Cloud is coming, faster than you might think

IDC has been banging on about its 'third platform' for several years now, but maybe it takes one company's real-world experience to bring home the importance of this shift and the rate at which it is happening.

IDC believes IT is moving rapidly to a paradigm based on cloud computing, mobile, big data and social, and that this shift will be highly disruptive. It recently set out its views in IDC Predictions 2014: Battles for Dominance —and Survival — on the 3rd Platform, which you can buy from IDC for the princely sum of $5, or get for free here, courtesy of SAP.

CIO magazine gave it a rave review. "While understated, its analysis and predictions provide as much drama as any novel, and its denouement is the kind of cliffhanger that makes it, as the saying goes, unputdownable. Simply stated: You must read this report and think about what it means for your company's future. This is true whether you're an IT user a vendor or, for that matter, a company that thinks of itself as in another business altogether."

So, back to that real world experience. Here's how fast one software company - call centre systems vendor Interactive Intelligence - has seen its sales shift from the on-premises version to the cloud version.

In mid 2011 I asked Brendan Maree, the head of Interactive Intelligence for Australia and New Zealand how fast he thought sales would shift from the on-premises version of the company's software to the cloud version. He predicted that up to 50 percent of revenue could come from the cloud version within three years.

He was right, and he was wrong. Last year, globally, 50 percent of sales were for the cloud version, according to founder and CEO, Don Brown, but in ANZ the figure was 87 percent.

Maree says that the shift to cloud has been rapid and almost complete "This is our fourth year into the cloud business in Australia and New Zealand. We introduced a cloud offering in 2009. In the first year five percent of orders were for the cloud version. The next year it was 11 percent of revenue. It moved to 26 percent the following year and then jumped to 87 percent last year. This year we have done only two deals for on-premises system, both quite small."

He added: "There was a time last year when cloud created a lot of work for us. The sales engineers had to do two designs because prospective customers weren't sure about cloud. But all the tenders now, and all the discussions, are about cloud. It's like people have forgotten about premises based systems."

Globally Brown said revenues from cloud had gone from five percent four years ago to 60 percent this year and projections for next year were 70 percent.

There was no suggestion from either Maree or Brown that the company has been aggressively promoting the cloud version at the expense of the on-premises version. Rather, that it has simply responded to market demand.

What this rapid transition illustrates is the need for enterprises to be alert to these paradigm shifts and adapt accordingly. Brown related two stories of discussions with potential customers - one a low margin fashion retailer and the other a large long-established insurance company - that do not appear to have realised what is happening.

The fashion retailer had "run its previous [premises based] contact centre into the ground; amortised it to dust" and was quite happy to do the same with a replacement system. The insurance company "almost threw me out of the room when I mentioned cloud," Brown said. "It was like I was insulting the operational capacity of their data centre."

There may well be good reasons for a company to opt for a premises based solution rather than cloud-based, but it's clearly not a decision that should be taken because that was how it was done in the past, or in ignorance of a transition that is turning the world upside down at great speed.

Here comes the Quantified Selfstra

The launch of Telstra's eHealth initiative this week was a curious affair. Most of the focus was on ReadyCare, Telstra's joint venture with Swiss company Medgate set up to provide general practitioner services over the phone. It's at least six months from becoming reality.

In contrast no mention was made of close to 20 ehealth offerings detailed a glossy brochure handed out at the event, all of which, it seems, are services that are already in operation. So quite likely most of what you've read in the news about Telstra Health represents only the tip of the iceberg. You can find most of them on this web page.

When I asked about these Telstra told me that the providing entities were a mixture of companies acquired by Telstra, companies in which it has taken equity and those whose products and services it has licensed.

So there is certainly more, much more to Telstra Health than Telstra has talked about so far and some it likely centres around how Telstra can leverage the personal monitoring devices that will, inevitably, be a major component of many ehealth initiatives.

According to Frost & Sullivan, "wearable technology has gained considerable traction especially in the health and wellness industry." That's stating the obvious, but it was made in a press release announcing a F&S report: 'Sensor Technology Innovations Enabling Quantified-Self', in which F&S said: "The market for quantified-self technologies – apps that enable people to track and quantify aspects of their daily lives – is currently in the embryonic stage. However, explosive growth is expected in coming years."

It added: "As healthcare is one of the main industries impacted by the quantified-self movement, acquiring accurate data and ensuring seamless interoperability are key challenges. In addition, data sharing among health services and pharmaceutical firms raises privacy concerns. Healthcare companies must ensure that data collected from clients is not shared without direct consent."

Assured privacy and security will underpin everything Telstra does in eHealth, or else the initiative will be dead in the water. As a company that clearly intends to be active in all areas of eHealth, interoperability will also feature strongly in its offerings. In short Telstra is well placed to take a lead position in the quantified self market.

Similarly, F&S observes: "To get the healthcare industry further involved in quantified-self, enhancing the connectivity of wearable devices with technology companies to support data exchange will also be crucial." That's another function Telstra Health will be well-placed to fulfil.

But just what is the quantified self? According to F&S: "Quantified-self facilitates the tracking of diet, sleep, heart rate, activity, exercise and moods and allows individuals to gain better insights on physiological parameters that were never examined earlier.”

The movement, and the term, was created by two editors from Wired Magazine, Gary Wolf and Kevin Kelly. You’ll find a detailed explanation of it in this 2009 article by Wolf.

There is already a global movement for self monitoring and quantified self (http://www.quantifiedself.org). It has over 100 Meetup groups around the world and one each in Sydney and Melbourne with over 400 members between them.

