Home › Posts tagged growth

Tag: growth

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , , ,

In today’s challenging economy, customer expectations are high, patience is low, and attention is at a premium. Your customers demand a seamless experience with your products and services, with easy access to detailed, helpful self-service support options. So how do you stay ahead of ever-increasing customer demands? Data. Harnessing numerous customer data points, often scattered across multiple departments, is the key to unlocking a proactive approach to customer satisfaction (and growth).

So your customer success organization is more integral to your brand than ever. And its job is significantly more complex, too. Your customer success team is tasked with ensuring that your customers have everything they need when they need it. And they must also offer a personalized experience that leads to increased product or service adoption and revenue growth.

Essentially, they need to act as a growth engine for your organization. So, instead of simply responding to customer requests, your teams should be proactive and prescriptive. Anticipate your customers’ needs, impressing and delighting them at every turn. The key to this transformation lies in intelligently using the data you’re already collecting.

Predictive insights. Self-service experiences. Highly satisfied customers.

Unifying data in the cloud to visualize it, analyze it, and apply tools like machine learning allows you to unlock new customer insights. Predict when they’ll need support. Better understand when they’re most likely to drop out of your lifecycle. Recognize when they’re most apt to increase their investment. And, of course, doing all this while carefully respecting privacy and adhering to laws regulating the use of data.

Armed with this information, and the right tech platform to glean insights from it, your teams can digitally engage with your customers at the right time with relevant content.

Like any business initiative, scalability is critical. You likely don’t have the workforce to connect with every customer personally. In an already overcrowded digital communication landscape, you’ll achieve greater success by putting the power back in your customers’ hands. Offer the self-service options they want, powered by elegant search experiences that deliver fast access to the information they need.

3 key customer experience drivers

There are three initiatives your customer success organization can implement now to ensure it proactively engages with your customers, offers a self-service experience, and generates continued and repeat business:

Ensure that a customer-first approach is baked into your organization’s DNA.

To position your customer success team as a growth engine, you must have alignment with sales, marketing, product, and other parts of your business.

Make sure everyone in your organization is on the same page about your data collection efforts. And, most importantly, evangelize how all your teams can use that data to set customers up for success and help them grow long-term relationships with your organization.

2. Identify and fill gaps.

What KPIs are important to your customer success team? Are you collecting the right data to report on them?

Ask the right questions of your data based on your KPIs, and you’re likely to uncover gaps or attrition points and identify ways to resolve them. Maybe your customers aren’t receiving enough training or information. Or your team is reaching out to them at the wrong times. Or not at all. When you understand the critical gaps, you can fill them to ensure a smooth road to customer loyalty.

Invest in documentation and metadata.

Your customers need to be able to search for, and quickly and easily find, tools and resources. Your metadata tagging strategy is vital to ensuring they can.

Many companies simply tag their content with internal or company-driven terms, but incorporating the language your customers use to search for information will help them find it faster. Continue to analyze your data over time to see if you’re missing additional content your customers need.

Your customers are at the heart of your organization’s success. And your data is what keeps it beating. When you leverage it strategically to delight your customers, you cultivate loyal customers who are eager to increase their investment in your products or services — a real win-win!

See how Elasticsearch helps foster a culture of customer success.

Rick Laner is the Chief Customer Officer at Elastic.

Data Management

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , , ,

Amazon’s cloud computing division, AWS, is shifting its focus towards large language models (LLMs) and generative AI-based offerings as it continues to see a downward spiral in overall revenue growth.

Amazon Web Services (AWS) has posted 16% year-on-year growth for the first quarter of fiscal year 2023 on the back of revenue of $21.4 billion. However, this revenue growth is slower compared to the 20%, 27.5%, and 33% growth seen in the fourth quarter, third quarter, and second quarter of 2022, respectively. 

The slowdown in growth, according to top executives of the company, can be attributed to enterprises optimizing cloud spend due to uncertain macroeconomic conditions.

“Given the ongoing economic uncertainty, customers of all sizes in all industries continue to look for cost savings across their businesses, similar to what you’ve seen us doing at Amazon. As expected, customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter,” Brian Olsavsky, chief financial officer at AWS, said during an earnings call.

