NTT Data Acquires Dell Services – Can a Telco rule IT Services

In late March, NTT Data announced a transaction to acquire the services arm of Dell for just over $3 Billion. This transaction includes all of Dell Services, including Perot, which was acquired by Dell in 2009 for $3.9B. The only services that will remain are the break fix attached product services of Dell.

From the capioIT perspective, the outcomes are as varied as NTT and Dell. For NTT Data it is a leap in depth of capabilities and the order of magnitude of the business. Some of the new markets that NTT have gained significant new capabilities include:

  • Healthcare, Financial Services, Public Sector
  • US non healthcare, Australia, Europe
  • Infrastructure Services
  • Mid-market services
  • Offshore service delivery
  • BPO

This is a significant deal for NTT Data. What will be a factor to watch is the speed in which it can shift people based services to asset-based services that are scalable, repeatable and cost effective. A note of caution has to be raised because in executive briefings post acquisition, a lot was made of the people acquired. capioIT will be looking to hear more about the process and asset based services that will be developed rather than the people aspect. In the as-a-Service, robotics world humans are the enablers of the new technology, rather than the workers.

The acquisition has a significant impact on the rest of NTT. Of course, capioIT believes that the most pertinent area of overlap will be with Dimension Data. In markets such as Australia and parts of Asia, Dimension Data and Dell did have an overlapping market capability and competitive environment. NTT has displayed a keenness to maintain the branding of Dimension Data in the market, so as this continues, there may be some overlap, but this will be balanced by the very significant growth in the NTT Data brand which is largely unknown in the UK, Australia and parts of Asia from a services point of view.

A note on NTT and services. capioIT has been very bearish about the capability of a Telco to offer IT services. We have seen many fail to understand what is required to offer such services, most succinctly the difference between a consultant and an engineer. NTT have been smart in separating the Telco from the services arm. Acquisitions such as Dimension Data have resided outside of headquarters and the legacy business. Perhaps they can be the vendor that breaks the history of Telco’s such as BT, AT&T, Verizon, SingTel and Telstra being far from successful with their long term strategies for growth through IT based services and solutions.

Dell on the other hand is a genuine concern. The primary motivation of the transaction appears to be to free up cash to help pay for the $67B acquisition of EMC. As capioIT has already commentated, the EMC-Dell transaction does not appear to offer to the customer any significant differentiation in growth areas such as analytics, mobility and cloud outside of commoditized markets. Without the services arm, the limited software capacities of EMC and Dell (excluding VMware which will look to maintain its independence if history is any guide) are not enough to drive the required innovation to ensure customer outcomes.

Whilst software is the future, the industry knowledge, scale and capability that Dell is giving up may come back to restrict the capability of Dell. For $3B in a $67B transaction, Dell and its investors may wonder if the value was worth it. Having said that, I am not Michael Dell, and I have not set up a multi-billion dollar company. I will give some benefit of the doubt to his strategy and investment.

Capture Point

NTT acquiring Dell Services was a poorly kept secret. capioIT believes that NTT Data is the big winner in the deal. It paid less than the market thought it would, and gains a significant increase in scale, capability and customers. It is a move to leapfrog it up the rankings for services providers.

On the other hand, capioIT has questions as to the extent to which Dell will be able to differentiate itself in the market as it pays for the $67 Billion dollar acquisition of EMC.

 

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand customer experiences from emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.

phil@capioit.com

+61422231793

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Department Store ecommerce – Not a Customer First Experience

Most traditional retailers have struggled with the shift to an online retail/ecommerce, reactive social media and other other technological innovations in meeting the ever-changing requirements of buyers from millennials through to the silent generation.

They may have largely deluded self justified reasons for this, but given that Amazon is now over 20 years old, the time for excusing or rationalizing poor customer outcomes from ecommerce for legacy retailers in any category is long gone.

Of all the major retail markets in the world that have tried to engage in online retail and ecommerce, department stores have been a true laggard in so many ways. The reasons for this, such as the franchise market, duopolies, leasing issues, regulations etc are reason for a lack of capability and enterprise skill, not excuses for a lack of success.

The loser in this systematic failure is the customer, and ultimately the shareholder. All because the department stores have no idea how to develop the experience their customer wants.

This is further evidence of the reasons why capioIT pioneered the concept of the Digital Devil’s Advocate  Each week we identify where too many enterprises fail to understand the role of the customer in the customer experience, digital or otherwise.

The failures are too easy to find because organisations just fail to understand the simple requirement for customers to have a real optimised experience on their terms. This can’t be achieved through technology alone. An app developer, or marketing executive asking a friend for experience is not validating customer experience. You need unemotional independent yet informed capabilities to act as the digital devil’s advocate and overcome these shortcomings.

