Technologies such as Social networking, mobile, analytics and cloud computing have been shaking the IT industry for past several years. But in last couple of years, this combination of technologies together is transforming the business model. IDC calls this combination "Third Platform", Gartner calls it "Nexus of Forces" and Cognizant calls it "SMAC "- Social, Mobile, Analytics and Cloud. This paper uses the word SMAC to represent this technology stack.
SMAC is disrupting the world. No CIO discussion is complete without considering impact of SMAC on business. Faster than ever improvements in this technology stack, are adding value to whole gamut of businesses. Advantages are many and seem very fascinating, with promises being made as large as - predicting future (Analytics), available anywhere (Mobile), everything so simple and networked (Social), and at a fraction of price (Cloud). This new technology stack has started transforming tomorrow's enterprise and has impact on each of the areas of an enterprise, hence subsequently on all the software applications used within and by the organizations.
Gartner predicts that by 2017, SMAC stack will drive more than 26% of the total enterprise software market revenue, an increase from 12% in 2012 - representing over $104 billion new revenue from this stack.
This Point of View delves into this technology stack and finds out how each of the component of this technology stack is impacting enterprise applications.
Before we move forward and study the impact, lets first understand the meaning of each of these technologies in context of this paper and how these technologies are impacting the world:
Social's dictionary meanings are community, group, shared, get-together, collective existence, networking etc. So being social means interacting with others and eventually with whole universe. There are multiple mediums for this interactions and the medium in question here is Internet. In pre-internet days, the medium of interaction was face-to-face, newspapers, letters and phones. With advent of internet, web based networking services started connecting people, and today facebook has 1.3 billion active users, which is same as entire population of world's most populous country- China. Ironically, facebook is blocked in China. 73% of adult Americans use one or other social networking sites. 25% people on this planet use social media, and this number is increasing very rapidly. In emerging economies, this growth is more than 100% year-on-year. So, social media is touching life of so many people, which no other medium has done in past, at such scale.
There are 7.1 billion people living in this world and 6.6 billion mobile subscribers. By 2016, there will be more than 10 billion mobile devices which would roughly be 1.5 times of world's population at that time. Today almost every information and transaction is available on mobile devices and people use those to be productive. Even, in remote villages in emerging economies, where there is no internet access, people carry basic mobile phones with black and white screens for minimal transactions like booking train tickets, money transfers, payments etc. In poor countries, many people across a village share a mobile phone to be connected. So, almost everybody on this earth is connected through mobile phones.
Analytics means scientific and systematic analysis of data. In today's digitally connected world, there is data everywhere resulting into an information overload, which is not readily usable for productive purposes like decision making. Analytics makes extensive use of mathematics and statistics to convert raw data into a meaningful data which can augment decision making process. There are pre-packaged software applications which help companies in analyzing their data and give them meaningful insight into their data - examples are customers demand trends, financial analysis, sales optimization etc. Amalgamation of multiple analytics techniques and methodologies like statistics, neural networks, weibull analysis etc. is called Advanced Analytics. Based on these various techniques, Advanced Analytics helps in anticipating future outcomes - a typical example could be to predict a machine failure and proactively notify its owner to avoid downtime. As analytics claims to predict future, it is so fascinating.
Simple meaning of Cloud in context of SMAC is using software applications as a service without buying them. Service is offered remotely through internet and a usage charge is paid to seller. The point here is that user need not buy and install hardware, software, network and infrastructure and start using the software without any capital expenditure, and pay as per use. Cloud services providers use economies of scale and tries to make use of every bit of computing space to provide cost effective services to users. So a cloud based offering provides services from anywhere using any device at a much lower usage cost. It further claims to offer multiple other benefits like usage of latest products/technologies, reduced internal IT staff, better opportunities for innovation while day-to-day operations being shifted to cloud service provider. So, getting software services at lower price without making a capital investment makes cloud a lucrative option for organizations to consider. Also, cloud is just not about the cheaper cost, it is also about agility, innovation, access to latest technology, on-demand service and scalability.
How technologies within SMAC stack work together
So, such disruptive technology trends - where Social media touches life of 25% people on this planet, count of mobile phones becoming more than the world's population, software claims predicting future, and cloud offers everything latest at reduced cost - cannot be missed by business or IT leaders, and are on everybody's radar. The impact of these individual technologies on business is significant. If considered together, this stack brings amplification capabilities to transform the business model itself.
In today's digitally connected world, no product or offering is complete without having a touch of at-least one technology from SMAC stack. For e.g. Traditional ERP systems are offering look and feel of their front-end applications like that of social media. Almost every company needs applications available on mobile devices. New application purchases are being evaluated to be cloud deployable. Big data and advanced analytics are buzz words today in enterprises.
Going forward, SMAC stack would be foundation of enterprise applications and would impact all applications used by organizations. Today, it is difficult to visualize an ERP product without having mobile capabilities or not available on cloud. Every corporate today has some way of social networking tools among its employees to make them more productive and these tools are made accessible on mobile devices. Best example can be seen in telecom services - communication service providers can offer personalize services to customers based on their usage pattern, where customers also earn some credit points stored in a cloud based application accessible from anywhere.
Social Media, mobility and cloud computing are touching lives of billions of people every day on a continuous basis. Humongous volume of data generated from this usage, if effectively analyzed, can lead to specialized and personalized offerings for people.
Impact on Enterprise Applications
Organizations, in order to effectively run their businesses, traditionally have been using many enterprise applications like Enterprise Resource Planning (ERP), Project Management, Business Intelligence (BI Tools), Customer Relationship Management (CRM), Business Process Management (BPM), Enterprise application integration (EAI), Document Management, Content Management, directory services (LDAP) and more. These applications are in use for many years and serve as backbone of the organizations. In recent past, this application portfolio is being augmented by some technologies from SMAC stack. Companies have started deploying enterprise mobility and internal Social Media platforms. They are also moving selected applications to private clouds. Below section mentions impact of these individual technologies on enterprise applications.