“We are seeing these optimizations continue into the second quarter with April revenue growth rates about 500 basis points lower than what we saw in Q1,” Olsavsky added.

In response to the trend, Olsavsky said that AWS’ sales and support teams have continued to spend much of their time helping customers optimize their spending to help them “better weather this uncertain economy.”

However, AWS top executives remained bullish on the growth perspectives of the division, citing the opportunity around the conversion of on-premises workloads.

“The new customer pipeline looks strong. The set of ongoing migrations of workloads to AWS is strong. The product innovation and delivery is rapid and compelling. And people sometimes forget that 90-plus percent of global IT spend is still on-premises,” Amazon CEO Andy Jassy said during the call.

AWS shifts focus to generative AI

In addition, Jassy hinted that the company’s major chunk of cloud business will come from machine learning requirements.

“And in my opinion, few folks appreciate how much new cloud business will happen over the next several years from the pending deluge of machine learning that’s coming,” Jassy said.

The company has already been making capital expenditure adjustments to reroute funds toward the improvement of large language models and generative AI capabilities.

Amazon has been bringing down spending at its fulfillment and transportation divisions year-on-year and has decided to route the savings to AWS to be invested in infrastructure and large language models, Olsavsky said.

AWS’ strategy, according to Jassy, is to target revenue generation by providing compute resources, training capabilities and applications for generative AI and large language models.

“I would say that there’s three macro areas in this space. If you think about maybe the bottom layer here, is that all of the large language models are going to run on compute. And the key to that compute is going to be the chip that’s in that compute,” Jassy said, adding that the company has already launched its Trainium chips and accelerators for memory-intensive tasks, ideal for AI-heavy workloads.

The second layer, according to Jassy, would be to train foundation models, and AWS has just launched its Amazon Bedrock service that provides multiple foundation models designed to allow companies to customize and create their own generative AI applications, including programs for general commercial use.

The third macro area or layer will be offering applications for developers, such as ChatGPT-enabled Copilot from Microsoft-owned GitHub, said Jassy, citing Amazon CodeWhisperer.

“Every single one of our businesses inside Amazon are building on top of large language models to reinvent our customer experiences, and you’ll see it in every single one of our businesses, stores, advertising, devices, entertainment,” the chief executive added.

Other investments in the first quarter by the cloud computing division include a new region in Malaysia and a second region in Australia. 

Amazon Web Services, Artificial Intelligence, Cloud Computing

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , , , ,

Google Cloud, the cloud computing arm of Alphabet, has turned profitable at an operating level for the first time ever, despite fears of macroeconomic uncertainty.  

Google Cloud posted an operating income of $191 million for the quarter ended March, compared with an operating loss of $706 million for the corresponding period last year.

The unit’s revenue grew 28% to $7.45 billion during the quarter, resulting in an operating margin of 2.6%.

“We have consistently grown top line revenue and improved annual operating margin, and we continue to do so this quarter. Our growth has come from our deep relationships with large enterprises, a strong partner ecosystem, and our product leadership,” Alphabet CEO Sundar Pichai said during an earnings call.

“Over the past 3 years, GCP’s annual deal volume has grown nearly 500%, with large deals over $250 million growing more than 300%. Nearly 60% of the world’s 1,000 largest companies are Google Cloud customers, and many leading startups and millions of small and medium enterprises use Google Cloud,” Pichai said.

Google Cloud’s mounting losses for the past few years could be attributed to the continued investments, especially in data centers. The company has been making these investments to compete better with larger rivals Amazon Web Services and Microsoft Azure.

In March, Google Cloud announced plans to open a second Middle Eastern region in Qatar. In October last year, Google announced it would open new regions across Austria, Greece, Norway, South Africa, and Sweden to supplement new regions announced in August for New Zealand, Malaysia, Thailand, and Mexico.

Reduced customer expenditure slowing revenue growth

Alphabet’s cloud computing arm continues to see a slowdown in revenue growth over the past few quarters.

For the March quarter, revenue growth for the unit came in at 28% year-on-year, four percentage points slower than the December quarter, which saw 32% year-on-year growth. The previous sequential quarter that ended in September registered an ever stronger growth of 38% year-on-year.