On to the Department Store example.

The following pictures reflect the experience for shopping at a prominent Australian Department Store.

First Page – All good. The store is having a sale, the benefits are highlighted that is clear. One can shop for the usual categories at a department store, womenswear, menswear, shoes etc. 

IMG_0684

Second tab (after clicking on womenswear) – Shop by size. What is David Jones thinking? This defies optimising the shopping experience in so many ways. 

IMG_0686

Since when have women department store shoppers had size (6,8,10,12,14,16) as their first priority in terms of what they buy. Surely the type of fashion, e.g. formal, jean, casual, jumpers etc, is much more relevant. It is just a staggering approach that is so far removed from customer experience.

Overwhelmingly consumers will not just be a size 10, for some things, they might be an 8, for others 10, and 12. I showed the options to approximately 10 women (actual and likely customers of David Jones). Not one woman I spoke with would shop on the basis of size as the first point of call. After choosing womenswear, all would then chose the type of fashion, the brand, then size, in store as they would online. It just is a crazy and failed approach to customer experience for customers. It is  be difficult enough for department stores to attract the next generation of shoppers. With laughable online shopper environments it will be impossible.

Anyone who knows David Jones and the online experience in Australia will not express shock. They have long been laggards and failed to understand the customer experience. Not surprisingly the likes of H&M and Zara who understand, serve and engage their customer across platforms are blitzing the market locally. 

What can be learnt from the experience. It is quite simple. Retailers have to allow their customers to shop in any format in the way that best provides an experience. David Jones and other retailers need to

  • Make the customer central to all decisions, investments, and outcomes
  • Move-on anyone who cannot act on the unequivocal central role of the customer in all the enterprise does online or otherwise.
  • Ensure that the entire ecosystem is customer centric, from buyers, manufacturers, distributors and even external and internal technology providers
  • Continue to invest and involve
  • Understand the role of the Digital Devil’s Advocate

Capture Point 

The time for excuses for poor online customer experiences for retailers has long past. It is just not acceptable to have poor online experiences and customer outcomes. Learn from laggards like David Jones make the future viable.

  • Make the customer central to all decisions, investments, and outcomes
  • Move-on anyone who cannot act on the unequivocal central role of the customer in all the enterprise does online or otherwise. 

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand customer experiences from emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.

phil@capioit.com

+61422231793

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No Game of Drones For Indonesia

One of the joys of technology is watching new innovations become pervasive throughout societies across the world. There was a time when one wouldn’t answer a phone on a bus, now, 10 minutes on a bus will sound like a soap opera. Eye contact on a Japanese subway is impossible as eyes are glued to the screen not to the blank subway faces of the fellow subway traveller.

Drones are now rapidly becoming pervasive. They have several applications starting from consumer toys, all the way to being the cornerstone of sophisticated military action. Amazon has trialed drones to deliver packages and the potential role of drones in a connected world is unlimited. The role of the drone in managing wildlife and agriculture provides considerable scale and cost benefits.

Unless you are in Indonesia. I was on a website of a hotel that I will stay at for an upcoming conference in Bali and was surprised by this addition to the FAQ’s.

Screen Shot 2016-04-07 at 9.31.33 PM

This is no simple hotel generated initiative. Drones are heavily restricted and regulated in Indonesia. The punishment for breaching the regulations is severe. Flying a drone over 150 meters at any time, in any location needs a license that is not simple to procure. Fail to get a license, and then you leave yourself liable to three years jail and a fine of approximately US$75K. Indonesia is a country that can under regulate, or significantly over-regulate, particularly around national security issues (real, or imagined) and this is a vivid example of the way in which the country operates. If the Indonesian government does not like something the simple advice is to avoid it completely. It works for drugs, it works for drones.

Capture Point

The drone is going to be a very significant aspect of much of the life of the global population in the next generation. The Indonesian example highlights how important regulatory environments are to ensure that the innovation permeates throughout an environment. Clearly in Indonesia, the government feels that safety and security threats outweigh the social and societal benefits of the technology. How long this last will depend on managing the technology and ensuring that safety issues of the populace are managed.

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand customer experiences from emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.

phil@capioit.com

+61422231793

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Big Blue Acquires Bluewolf – IBM Invests in the Salesforce and SaaS Services Market

On March 31st, 2016 (although it will already be April Fools Day in many parts of the world, it is no joke), IBM will announce the acquisition of Bluewolf, in a deal that according to Re/code is a US$200M plus investment. (IBM to acquire Bluewolf – Re/code) 

This is one of the least surprising deals in the Business Services sector that we have seen in recent times. From the moment that Accenture acquired Cloud Sherpas, (see – https://capioit.wordpress.com/2015/09/16/accenture-acquires-cloud-sherpas-cloud-services-provider-consolidation-reaches-new-heights/) it was only a matter of time before Bluewolf and Appirio (the other two major independent Salesforce integrator) would be acquired.

