (YoY) projected growth in 2011.
  
• Governments in the APEJ region are increasingly driving sustainable economic growth within their jurisdictions instead of outsourcing. Lately, IDC Government Insights notices that there has been a push for IT insourcing/backsourcing.  
  
• The birth of social analytics will bring about greater intelligence into the public sector decision making process and Web 2.0 engagements. Coupled with the growth of personalization and conceptualization services, public sector employees will be increasingly empowered to improve citizen interactions. 
  
• The exploration of business-as-a-service (BaaS) will result in the wider adoption of private clouds. Most public sector organizations will consider the adoption of private clouds over public clouds to realize the flexibility and scalability benefits of cloud computing without compromising on security, availability and reliability threats. Although the technology risk is lower when adopting private clouds as compared to public clouds, the cost is noticeably higher.

If  you have any questions about the report, please feel free to contact me at geraldwang@idc.com.

 Figure 1: Key Themes for the APEJ Public Sector ICT landscape

Governments are considering cloud technologies in a bid to drive more efficient operations

Tags: accountability, asia/pacific, cloud computing, government, healthcare reforms, public policy, virtualization

The recent global recession has increased public scrutiny and accountability demands on the IT budgets of government organizations. Paradoxically, these organizations are increasingly under pressure to raise service competency and productivity. This cost and performance management irony has propelled public agencies to look to other technological alternatives, such as cloud computing solutions.

In the latest IDC Government Insights study, “Looking Ahead: Articulating Cloud Competencies for the Aisa/Pacific Public Sector (Doc #AP9694203S)", IDC Government Insights discussed the trends driving the adoption of cloud technologies, whether public, private or a hybrid of both models, and the concerns over the use of cloud computing technologies in the public sector such as security, reliability and regulatory compliance.

In general, most public sector agencies are widely dispersed operational silos and have an urgent need to coordinate and integrate the various egovernment functions. Notably, the challenge today is that these agencies face varying policy and operational restrictions which translate to different needs and scales on their IT capacity. As the business case for the traditional data center is no longer sustainable in the long run, the adoption of cloud computing technologies in the public sector has become a viable option.

We note that the Asia/Pacific public sector is still apprehensive about the adoption of cloud computing especially in agencies that handle sensitive information. Most of the initiatives today are still at an experimental stage as the public sector tries to determine the return on investment (ROI) and weigh the risks involved in the adoption of cloud computing technologies.

Governments should take an active change management stance to address the people and process aspects of cloud implementations, such as revolutionizing traditional workflows and facilitating interoperable standards to bring about greater inter-agency coordination. All the stakeholders involved need to internalize the value and application of the cloud model so as to truly realize a continued and successful egovernment transformation.

We are also expecting data protection and security solutions such as "rights-management-as-a-service", and integrated business intelligence and analytics applications to feature strongly as key technological innovations that lead the adoption of cloud computing for the public sector.

Inevitably, apart from cost management agendas, public sector agencies will need to define their own set of business requirements for cloud computing solutions. This means they have to explore and gather distinctive proficiency and awareness towards building a specialized enterprise-grade cloud services model that fits the unique environment it serves. Thus, the eventual adoption of cloud technologies, whether public, private or a hybrid of both models, lies fundamentally on the operational requirements it seeks to address.

Concerns in the Cloud: Issues for Manufacturers

Tags: cloud computing, it priorities, manufacturing, supply chain

The CIOs of many manufacturing companies are in a dilemma; they are being tasked to reduce costs, optimize existing infrastructure investments, and provide new applications to support the business. Whilst it is easy to say these things, the delivery of new strategic applications to the business, with a smaller team, is much more difficult. One possible solution to the CIO's dilemma is the use of cloud computing.

However, our research shows that whilst cloud options are being considered, manufacturers have a number of concerns that vendors will need to address.

According to the IDC Manufacturing Insights Asia/Pacific Business and IT Priorites survey, April 2009:

The biggest concern is security: close to 60% of the survey respondents cited confidentiality of company information as their prime concern. The need to protect financial information is a given, and this typically has not been an area where we see interest in cloud computing initiatives. But even if we look beyond the ERP systems, there is a growing need for the protection of intellectual property as well as security of supply chain information. So as new applications connecting the supply chain and supporting product lifecycle management are being considered, security is the top concern.

The second rated issue with just over 50% of all companies citing as a concern is that the cloud delivery model is not able to replicate and support business processes that are specific to the company. As companies seek to differentiate themselves, their applications become increasingly personalized, and the question I often find myself discussing these days is: Can the cloud deliver – and how? This also relates to data integration concerns, where over 40% of respondents expressed their concerns over data integration from applications in the cloud to applications within the four walls.

The third-highest ranked area of concern was the view that moving to a cloud model will not be cost effective in the long term. The shift from a capex to an opex model has long been discussed, and where the shift to an opex model will benefit in the short term by getting new applications deployed and/or scaled quickly, the long-term cost implications are a concern that vendors will need to address if they want companies to embrace this new way of operating.

Cloud does offer a lot of opportunity for manufacturing companies to embrace new applications and scale very quickly; however, vendors must ensure that the needs of security, personalization and ROI are addressed before cloud becomes widely adopted in the manufacturing segment.