The Mobile "App Internet" Recasts the Software & Services Landscape by Ellen Daley, Forrester

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The Mobile "App Internet" Recasts the Software & Services Landscape by Ellen Daley, Forrester. Presentation made at the NASSCOM EMERGEOUT Conclave 2011

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  • Good Morning. Thank you so much for the opportunity to address you at EMERGE OUT today. I’m pleased to be able to share this perspective in India. I’ve recently located here with my family, precisely because (among other tihngs) Forrester see India as an innovation engine in some sectors that can feed domestic and international demand.Today, my remarks will focus less on technology as the effect technology is having on the business of the tech industry – particularly in SW and Services.I hope with you during the session and post the session that we together validate, broaden and challenge thinking.
  • I know many of you are early or mid-stage firms in SW, services and are looking to the next step -via partnership, purchase or organic growth.In a sense a leap to the next bowl. I’ve tried that leap a few times myself. I have done 2 startups – both in mobile. Our first one was started the day after the dotcom crash of 2000 in the area of mobile middleware we self-drowned in the first fishbowl. The second company, focused on enterprise and then mobile applications we made it to the second fishbowl – we got acquired - but it was not that much larger of a fishbowl. Starting, sustaining and growing businesses depend on a lot of things as you know, talent, and the time being right. I’m going to talk to youabout the time being right, particularly in India – and the domestic and international market being ripe for that innovation.And in fact, even with dicey financial markets, we are in the fourth phase of tech industry growth.
  • Today I hope to answer 3 questions –What does the future hold? What does Forrester Where does india stand in that future, both domestic opportunity and siezing more global opportunitiesSome best practices we have observed, though I understand much of the day is built around acceleration to the next level.
  • Let me give some context and Forrester’s perspective on the short history – say 50 years – of the tech industry.We have seen serial waves of tech investment and innovation. Think about the Minis, then the PC’s’ and the Internet.We are entering a fouth wave that does not have a dominant technology but rather is a confluence of multiple areas, where innovation is being driven in a much more interlocking fashion than we have seen before.We recently interviewed about 30 global executives and experts and asked, “What do you expect the rate of change to be over the next 10 years?”All expert interviews said:“The level of innovation would increase by a factor of five to 10 times compared to the past 10 years.”We are seeing a network effect in innovation – spurred by disillusionment with entrenched players in our young tech industry history and much higher set of expectations of businesses and consumers.Its not Microsoft, IBM or even Google that is showing innovation, but newer, more nimble firms like This demand from consumers and businesses create the perfect storm for disruptive smaller players like crunchfish and even jamcracker playing the role of a cloud broker.
  • Lets look at a an example on the consumer side. An app that today uses audio (and sensors tomorrow) to create a profile of their sleep patterns and compare that with a back-end cloud service of known pattern.In enterprises, the same thing comes true. Firms like Nike have built apps that reach out to customers and partners. These are often thick-client injected with promotions, applications from cloud services.Firms like MobileIron, building entprise app stores for the likes of X, Y, Z and are forming partnerships with Telcos to further their role in the Application Ecosystem.
  • So what does this mean?This is not a technical architecture discussion. If you push the app Internet out further. The mantra of the future becomes “There is an App for That”.Imagine our devices – in cars, home, mobile phones – smart and dumb.People both in professional and personal lives ‘tune’ (and downloads) apps that get injected with information to feed them.In that world, search can diminish.Now, this is one interesting vision. But how close are we? Well, obviously different geo differences. But its early days…Based on type of device maturity in markets, and bandwidth.But to consider that lets talk about where are we in terms of both cloud and mobile?
  • While we see the staggering number of apps becoming available worldwide300,000 apps for iOS devices200,000 for Android and growing significantlyToday, while there is a lot of discussion, in terms of absolute numbers downloading applications on a mobile device is not very common. – less than 10% across geos. But the story behind that is that when equipped with the right phone and the right network – and the right experience – more happnens. For example, in the U.S. 33% of smartphone users download apps, compared with about 7% in the U.S. of all phones.Here in india, most phones are not smartphones. Apps work good on smartphones. But, in an unlocked market like India with no subsidies we run into challenges to get consumers (and businesses) to pay and use smart phones. The applications will be the currency that drives the hardware in these markets; just like the hardware become the conduit for applications in the U.S. I said App Internet requires both mobile and cloud. We spoke about mobile so far. And see how it requires a critical relationship with the telco (we’ll come back to that later).