In fact, when we announced the Cloud Sherpas and Accenture acquisition we finished our research with the following – “Finally, what does it mean for the remaining “born cloud” providers. Firstly, their price is now a bit higher than it was yesterday. The potential list of suitors for the remaining two providers is easy to develop. IBM, NTT Data, Fujitsu, Infosys, TCS et al are all relative subscale in the space and need to do something quickly if they are to retain leadership.”

Until the investment was announced,  IBM has lagged badly in the Salesforce Services market specifically, and in the SaaS services market more broadly. Unlike Accenture and Deloitte, it did not make the transition from traditional IT and Application services provider effectively enough. The old model of IBM did not suit the new world. It was questionable if IBM actually had the capability to deal in the SaaS Services market, with a new type of engagement model, platform and customer. The acquisition of US based Workday provider Meteorix in September 2015 was a critical indicator that IBM would start to do something serious in the space. Bluewolf was the next logical step.

For the $200M it spent, IBM gets a very substantial  boost in capability. In the 2014 capioIT Capture Share report for the Global Salesforce Services Market, Bluewolf was ranked as an overall leader in the market, and of the 14 vendors included in the study, it was placed 2nd behind Accenture. By contrast, IBM was ranked very much in the bottom rung of capability. – For more of this study –  https://capioit.wordpress.com/2014/09/17/capioit-announces-the-global-salesforce-com-systems-integration-and-services-market-leadership/   – (note, capioIT is currently undertaking research to replicate this study, details as it is finalised in mid 2016). Geographically, Bluewolf has strength in  traditional Salesforce focused markets of the USA, UK, Australia and France.

As with all acquisitions, regardless of the scale, the proof will of course be the integration, keeping the customer happy and scaling up the capabilities. IBM has to prove all of this, ensure key staff are retained, and organically build out capability. Acquisitions at IBM have been more focused on Software in recent years, so the investment in Services as highlighted is overdue, but will present some integration challenges.

It is worth understanding the cultural differences that the acquisition will present. Bluewolf is very much born of the SaaS world, offices are urban, the fact that it will sit in the IBM iX (Interactive Experience) group is a good starting point. Further to the cultural differences, capioIT research and analysis points to the fact that IBM and Bluewolf do not have a lot of historical employee overlap. The opposite worlds that they have lived in will be of some concern for integration.

IBM is, and always will be, an acquisitive company. Some of the acquisitions such as the Weather Company are lateral at first to the core business but play out over time. For legacy IBM, the Bluewolf acquisition maybe another left field move, but it is well overdue to position IBM in the Salesforce and SaaS Services space. As ever, it is now on IBM to execute, integrate and maximise customer satisfaction.

The market may now turn attention to Appirio and the unique crowdsourcing model it deploys. It is the last of the three remaining independent providers. Either Deloitte will look to maintain its competitive position, or one of the remaining providers, NTT Data, Infosys etc will spend money. To be fair, NTT Data has already spent $3B this week on Dell Services, it may have attention focused elsewhere.

Capture Point 

IBM is, and always will be, an acquisitive company. Some of the acquisitions such as the Weather Company are lateral at first to the core business but play out over time. For legacy IBM, the Bluewolf acquisition maybe another left field move, but it is well overdue to position IBM in the Salesforce and SaaS Services space. As ever, it is now on IBM to execute, integrate and maximise customer satisfaction.

If you require further information, please contact Phil Hassey, Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology and their customers as the world becomes Digital. Phil may be contacted by email below,

phil@capioit.com

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Google Announces 12 new Data Centres – Game on for AWS

Google has announced that it will be opening 12 new Cloud Data centres over the next 12-18 months to compete with AWS. The first two data centres will be in Oregon and Japan, followed by 10 more centres in as yet undisclosed locations. 

It is doing this to directly target AWS and to a lesser extent Azure in the Public Cloud, Iaas/PaaS/SaaS marketplace. Clearly it will have an impact on other public cloud providers such as IBM and Rackspace.

Whilst the investment is a very positive move, (and parallels strongly with the recent Apple announcement) there is no doubt that Google has been far to slow to the enterprise market opportunity and customer outcomes. The strength of Google as a consumer company transposes sharply with the capability of it in the enterprise. It has lagged in strategy, execution, focus and most importantly customer outcomes. 