“In Q1, we continued to see slower growth of consumption as customers optimized GCP costs reflecting the macro backdrop, which remains uncertain,” Alphabet Chief Financial Officer Ruth Porat said during the earnings call.

The company, according to CEO Pichai, has been trying to help enterprise customers optimize their spending during this period of uncertainty.

“I would add, that we are leaning into optimization. I mean there is an important moment to help our customers, and we take a long-term view. And so, it’s definitely an area we are leaning in and trying to help customers make progress in their efficiencies where we can,” Pichai said during the call.

Google Cloud is growing much faster than its parent Alphabet. For the March quarter, Alphabet posted total revenue of $69.78 billion with Search continuing to be the largest contributor with a $40.35 billion share. Revenue for the entire company was up only 3% year-on-year.

Alphabet, which laid off 12,000 employees in the beginning of the year, said it will continue to hire top engineering and technical talent while investing in areas of priority.

Cloud Computing, Google

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , ,

Despite a tumultuous couple of months, strong user uptake of Tableau business intelligence and MuleSoft data automation and integration software fueled a surprising 14% year-over-year jump in revenue for Salesforce’s fourth quarter.

Posting revenue of $8.38 billion after stock market trading closed on Wednesday, the company beat the expectations of analysts, whose average forecast for the quarter was $7.99 billion, according to data from Yahoo Finance. Concerns about the company’s ability to absorb various acquisitions it has made over the last few years without losing focus on product development and sales, and recent layoffs in the wake of a hiring binge during the pandemic, have raised questions about the company’s ability to grow.   

The better-than-expected results caused the company’s share price to rise by 12% in afternoon trading Thursday.

Speaking to analysts on a conference call after the results were announced, CEO Marc Benioff praised the company’s subsidiaries for helping to drive growth, noting that MuleSoft was included in seven of the company’s top 10 deals in the quarter, while Tableau was included in every top 10 deal, according to a Seeking Alpha transcript.

Mulesoft, Tableau outperform company expectations

Mulesoft and Tableau outperformed the company’s own expectations, said company CFO Amy Weaver, also speaking on the call.

Benioff also told analysts that customer revenue attrition was at its lowest level in the company’s history, ending the quarter below 7.5%.

Fourth-quarter subscription and support revenue was up 14% year on year to $7.8 billion, while professional services and other revenue totaled $600 million, an increase of 19%. The results helped boost Salesforce’s total revenue for financial year 2023 to $31.4 billion, a year-on-year increase of 18%.

Despite the revenue gains, Salesforce posted a fourth-quarter loss of $98 million, compared with a loss of $28 million in the same quarter last year, due mainly to restructuring costs that included layoff-related expenses.

The previous 90 days haven’t been smooth sailing for Salesforce. During the quarter, the company cut around 10% of its workforce, shut numerous offices, and co-CEO Bret Taylor and Slack CEO Stuart Butterfield both announced in the same week that they would be stepping away  from the company.

Like many other tech companies, Salesforce blamed the need for layoffs on a hiring spree during the pandemic — when the need to go remote spurred corporate demand for cloud services and collaboration software — that was followed by weakening demand last year as a result of macroeconomic issues including inflation and supply chain disruptions.

Salesforce touts soon-to-be-launched EinsteinGPT

Looking ahead, Benioff said that Salesforce’s upcoming EinsteinGPT offering will soon integrate with all Salesforce cloud products, including those from its Tableau, MuleSoft and Slack subsidiaries. He added that EinsteinGPT, which Salesforce is set to unveil next week, will complement the company’s Einstein AI technology, which offers predictive analytics and allows for voice control of software, and which has already been incorporated into products including Tableau.  

The growth of AI as well as the internet of things (IoT) presents an opportunity for other Salesforce products, Benioff said.

“We‘ve always been influenced by the world of AI and IoT and seeing our customers try to add in all of their intelligent devices onto our platform so they can have better relationships with their customers who are connected to them in these incredible new ways,” he said.

Benioff’s comments come in the same week that Zoom announced it would be expanding AI capabilities throughout its product portfolio and Microsoft officially made Bing Chat available to preview users in Windows 11.

