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At Oracle’s recent cloud computing analyst summit in sunny Palm Springs, the company’s executive team insisted that it sees clear skies for its efforts in cloud computing. The summit was led vr_BTI_importance_of_cloud_computingby senior executive Thomas Kurian, who runs the entire product organization and reports directly to CEO Larry Ellison. He affirmed that Oracle intends to offer the full range of cloud computing – public, private and hybrid models – to its customers and partners. As one of the world’s largest software suppliers Oracle has much at stake to make its database and all tools and applications available in these cloud environments, including managed cloud services. Our business technology innovation research shows this is a smart bet. Cloud computing is important or very important to 57 percent of organizations, and more than half (55%) of cloud users have been using it for more than a year. I noted in 2013 that simplifying IT and innovating in business are key to its software strategy, and Oracle’s efforts since then have executed on this outline.

Oracle has been developing a public cloud for some time, but in the last couple of years it sharpened its expertise and gained customers through acquisitions while refining its focus and investing in technology. Oracle now offers software as a service through its applications team covering HR, customer service, sales, marketing, ERP, finance, the supply chain and other areas. I recently assessed the Oracle HCM Cloud service, which provides a good example of what the company is doing and one that we awarded for 2013 Ventana Research Technology Innovation Award.

Oracle is determined to provide infrastructure as a service and elastic computing services for storage, identity verification, messaging and networking. Here it is competing directly against Amazon, IBM, Microsoft and others. Oracle also offers its platform as a service for using its database and tools in a variety of ways including the Web and mobile to collaborative methods. This strategy also includes analytics and big data. Our big data analytics research found 27 percent of organizations using cloud-based systems for this purpose, and it is gaining momentum as the preferred method of access: 22 percent prefer software as a service for big data analytics, 7 percent prefer a managed service, and 18 percent have no preference. Oracle is confident it can compete on price with other public cloud players. In addition its newest focus in the public cloud is information as a service, which brings corporate and public data together for business needs. Oracle is also strengthening its cloud computing marketplace so its software will be easy not only to access and purchase but also to onboard and use.

The private cloud computing area is somewhat different. CIOs need options to expand their compute power rapidly according to business needs; such a plan once had to be executed in the company’s data center, but now the cloud offers alternatives. In a more controlled manner than for the public cloud, Oracle provides the full life cycle of management through Oracle Enterprise Manager across its applications, platform, database and infrastructure, which can help most IT organizations simplify and reduce their focus on managing their infrastructure and enable them to focus on the value of the information and technology they provide for the business. Oracle offers multiple methods of deploying a private cloud: virtual machines for server consolidation, clustered databases for platform consolidation, and multitenant occupancy for database consolidation. Its private cloud platforms can provide a range of computing services to support applications and even enterprise deployments for use of mobile technology.

Oracle also offers a managed cloud service in which it builds and manages a private cloud environment similar to IT outsourcing except that Oracle owns the software being hosted. In this arrangement Oracle can provide in the cloud any of its applications, platform and infrastructure and can also connect to customers’ on-premises systems. Oracle says that more than 550 customers around the globe are using this service, processing 1.25 trillion business transactions per day; it stores more than 41 petabytes of data as well. In this offering Oracle competes directly with companies that have been offering this type of service in managed and outsourced approaches, including HP, Accenture and TCS. Oracle has been steadily building a strong position for its own outsourcing and managed approach to cloud computing.

These three cloud approaches have in common the Oracle database, running as a database as a service. Supporting it is the Oracle Fusion Middleware as a service that operates its business applications and is the basis to build custom applications by providing user, process, documents, information and identity services. Middleware is also where Oracle is advancing its support of mobile computing and big data as well as batch-to-real-time integration to applications and data across the enterprise and cloud along with Web services support through the REST and SOAP interfaces. Our research shows that integrating data from cloud applications is important to 80 percent of organizations. Oracle is releasing in the first part of 2014 more technology like Java, document and business intelligence as part of its Oracle Fusion Middleware as a service. Oracle has enlisted its Java technology to support the “as a service” concept to help move on-premises applications to the cloud but also to support application deployments. Oracle has worked to ensure its middleware can operate in the Microsoft Azure and Verizon Cloud services. Also part of middleware is the database as a service that is part of the Oracle cloud and of the compute service for elastic computing; it can be provisioned and used on a subscription or a usage basis; customers also can subscribe to backup as a service. Beneath the middleware and the database is the infrastructure as a service, which provides direct support for computing, storage, messaging, identity and notification services. Oracle supports integration of other cloud computing environments such as salesforce.com with its on-premises applications.