  • We can look at data on cloud, but the real impact of the delivery model is cost.At the economies that as-a-service gives, the IT or the biz leader does not call the shots. The CFO does.We have seen service providers (new entrants and traditional hosters) of all types start targeting the CFO. The CIO has a job to save.Hero Honda here in India is a good case study a group of people that make IT decisions – but it includes the CFO as well as MD&CEO, CFO, CIO(myself) , Head of Sales, Marketing and Customer Care, Head of HR, Head of Operations and Supply Chain and Head of Strategic Sourcing.And new ISVs – startups like yourselves are building cloud models. Take ProGen Business Solutions (here in India) – a PaaS BI platform for the social media and then analytics.
  • The bottom line the global opportunity for App Internet. A $37b market for apps$13.2b market for app services market
  • Tech-native employees, stability of tech solutions,new deployment models like cloud, and improved user experiences now allow not only technical ITbuyers, but also business buyers and individual employees to make the tech decisions that are rightfor them. In 2011, we expect a couple of concrete instances of this trend:· Vendors pay more attention to CMOs and marketing organizations. Business decision-makersoutside of IT have deep influence and sometimes final authority over technology choices, andnone more so than marketing executives. Depending on the type of technology product or service,marketers decide or influence decisions between 40% and more than 80% of the time (see Figure6). In the context of this data, it isn’t hard to understand IBM’s series of acquisitions — SPSS,Coremetrics, Unica, Sterling Commerce — all aimed at the CMO as the buyer of technology totransform and measure marketing effectiveness.· Personal cloud services emerge to empower individuals. Cloud-based personal andprofessional services will liberate the individual from device and place. Today 47% of theworkforce at North American and European companies report using one or more website(s)to do parts of their jobs that are not sanctioned by their IT department.11 We expect thisnumber to grow to close to 60% in 2011 as frustrated workers work around IT to self-provisiontechnology; for example, using Dropbox for archiving when network drive access is too slow.This phenomenon will accelerate as these workers bring high expectations into the workplacefrom their experience with cloud-based services like Facebook and universal address providersthat allow access from any device.So, where does that leave us?In the future we will see a combination of corporate app stores and cloud services eliminate many of the hassles traditionally associated with supporting some of this client-side code. For example,network-resident services like Evernote and Box.net automatically manage and back up content and files in the cloud and make it available to any device that the end user may have.
  • India is not a powerful app economy yet.Maturity is a 2-3 year evolutionFor an unlocked market the app is king.Multiple app stores exist, but look for those that have the reach and brand power to differentiate.Enterprise mobility can strongly differentiate – and margins are best.“Personal cloud” opportunities abound
  • Mobile will have the same impact as the PC 20 years ago – redefining ITexperience, experience (cross channel) – brand loyalty all time lowSales cycle is still, PO based. How do you generate instrest and deman in the enterprise….-> New organizational models break down traditional technology silosAn agile product development model replaces the old waterfall mind-set/approachSkyrocketing support costs and the need for agility finally force the legacy rationalization ArmageddonFirms have to rethink their security architectureSupplier governance/vendor management NOT procurement delivers real value
  • In Summary:The innovation around mobile will accelerate driving huge revenue growth but also severe business model changes.Smartphone apps lead the way for the app Internet.The explosion in mobile activity/app development will provide a huge and unique services opportunity.The app Internet will recast software industry delivery and pricing models.
  • Epassport – infosys. Passport india…Example of cloud company.Why this a view of business cloud adoption, the trend is clear. Cloud economics make sense – in most cases.Sure there are inhibitors for businesses, but we see most new firms, ISVs for consumer or business go directly to cloud due to lack of capex investment flexibility and better price points. This uproots – as you know – the SW industry.
  • The ‘selling of apps is big’.
  • Reviewed Fortune 500 and 67 verticalsHigh likelihood is 11 verticals and 61 companies.Including airlines, commercial banks, entertainmentMedium likelihood is 23 verticals and 145 companies.Including healthcare, insurance, telecommunications, motor vehiclesLow likelihood is 33 verticals and 293 companies.Including energy, transportation, mining, crude oil production
  • The Mobile "App Internet" Recasts the Software & Services Landscape by Ellen Daley, Forrester

    1. 1. The Mobile “App Internet” Recasts The Software And Services Landscape<br />Ellen Daley, Vice President, Practice Leader<br />Based on research from John McCarthy, Thomas Husson, Charlie Golvin<br />
    2. 2.