Artificial Intelligence, Business Intelligence and Analytics Software, Technology Industry

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , , , , ,

In economic uncertainty, it’s natural for executives to explore where to reduce spending, trim the fat, so to speak, and cut enterprising investments as a matter of caution. But this thinking is also counter-productive for all the reasons that make uncertainty so predictable. We can expect that every company is going to react this way in times of uncertainty.  

In 2023, CIOs are guided to focus on enhancing workforce engagement, customer experience, and data and AI. These are identified as key areas where technology can drive business growth and increase customer satisfaction in the process. 

Yet, it’s not uncommon for executives to cut costs in areas that actually improve customer experiences and also double-down on investments that can minimize them. 

Where winning companies deviate from the norm is that they look for opportunities to attract and retain customers by making experience and service a signature competitive advantage. The key is to understand where investments can deliver returns, accelerated time to value, and success now. 

The importance of customer experience as a competitive advantage 

Customer service is overdue for its makeover, shifting its role in the organization from a cost-center to a growth engine. More so, making service something the customers enjoy and appreciate, instead of dreading the engagement. 

Think about it this way, if 94% of your customers said that the service you provide directly influences future buying decisions, would you solely focus on the 6% who are seemingly indifferent? What if nearly half said that they’d switch brands to get better service? Well, in the last year, 71% said that they had done just that.  

Research shows that almost nine-in-ten (88%) of customers say that the experience your company provides is as important as your products and services. Best-in-class, personalized customer service is more important than ever — especially when it’s in someone’s home or business. 

For those companies that invest in customer experiences and relationships, the economic upside is already there. According to Gallup research, fully engaged customers represent a 23% premium in share of wallet, profitability, revenue and relationship growth over the average customer. By increasing customer engagement, Gallup also promotes increases in customer service metrics, including: 

66% higher sales growth,  10% increase in net profit,  25% increase in customer loyalty, and  +20 percentile point increases in customer confidence.  

There’s much to be done. Only 26% of U.S. workers believe their organization delivers on the promises they make to customers. 

Field service is a sleeping giant waiting to deliver business value  

When I say the words, “field service,” what comes to mind?  

Working with service and sales leaders over the years, I can honestly say that it’s usually not “innovation” or “groundbreaking” or “growth driver.” Yet, field service is literally on the front line of the customer’s experience. And CX itself, is ranked by businesses around the world as the top priority emerging from 2020 disruption.  

Field service represents the front line of live customer service, a true human touch point. It also represents a critical, and arguably underestimated or even undervalued, customer touch point that can increase customer satisfaction, drive sales, and lead the charge for overhauling customer service as a growth engine. 

The time is now. 

In its State of Service report, Salesforce research learned that case volumes for 54% of service teams rose between 2021 and 2022. In response, organizations strengthened mobile workforces by increasing budgets (62%) and headcount (61%). And, the field service management market is expected to grow to an estimated $8.06 billion by 2028 as companies work to meet increasing customer demand while managing costs. 

As mobile representatives serving on a company’s front lines, field service teams have a unique opportunity to manage these expectations and grow customer relationships through interactions that drive repeat revenue.  

Field service drives revenue and cost savings 

If you think about luxury goods and retail, many employ a strategic service offering called “clienteling.” Clienteling is a personalized approach – cater to high value customers in stores. As its evolved, data, insights, mobile tech, AI help service professionals deliver real-time personalization, promote satisfaction, and increase customer lifetime value (CLV). 

In field service, mobile workers are gaining the ability to deliver clienteling-like experiences for every customer. By delivering enhanced customer experiences, field service can significantly contribute to growth. 

New Salesforce research found that 86% of decision makers at companies with field service teams believe these teams are critical to growing the business.  

Fifty-two percent of high-performing field service workers say that their company’s management views customer service as a revenue generator. Specifically, 69% of high-performing mobile workers say their organization tracks revenue generated by customer service. And 82% of strategic organizations depend on mobile workers to upsell products and services. 