vr_ngbi_br_bi_deployment_preferences_updatedOracle also is expanding its presence in application-centric cloud deployments. For instance, its Oracle Business Intelligence Cloud service will be available in 2014; here it plans to provide a range of real-time and self-service analytics and integration of data from the cloud and on-premises systems. Oracle already has been supporting its own BI applications in the cloud, but this step will help it compete in a market where many options have been available for several years. Our next-generation BI research found a need for this in 2013, when 25 percent preferred software as a service for enterprise BI and nearly as many (22%) a hosted private cloud. It is even more important for mobile BI: 26 prefer cloud deployment, 30 percent chose hosted by supplier, and 36 percent had no preference; only 9 percent prefer on-premises for mobile BI. For another example, the Oracle Planning and Budgeting Cloud Service is now available, based on its Hyperion Planning software. In BI and planning in the cloud Oracle definitely is not first to market and indeed will have to catch up to build a brand and trust with customers in these areas.

Given its size, Oracle is uniquely positioned with server, database, vr_BTI_BR_top_benefits_of_cloud_computingplatform, tools and applications all operating in the cloud in public and private approaches and as a managed service. Only IBM is close to providing such an extensive software and technology stack. The competitive edge of preintegrating the entire stack in the cloud is a great position from which to grow its business. Our business technology innovation research finds that cloud computing has improved the availability of applications and information for business; one-third (34%) of organizations said it has improved availability significantly. In addition the research found that cloud computing has lowered costs, improved the efficiency of business processes, boosted communications and knowledge sharing, and increased productivity for more than one-third of organizations. The skies look clear and not cloudy for Oracle, which will be delivering more cloud computing on a very aggressive schedule throughout 2014 and 2015. If you are transitioning to or evaluating cloud computing in any manner, from infrastructure and platform to tools and business applications, Oracle is a provider you can’t ignore.

Regards,

Mark Smith

CEO & Chief Research Officer

In today’s highly competitive sales environment, where success depends on meeting the specific needs of buyers, an accurate and timely sales forecast is a critical tool for optimizing business outcomes. VentanaResearchBenchmark_SalesForecastingI discussed this as part of our 2014 research agenda for sales, noting that linking the forecast to commissions, quotas and territories is a requirement for success. We recently completed new benchmark research on sales forecasting to ascertain the state of the processes and technology sales organizations use. This research continues to find less than adequate efforts by organizations to improve their sales forecasting process and insufficient information about the full revenue potential from accounts and customers.

Each of our benchmark research studies generates a Performance Index that assesses organizations’ performance in a specific process and how well people use information and technology. Our latest sales forecasting research places fewer than one in five (18%) organizations at the highest Innovative level of the four by which we measure sales forecast performance and increasingly larger percentages at each of the succeeding lower levels; more than one-third (35%) rank at the lowest Tactical level. The largest organizations by both number of employees and annual revenue perform better than smaller ones. We find that organizations do see the importance of sales forecasting: More than half (55%) said that it is very important, and another one-third (34%) said it is important. But execution is another matter: More than half (53%) are not satisfied with their current sales forecasting process, and two-thirds (64%) of those that said forecasting is very important also said they are not satisfied with the process.

Why are people most dissatisfied? The most common complaints about how sales forecasting works are that the process is not vr_SF12_09_complaints_with_sales_forecastingreliable (for 57%), data is not accurate (50%) and the process is too slow (50%). But those seeking to address these complaints encounter barriers that obstruct improvement; those most commonly cited by organizations not satisfied with the current process of creating forecasts are lack of resources (84%), no executive support (79%), no suitable software (77%) and lack of awareness (75%). All of these findings indicate room for improvement across the people, process, information and technology dimensions of performance.