    3. 3. Agenda<br />
    4. 4. The perfect storm of ‘networked innovation’ replaces serial waves of change<br />Cloud<br />Analytics<br />Mobile<br />Smart<br />Social<br />Minis<br />PCs<br />Internet<br />Enterprise apps<br />
    5. 5. The “App Internet” <br />“The App Internet is an application architecture of native apps on a range of smart mobile devices, cars, televisions, and appliances linked to a broad array of cloud-based services to provide a optimized, context-rich experience anytime, anywhere . . .”<br />Source: February 28, 2011, “Mobile App Internet Recasts The Software And Services Landscape” Forrester report<br />
    6. 6. Source: Proxima Mobile (http://www.proximamobile.eu/article/isommeil)<br />
    7. 7. This is not a technical discussion!App Internet will convert predominantly search behaviors to a subscription channel model.<br />Injected by <br />cloud services<br />
    8. 8. Who is ready for this innovation?<br />"Which of the following activities do you do on your primary cell phone or handheld wireless device AT LEAST MONTHLY?"<br />In the U.S. 33% of smartphone<br />users download apps.<br />Base: 18284 European adults (18+) who own a mobile phone Source: European Benchmark Technographics Survey, Q2 2011<br />Base: 1,729 Indian adults (18+) who own a mobile phone Source: Asia Pacific Technographics Survey, Q2 2010 <br />Base: *Base: 2,245 US adults (18+) who own a mobile phone Source: North American Technographics Survey, Q2 2010 (US, Canada) <br />
    9. 9. “As-A-Service” changes the economics of the tech industry<br />India (after china) prioritizes cloud <br />the most (56% call it a top mgmt priority) <br />geographically<br />At 35-40% off, <br />CFO starts <br />calling the shots<br />Source: Forrester Research, 5/2011<br />
    10. 10. The App Internet Market is big (by 2015):<br /><ul><li> $37b market for apps
    11. 11. $13.2b market for app services</li></ul>Source: Mobile App Internet Recasts Software and Services Market, Forrester Research 2011<br />
    12. 12. Traditional suppliers are not innovating fast enough to meet rising expectations<br />Business & Consumer Expectations rise<br />New Supplier Entry<br />‘Traditional’ Tech Industry Supplier Innovation <br />
    13. 13. The problem is not one of opportunity, but distribution.Applications are the currency of the tech industry<br />Apps<br />Apps<br />Apps<br />Apps<br />Apps<br />
    14. 14. Attributes of successful young players in this market<br />Partner with those that can provide the cross-channel experience<br />A product development model, (for services as well as ISVs)<br />Integration of a cross-section of skills:<br />Gaming<br />UI/UXP<br />Legacy enterprise apps<br />Agile<br />Domain expertise<br />‘smart’ experience<br />
    15. 15. The overall implications<br />The chief mobility officer (CMoO) emerges as a new buyer.<br />Telcos use apps as their currency to reduce churn<br />Mobile apps drive the intersection of product development and IT services.<br />Developers potentially turn to crowdsourcing for modules.<br />The tech sector sees the elimination of the business/consumer.<br />Forget smart city and smart grid — smart consumer devices & apps will be the bigger market.<br />Enterprise mobility will be propelled by consumer market.<br />
    16. 16. Thank you<br />Ellen Daley<br />+91 9818632652<br />edaley@forrester.com<br />www.forrester.com<br />
    17. 17. Appendix/ Back-up slides<br />
    18. 18. India and other economies leapfrog in cloud.<br />“Which of the following initiatives are likely to be your IT organization’s top IT management priorities over the next 12 months?”<br />“Create a comprehensive cloud/as-a-service adoption/migration plan”<br />Base: IT executives and technology decision-makers who selected ‘High’ or ‘Critical Priority’ <br />Forrsights Budgets and Priorities Tracker Survey, Q2 2011<br />
    19. 19. Even at $2.00/app, it’s a huge market.And cloud services on the back end fuel it further<br />Worldwide sales of smartphone and tablet apps (US$ millions)<br />Source: February 28, 2011, “Mobile App Internet Recasts The Software And Services Landscape” Forrester report<br />
    20. 20. The specialized services opportunity is large from mobile app development services to SI work.<br />Source: February 28, 2011, “Mobile App Internet Recasts The Software And Services Landscape” Forrester report<br />

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