Telstra's store revamp - in search of consistency

When Telstra CEO, David Thodey, trumpeted the innovations in customer service embedded in the company's new $112m flagship retail outlet in the old Daryl Lea chocolate shop at 396 George Street, Sydney he talked about giving customers the ability to start an interaction in one store, review the history on their own PC, tablet etc and, eventually, when the retail refresh has been rolled out fully, pick up the conversation in another store.

Trouble is, although many of those stores might look and to some extent feel like Telstra stores, they aren't. ASX listed Vita Group alone operates 109 Telstra branded retail stores and Telstra Business centres around Australia.

I asked Thodey whether the same seamless experience would be available across these licensed stores - because of course customers are blithely unaware of ownership distinctions. Not initially, he said, but this was something Telstra was working on.

Consistency of customer experience in retail environments certainly something that has been highlighted as important and its importance is reflected in the long history of love-hate relationships between Australian mobile operators and the own versus licensed retail outlet model.

Last year KPMG published the results of a global mystery shopping exercise for prepaid SIMs. They weren't interested in prepaid SIMs per se, but they were a convenient, and almost universal product that could be used to contrast and compare the 'customer experience' across different channels - online, in store, etc - different outlets - owned v licensed v independent - and different countries.

Consistency loomed large. "In the early days of prepaid, operators are often happy to have their products sold from all retail channels: licensees, non-exclusive, supermarkets, convenience stores, etc," KPMG said. "The focus has now changed to the extent that some operators are buying back the franchise and licensee stores so they can have more control over the customer experience. ... It is vitally important that operators deliver a consistent experience across all retail outlets regardless of ownership."

KPMG went on to note that "Two leading Australian telcos in April 2013 both moved to end long-standing agreement with sub distributors of their prepaid offerings to allow for more control of the channel."

Optus last year shed deals with AllPhones and TeleChoice cutting its retail outlets by over 300 stores and announced plans to open up another 30 of its own stores. Optus MD of sales, Rohan Ganeson, was reported saying: “We believe [that] investing more in our stores, investing more online and investing into our people will deliver [the] results we need them to, but also deliver a greater experience for our customers overall. We think the renewed focus will give a cleaner, more engaging…customer experience — much more enjoyable — rather than going in and having a phone flogged to you.”

Vodafone has had a view of retail that has varied with its ownership. Back in 2003 it jettisoned the last of its retail stores announcing a deal to outsource the operation of its 58 shops to privately held phone retailers Digicall Australia and First Mobile. Then in 2009, following the merger with Hutchison, the new company announced that it would bring all its 208 Vodafone-branded retail outlets in-house.

VHA said: “We do see it as a very important strategic shift which will allow us to own and operate our national Vodafone-branded retail channel. “We also see it as a very shrewd move competitively because it will better position VHA with a more cohesive and consistent Vodafone customer experience."

Of course what these stores sell has changed dramatically over the past decade. And it was clear from the Telstra store that it's not just about mobiles. It about smart homes, wearable devices, Internet connected domestic appliances and more. The store even features a wall sized video screen portraying products and technologies that are, to varying degrees 'futureware'.

To communicate the full potential of what is available to the connected consumer will increasingly require significant investment in large demonstration-type facilities like the new Telstra store. Maintaining a consistent experience across multiple outlets will be a huge challenge.

Salesforce Wave and the future of data analytics

Forbes Magazine concluded a lengthy report on Dreamforce - Salesforce's mammoth conference held in San Francisco last week - with the comment that neither of the major product announcements - data analytics tool Wave and mobile app development platform, Lightning - were "as finished, or nearly as polished, as the four-day corporate love-fest that Salesforce has become the master of hosting."

I'd come to the same conclusion. Like everything else at Dreamforce the demonstrations of Wave were slick and seamless, but I also came to the conclusion that what was demonstrated was without doubt the future of data analytics and that, however far short of that Wave today is in reality, it will get closer, and probably quite rapidly.

Firstly, Salesforce has developed it Wave the basis that the primary user interface will be a mobile device, not only because mobile devices are now the favoured means of interfacing to cloud based IT services but because it believes that access to analytics capability needs to be available in real time to the people at the coalface: sales people trying to win deals, distribution managers trying to determine delivery volumes, etc, not just to data analytics specialists in back rooms.

Secondly, ease of use is a number one priority. Data analytics needs to be available directly to those who need the answers, not just to specialists and the results displayed in easy to understand graphics in any one of many different formats and flicked instantly from mobile to tablet or desktop.

Thirdly there needs to be access to data from many different sources to support a wide range of queries, many of which might be hard to anticipate in advance.

In one demonstration a rep from a financing company convinces a builder of luxury boats to take on millions of dollars of finance to build more of a particular model by showing (a) inventory of that model is very low and (b) demand for it is likely to be high based on the volume of positive chatter about it on social media sites.

Salesforce maintains that none of the demonstrations were set up, that all were real systems. That's no doubt true but what determines the usefulness of tools like Wave is not just the user interface - and Salesforce seems to have done a very good job of making very easy to use - but the data sets that have been integrated into it.

The choices made will inevitably be determined in anticipation of the types of queries likely to be made and costs would make it a case of diminishing returns to cater for infrequently needed queries.

But the vision is spot on. Being able to easily ask any question of any relevant data set, even those that might previously never have seen relevant, comparing the answers with queries on other datasets and getting quantified results presented graphically will revolutionise many aspects of many industries.

The realisation of that vision will do for the world of quantitative data analysis what Google it for qualitative information research. Remember the pre-Internet and pre-Google era where online research was the exclusive domain of librarians and researchers who understood the arcane technology of online databases like Dialog?

Launched in 1966, Dialog claimed to be "the world's first online information retrieval system to be used globally with materially significant databases." Its usefulness was limited by the range of its datasets and the skills needed to use it. And that is pretty much where data analytics is at today.