Dissatisfaction correlates with low confidence in the sales forecast and the information in it; 44 percent lack confidence, which is even more disturbing when we remember that the information from the forecast is essential for managing not just the process but all of sales operations. Similarly issues with accuracy of information also correspond to lower levels of confidence: Fewer than one-third (29%) of participants said that their forecasts are more than 80 percent accurate; that is a lower number than in our previous research. One way to improve accuracy is to tie performance rewards to it, but we find that not many (29%) organizations reward sales forecast accuracy. However, those that do this are more confident by a large margin in the quality of the information than those that don’t (61% vs. 37%). Thus we recommend the use of rewards as a way to improve the accuracy of sales forecasts. A related element is timeliness, and the research finds that often the sales forecast takes too long to generate: One-third (35%) of organizations take three weeks or longer to generate a sales forecast, more than one-fourth (27%) take a week or two, and the fewest (24%) take less than a week. The time spent to process a forecast can impact the frequency of sales forecasting and hence its usefulness. This sluggishness often is related to inadequate technology to process and generate information for review and metrics to guide improvement. Almost half (44%) of sales organizations acknowledged that they have impediments that motivate management to contemplate further investment in sales technology.

Speaking of technology, only two in five (40%) of the organizations participating in this research use dedicated tools for sales forecasting. Most that do are new to the technology; three in 10 have been using it for more than a year, and 10 percent more began in the last year. Those that use dedicated sales forecasting technology told us it is helpful: More than one-fifth (22%) said it has improved significantly the outcomes of sales activities and processes, vr_SF12_10_reliance_on_spreadsheets_undermines_efficiencyand half (51%) indicated it has improved them slightly. The largest organizations have been using dedicated software longest among company sizes. Less than one-fifth of participants said they have no plans to deploy dedicated software. Asked why, most (58%) said they do not know, which indicates a lack of awareness of the technology and its advantages. One-fourth more (24%) said deploying it would not have a positive impact on business, which indicates a lack of understanding of its benefits. We found similar uncertainty elsewhere. Fewer organizations are confident in their ability to select and use sales forecasting technology (35%) than are only somewhat confident (40%); at the extremes, slightly more are not confident (14%) than are very confident (12%). Organizations that reward forecast accuracy also are more often satisfied with their sales forecasting technology (79% vs. 44%), which indicates maturity in understanding the full potential of technology investments. Yet many organizations use spreadsheets for sales forecasting even though more than half (59%) admitted that reliance on them undermines efficiency and only 24 percent said they are accurate and timely.

This research also finds much indecision about making changes to improve the process or the technology for sales forecasting. A larger percentage of sales organizations said they are not planning to change their process (41%) than said they will change it (32%); more than one-quarter (27%) do not know whether they will change the process. The most common drivers for changing the forecasting process are a business improvement initiative (for 65%) and a drive to improve the quality of business processes (60%), followed by increased operational efficiency and cost savings (48%) and improved sales and revenue generation (47%). All of these are good reasons, but we think that commitment to sales excellence and maximizing the number and value of sales should be enough to justify investments and efforts at continuous improvement. Dedicated applications can contribute to more accurate vr_SF12_07_impediments_in_sales_motivate_investmentsales forecasts, but we find that many organizations aren’t prepared to implement them or do not understand why they should. For organizations that are planning to change vendors for technology, the most common reason is to speed up the forecasting process (54%); fully half of this group is not satisfied with the current product’s functionality. The current research found organizations are dissatisfied with their tools because data gets outdated quickly, which indicates lack of integration of data and tardy processing of forecasts.

We conclude that many organizations should make a deeper commitment to sales forecasting; the research shows that those that do invest and improve are reaping the rewards in increased sales. We add that improving accuracy and participation should be rewarded and that up-to-date sales pipeline information should be processed into a periodic sales forecast that should be readily available. The whole point of a sales forecast is to measure performance of sales activities, and that should be aligned to the quotas assigned to the sales force across territories. Also important is the capability to examine the forecast by customer, product and geography to determine where more management is required and where coaching and instrumental changes to the sales methods used to drive the best execution through improvement to the efficiency and results. The sales forecast also impacts other key process, such as the financial plan, the demand plan for operations including customer service and field service, and manufacturing and distribution. It is critical for streamlining the overall business plan. Sales forecasting should be a well-managed, collaborative process with capable technology to support it, and not just running a report from the SFA that summarizes the current state of activities and lacks the analytics and collaboration required to operate the process. Having a commitment to improve the process and information requires technology that is designed to support it and finding ways for gaining more participation and interaction through collaboration and mobile technology.

I urge every organization that has issues in its sales forecast to conduct a self-examination with an eye on how to improve it.

Regards,

Mark Smith

CEO & Chief Research Officer

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