I recently saw an SAP announcement around its Next-Gen services and got excited. Turns out it is services around its newer products (SAP HANA platform and business analytics, mobility and on-demand).
That’s certainly one definition of Next-Gen. I was hoping to hear about new delivery models, new providers and new business models. While my next book does not focus specifically on services, I saw many examples from various chapters which suggest tectonic changes coming in the next few years> Here is a selection:
Influenced by Apple: “The more than 600,000 (as of November 2011 and growing) applications in the Apple App Store range from the sublime to the silly. But the sheer size of the marketplace is a formidable Apple asset. The head of iOS development, Scott Forstall, has commented that Apple has, in the iOS App Store, “created the best economy in software in the history of the planet.”” What’s remarkable here is the majority of the apps come from entrepreneurs and small businesses, not the IBMs or the Deloittes.
Influenced by Facebook: “Dell’s Data Center Solutions business says it will design and build servers based on the Open Compute Project specification. Presumably so will HP’s. Dell owns Perot and HP owns EDS, and those outsourcers currently run data centers for many corporations—and they are nowhere as efficient as what Facebook has built. So, the ripple effect of this on the industry could be tremendous, as even IBM, Accenture, and other outsourcers will be forced to benchmark against the open standards Facebook is sharing.”
Influenced by Cisco: “More impressively, Cognizant has rolled telepresence out to major clients. That helps overcome at least some of the consultant travel costs and other issues (we mentioned earlier in the chapter). Clients were generally skeptical at first, especially if they had previously used traditional videoconferencing, which was characterized by high cost, frequently dropped calls, and video and audio quality that ranged from poor to mediocre. But they have been much more accepting of telepresence, which delivers a vastly superior user experience. Two areas with high payback have been during transition and training. “
Influenced by Boeing: "Under this umbrella agreement with the Boeing Company, HCL worked as the engineering services partner of choice with multiple sub-tier companies on the 787 program. HCL’s services were utilized by these airborne systems suppliers across all the major design elements of the 787 such as common core systems, open systems architecture and e-enabled architecture. “
Influenced by Best Buy: Its after-sales service with over 18,000 employees in its Geek Squad, and investments like the Remote Service Project. The project allows Best Buy to identify backlogs at stores and re-assign the work [to another] store remotely. “we can level out the work across the enterprise, but above all, deliver a great experience for the customer and maximize the up time of the capability of the product that they’ve sourced from us.”
Influenced by Contract Manufacturers: I am constantly surprised to see outsourcers and service providers who have never heard of Foxconn or Flextronics. “Foxconn, the largest electronics contract manufacturer in the world with over a million employees in China, assembles iPads and other devices for Apple” “Given labor dynamics in China, Foxconn is exploring a diversification with sizable investment in Brazil. Even more significantly, it is looking to robots to do simple and routine work such as spraying, welding and assembling. The company currently has 10,000 robots and the number will be increased to 300,000 next year and 1 million in three years.” “Both Flextronics and Jabil also provide a wide range of warranty and repair services for their customer products. Then there other Taiwanese players like Pegatron, a spinoff from Asus and Quanta.”
Influenced by regulators: Gina Staudacher, tax partner at Baker Tilly, commenting about investments in global innovation projects: “When we work with clients to monetize tax credits globally—we utilize a ‘concept through final completion’ approach to consider all potential project costs that may be eligible for R&D credit inclusion from a global perspective. Hence, consulting fees incurred in a foreign country may not be eligible for inclusion in the US R&D tax credit programs, however, such costs and payments may be eligible in the foreign jurisdiction wherein they were performed or where payment was made.”
Note: the book is going through the publisher’s edits and the text above is subject to change.
The shock and awe of the public cloud
On a normal weeknight, Netflix accounts for almost a third of all Internet traffic entering North American homes. Look at the graph below and let the enormity of that sink in.
Now consider this. Netflix uses Amazon Web Services as its “data center”. Add on top of that Amazon and its affiliates retail commerce traffic, other companies who use AWS for their processing and storage, and Redshift users for complex analytics, and you see the massive scale that Amazon has built with an estimated $ 6 billion in data center capex the last few years.
Facebook 1+ billion users upload and tag 300 million + photos a day. Apple says more photos are taken on the iPhone than any other camera – and many of them get stored in the iCloud. Google says it answers more than one billion questions from people a day in 181 countries and 146 languages.
As the old adage goes a billion here, a billion there and you are talking real numbers.
And yet many in the enterprise still talk of public clouds as unreliable and unsafe. Many enterprise vendors claim they need to do better than consumer tech then brag about their data centers which are puny and grossly inefficient compared to new ones at Amazon, Google and others at Microsoft, Switch, Rackspace and elsewhere.
Fortunately, the best practices that are coming out of the consumer cloud are starting to be leveraged in the enterprise. Facebook’s Open Computing Initiative which it launched along with its hyper efficient Prineville data center has drawn interest from banks and other high volume users. Microsoft, Google and others are a bit more secretive but increasingly showcase their learnings when it comes to thermodynamics, power normalization and other data center operational issues.
An impressive example of the impact of the public cloud comes from a private cloud being rolled out by Fedex “The Colorado data center is located at an elevation of 6,000 feet, letting FedEx cool the building using the outside air instead of costly air conditioning. The design is modeled on the ultra-efficient, standards-based data centers that Internet giants such as Amazon.com, Facebook and Google have built. And that infrastructure will let FedEx move some computing capacity to public cloud services from the likes of Amazon, Rackspace and Verizon in the not-too-distant future. FedEx is set to convert a data center based on the same private cloud architecture near its Memphis headquarters. “
Admire what consumer clouds have built – then hurry up and apply the concepts to your private clouds and demand similar efficiencies from your hosting providers and other enterprise vendors.
Photo Credit: BusinessWeek
May 21, 2013 in Industry Commentary, Outsourcing (other vendors) | Permalink | Comments (0) | TrackBack (0)