In the recently released Australian Infrastructure Management Services Capture Share report, capioIT ranked Google as a “Transform Focus” vendor. It was differentiated because it is Google, but lacked the scale and local capability to come close to challenging AWS. – (see https://t.co/SsaloPaHu7)

In July 2014 following a customer event we wrote that “capioIT was intrigued to find that front and centre at the entrance was a bowl of lemons. I can only guess that Google was going to make lemonade from lemons, sadly, whilst the day had moments of sweetness, Google could not set up the lemonade stand this time around.” (see – http://tinyurl.com/jspw7uw)

The new locations are not disclosed, but if Google is serious in competing with AWS and Azure it has to be in the majority of the following locations in this 12-18 month timeframe. Otherwise, it is not going to win the global scale argument or local reach requirements.

  • Australia
  • Brazil
  • Canada
  • China
  • Germany/Netherlands/France
  • India
  • Korea
  • Singapore
  • UK/Ireland
  • South Africa

If Google seriously wants to disrupt AWS it needs to challenge with locations. If it considers some of the following locations then it may be able to be a differentiated provider in the market. (Note these markets provide significant challenges from a network, regulatory and market perspective, but playing catchup requires risks)

  • Indonesia
  • Argentina/Chile
  • Thailand
  • Kenya/Nigeria
  • UAE

It is also hoped that it understands the customer requirements. When it launched the Taiwan facility, Google seemed to force itself to believe that the cutting edge nature of the centre was enough to make Asian customers rush to it. Except it was in Taiwan. Taiwan is a comparatively small market and had major issues for non-Taiwanese customers. It was a perplexing decision as an outside to Google.

AWS will of course respond. It is clearly the market leader, and the announcement by Google is not going to change that in the short to medium term. It will continue to innovate on price, but as it has done in the last 12-18 months, it will focus to refine the perspective around the ISV and partner ecosystem, functionality, scale and innovation. Amazon as a company has withstood significant competitive challenges whilst remaining dominant, though to be fair, they have not had to fight the likes of Microsoft and Google in the online retail space.

Microsoft has a strong installed base with Azure and of course the Office 365 suite. That will continue to be critical for it, alongside relationships with the likes of Salesforce. IBM’s Softlayer and Rackspace will come under even more pressure, and if Google follows up on the investment, it is difficult to see the need for a fourth provider, that is more than a niche. The differentiation for IBM in particular will take a significant amount of investment.

Capture Point

It finally appears that Google is finally being serious about the enterprise IT market, particularly from a cloud perspective with the announcement of 12 new data centres. The most important outcome of the investment is that enterprise customers (Of Google or others) will be the winner. capioIT strongly believes that competition drives innovation, so when the competition is increased, so to is innovation. That has to be good for the customer and for the entire competitive ecosystem. 

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Infrastructure Management in Australia – Can anyone catch AWS? capioIT Releases the Capture Share Report

Australia is one of the most mature and competitive markets for Infrastructure Management globally. After a painful beginning with ill measured outcomes and results, investments and outcomes for Infrastructure Management in Australia has substantially evolved. Cloud has been the central part of the transformation, breaking up the culture of cosy oligopolies that plagued the market.

In order to gain objective insight into the market in 2016, capioIT undertook a Capture Share report. This report analysed vendors based on 17 objective variables covering “Transform” and “Leverage” attributes. What is the capioIT Capture Share Report? http://wp.me/p15cZf-7H

This followed similar analysis undertaken in 2014. 20 vendors were included in the study.

In the late 1990’s a similar study would cover the market with 4-5 vendors. Five years ago, debatably there were just 10 valid contenders. This growth in prospective providers is due to the emergence of cloud vendors disrupting services economics, the increased scope of Indian vendors, the intermittent and inconsistent role of Telco providers in the space and the attraction and importance of Australia as a market to enter Asia.

There are four different ratings for the Capture Share. For example a vendor ranked as a Market Maker has scored above average on both the transform and leverage attributes. A Leverage focus is above average for the leverage attribute and so on.

 

Vendors Rated as Market Maker

  • AWS
  • Microsoft
  • IBM
  • CSC
  • Fujitsu
  • Telstra

Vendors Rated as Transform Focus

  • Google
  • HCL
  • Rackspace
  • VMware

Vendors Rated as Leverage Focus

  • HP
  • Dimension Data
  • UXC
  • Datacom
  • Optus
  • Macquarie Telecom

Vendors Rated as Market Developer

  • Tech Mahindra
  • Unisys
  • Dell
  • Verizon

It is not be a surprise that AWS has clear leadership in the market. It simply dominates the public cloud market with partner led influence across all engagement models. It has forced virtually every vendor to change their strategy for the delivery of infrastructure Management and in many examples abandon public cloud aspirations. In 2016 and beyond the market is AWS’s to lose. Other Public Cloud providers have comparatively mixed results. Microsoft through Azure, is the next ranked provider, and has moved from strength to strength.