Enterprise applications so far have generally not been impacted by social mania. Historically, expectation from these applications have been to solve the complex business problems like preparing balance sheet, production planning, payroll processing, vendor evaluation, business process improvement etc.
Though existing users are comfortable in using these applications as they have been using them for years, but new generation users find them difficult to use and they want to have a user experience which they experience in their day-to-day life with all new modern technologies and gadgets. These users want more enablement in term of collaborative working. A business transaction in an enterprise application needs collaboration with co-workers, managers and subordinates. Today, such collaboration is being done outside the software application using emails, messenger, phones etc and is not captured as part of the transaction, also is not very productive and is time consuming.
Some application providers, in their new releases, have started bringing a social touch for a better and more relevant user experience for a collaborative way of working. They have started providing a social media like look and feel, where for e.g. a workflow enabled transaction, when moves from one stage to another (e.g. purchase order approval) displays the name, photo, role, online status, phone number etc of the approver. It provides an option to chat with the approver along with "like", "follow", "chat" and "comments". This results in a different way of experience where application moves away from boring, bulky and crowded user interfaces to a more intuitive user experience resulting in a collaborative way of working thus increasing efficiency and productivity.
This "social" enabled user experience has potential to redefine the way users would interact with their enterprise applications forcing vendors to rewrite the applications, however the impact is not going to be imminent.
Enterprise applications on mobile devices have been around for a long time but the scope has been limited so far. Users for enterprise applications are not much mobile and many of these users, majority of time perform their duties sitting in front of their computers. There have been certain functions which need to be mobile enabled, mainly the field services like warehouse stock taking, utilities maintenance, customer order capture etc.
Enterprise applications are generally complex to work on, and require specific training and knowledge. While mobile applications are typically meant for a simple user experience where users can perform transactions quickly, while being on move. Further, mobile technologies change much faster than the enterprise applications and require frequent upgrades, which does not align well with philosophy of enterprise applications. Hence usage of mobile for enterprise applications continues to be limited.
Typically enterprise applications can be divided into two categories based on their mobility usage and adoption:
• High - CRM, BI, HRMS
• Low - ERP, Project Management, BPM, EAI, Document & Content Management
Mobile penetration in enterprise applications will increase but it will mainly be for field staff. Even field staff would use it only for the functions to access information quickly which will help them in taking quick decisions, while being on move. In enterprise application space, significant usage of mobile would be seen mainly for accessing information and approvals. Majority of work would be still be done over the laptops and desktops, as the users are not mobile.
Enterprise applications have wealth of very intelligent and useful data within them, which they have assimilated over a long period of usage. This data so far has been fed into BI tools to generate reports and KPIs and take decisions based on the output. In most of these cases, the output of these BI tools have mainly be a summarized report without much analytics applied.
However, this trend is changing and BI would be an integral part of enterprise applications like ERP, CRM and BPM. Further the BI output would not be limited to be a summarized report or a simple KPI based on simple arithmetic, but it is going to be much more advanced. Future analytics capabilities within the enterprise applications will use advanced analytics using techniques like statistics and neural networks. The output expected would be derived based on historical trends, current situation powered by advanced analytical capabilities. This output would be a prediction for future trends and not a mere report. Also, this output would be needed on a real-time basis to take quick decisions. Typical examples for these future trends would be to predict sales forecasts, market trends, customer behavior, next best action and machine failures etc.
Analytics would impact the enterprise applications in a big way and every application would be perceived to be an intelligent application predicting the future trends.
Cloud is bringing down the cost of running enterprise applications and also making these applications available for use by enterprises at much faster speed. These benefits are forcing enterprises to explore options to move their existing applications to cloud, in addition to buying new applications on cloud. Also as on-premise enterprise applications are not known for agility, cloud is enabling enterprises to be more agile by offering innovation, access to latest technology, on-demand service and scalability.
Large enterprises have made their on-premise applications rigid by excessively customizing them, hence making them difficult to upgrade and make ways for improvement and innovation. These applications are not flexible enough to accommodate today's changing business needs. Cloud based point solutions are providing an alternate to these applications. Salesforce.com is a classic example here for CRM. As these applications run critical business functions, these will continue to remain the "core" of an enterprise and entire application landscape may not move to cloud. But there would be possibilities of having those "core" functions on-premise and new innovative offerings on cloud, forming a hybrid model.
While cloud brings in advantage, there have been concerns as well with data security, privacy and control. While these concerns are genuine, but cloud providers have been able to address these concerns to a great extent and provide reasonable solutions. Further details on this can be accessed in another blog at ERP in Cloud - Hype or Hope!!!
Cloud is changing the way the enterprises are deploying applications and is impacting fast. Cloud has the potential to become the new foundation of enterprise IT landscape. Cloud based offerings would impact the enterprise applications in fastest way compared to all three technologies of SMAC stack and enterprises cannot afford to ignore this technology.
Every application and every human being is, or will be touched by, at-least one technology of SMAC stack. Business leaders need to be cautious of advancement in this stack and should not miss the bandwagon, as this technology stack in coming years will transform the way they run their businesses. So, this stack has high potential to disrupt their IT landscape. They should carefully evaluate and analyze the impact from each of these technologies on their software applications and adopt accordingly. However, there is no immediate adoption need to act in haste, but a careful impact analysis is required. Especially for enterprise applications, the impact of this entire stack is not high - only Cloud and Analytics will have some impact.