What is clear from the analysis is the depth of undifferentiated competition. As a result of this lack of differentiation, the remaining vendors without a public cloud offering struggle to transform client requirements. Without full control of the data centre environment and the resultant innovations differentiation is difficult. This is a critical issue long-term as the price of data centre space shifts further towards commoditisation and scale.

Leaders in the Australian Infrastructure Management marketplace share core attributes

  • Long term, consistent unwavering commitment to cloud computing
  • Ability to communicate a unique Australian value proposition for Infrastructure Management that meets Australian needs, not global requirements
  • Focus on IP and Asset based solutions with the possibility for Outcome Based Pricing
  • Ability to offer a unique local offering meeting Australian client needs, not replicating global requirements
  • Proven track record to invest, scale and evolve with the market.
  • Leaders in the market have been able to leverage total business services capability with strong industry insight. Without the applications experience and industry depth, credibility is at times difficult to obtain for challenger vendors.

 

Capture Share Reports are independent research. They are not prepared on behalf of any vendor or provider. It is a rigorous and tested methodology that is based on extensive qualitative and quantitative engagement with a range of stakeholders. 

 For more on capture share reports please see:

 What is the capioIT Capture Share Report? http://wp.me/p15cZf-7H

 For more on the Business Principles of capioIT http://wp.me/p15cZf-8x

 If you require further information, please contact Phil Hassey, Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand digital and emerging technology in emerging markets. Phil may be contacted by email or phone below,

 phil@capioit.com

+61 (0) 422 231 793

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How the Car Park expose Digital Failures that Kill Customer Experience

The humble car park. It is difficult to believe that this is the frontline on the identification of digital failures and the need for Digital Devil’s Advocates – see – http://wp.me/p15cZf-ek . The humble piece of real estate that is the car park has become a clear example of how digital will fail when new technology or initiatives are locked on to legacy processes. This was clearly seen with the Westfield example – http://wp.me/p15cZf-dy. Note that the media finally caught up to capioIT with their breathless “exclusive” on the parking issue that only came out 3 months after we had first identified the issue.

Of course, Westfield is not the only parking issue, the rise of GoGet, ZipCar, Car2Go et al highlights how inflexible current frameworks can be in a digital world and how a new regime of thought and process and investment is essential.

IMG_0454

As the photo highlights many car parks only allow one arrival per day for free parking periods. With photographic identification of license plates it is possible to know if a car enters and remains in the parking station. If you have two hours free parking in the pre digital time, you could remain for for 1 hr. 59 minutes, and then exit, only to return again to maximize free parking times.

Now the parking manager is now able to charge after the first two hours regardless of re-entry. I know this has caught me out. They do this because the model works for their limited thinking, car-parking revenue is increased, and car parks turnover. So far so good.

The rise of the shared car rental is anathema to this inflexible thinking and old school technology. An individual may have a share car for 2 hours to go shopping then return it. Someone else may take the same car and also do their shopping in the centre. They may find that they are charged for car park usage the moment they enter, getting a massive bill shock if they choose the wrong car park. Car sharing technologies tend to be local in nature, and often in high-density areas. This only amplifies the issue.

The irony is that the lowest technology car park, that is on street parking usually provided by local government has been able to find a cost effective and low-tech solution to the problem that remembers the customer experience. They use a tin of spray paint to maximize the customer experience.

IMG_0479

Simply car park managers have clearly not caught up with the car sharing technology and consumer behavior. Unsurprisingly users are going to be unnecessarily punished as a result.

Yet again this example highlights the point that capioIT regularly is an evangelist for, and increasing consulting around for clients.

 Digital is more than a technology play.

  • The customer experience has to be front and centre of the outcome.
  • When the customer isn’t central, digital fails, whether it is online insurance, car parking or attending a sporting event.
  • There is no compromise, or wriggle room, digital investments have to be more than technology.

 

Capture Point

Digital is hard. Digital failure is easy. Disruption and Digital are clichéd, but there is a valid reason. This is so true when Digital becomes just a technology solution leveraging legacy. If you, your organization, or stakeholders rely on old technology and processes to become digital then you are significantly increasing the expectation of failure. Get the Digital Devil’s Advocate to ensure that you have the correct durable platform, not an investment that is on track to fail.

 

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