With product expertise and knowledge of customer purchases, service history, and usage data in hand, field service teams can tailor recommendations to every customers’ unique needs. As a result, those mobile workers who convert meaningful engagement into upselling or cross-selling opportunities realize an average success rate of 65%. 

Field service management, powered by AI and automation, enhance productivity and employee experiences 

For 93% of mobile workers, there is a direct link between employee experience and the customer experience. After all, mobile workers are brand ambassadors, and they are the face of your company.  

Salesforce research found that 65% of field service representatives feel the weight of customer expectations, more than any other type of service worker. As such, in addition to customer experience, employee experience is also key.  

An overwhelming majority (94%) of service professionals in high-performing organizations cite productivity as a major or moderate benefit of field service management. This should serve as an important consideration as executives look for ways to cut operational costs without compromising customer satisfaction. 

To better support their field service teams, organizations are improving operational efficiency and customer satisfaction with field service management tools. Of the 96% of high-performing field service organizations that use field service management, 90% report increased agility, 55% report higher productivity, and 53% report improved job satisfaction. More so, 98% of mobile workers credit it with productivity benefits. 

Automation and AI are also further unlocking efficiency and productivity opportunities. 

Research shows that 78% of high-performing field service organizations use AI, and 83% use workflow automation.  

For example, with AI-powered tools, like thoughtfully designed chatbots, mobile workers can efficiently schedule appointments, get real-time updates, and quickly find answers to questions.  

With conversational AI, service agents can transcribe conversations in real-time, gain insights, personalize engagement, save time, and the need for customers to repeat themselves.  

Additionally, automation-enabled workflows simplify the ability for mobile workers to create new accounts, place equipment orders, schedule appointments, and automate time-consuming, mundane tasks out of their day-to-day routines.  

Added up, agents get time back to be more creative, spend time engaging customers, and cultivate customer relationships. More so, AI reduces response times and accelerates first time fix rates, enabling mobile workers to serve more customers faster while boosting customer satisfaction. 

In summary 

Research makes a compelling case for businesses to invest in the areas that can drive business growth, improve employee experiences, and foster more loyal customers. As such, field service, and customer service, are no longer cost centers, but instead strategic areas for investment, to deliver a new kind of ROI for these times, return on innovation. 

Business, CIO, Employee Experience

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , , ,

Even though Google Cloud revenue growth showed signs of slowing, it nevertheless provided something of a bright spot as parent company Alphabet — hit hard by the tightening of customer budgets — posted a year-over-year decline in net income for its 2022 fourth quarter.

Fourth-quarter gross revenue for Alphabet was $76.05 billion, up just 1% from $75.3 billion a year ago, according to company results posted Thursday. Net income (profit) was $13.6 billion, down 34% from $20.6 billion in the fourth quarter of 2021.

The company’s share price dropped by 3.29% Friday on the news, closing at $105.22.

Though revenue grew slightly, rising expenses — mainly for research and development — were a major factor in the steep drop in net income.

One of the best-performing business segments for the quarter was Google Cloud, where revenue was up by 32% year on year, growing to $7.32 billion.

Google Cloud cuts losses

Google Cloud was one business unit that managed to keep costs down, which helped cut losses. The business unit operated at a $480 million loss in the most recent quarter, compared to the $890 million it lost in the year-earlier period. Though cloud computing provides revenue opportunities for Google and competitors including Microsoft and AWS, costs related to expanding and running infrastructure are high.

It wasn’t all good news for the cloud business, however. Even though cloud revenue was up, growth was slower than the 38% jump in revenue the company reported for the third quarter of 2022.

Meanwhile, Google’s total advertising sales fell to $59 billion, down 3.6% from the $61.2 billion the company posted a year earlier. In particular, a slowdown in advertising on YouTube caused revenue to fall for that unit to $7.96 billion, an 8% decrease from the $8.63 billion it generated in the prior-year period.

Going forward, Google is focused on growing its advertising revenue through AI-driven innovation, Chief Business Officer Philipp Schindler said on a call with analysts after the results were posted.

“Already, breakthroughs in everything from natural language understanding to generative AI are fueling our ability to deliver results that drive meaningful performance for advertisers and are useful to users,” he said.

Google plans to roll AI into more products

CEO Sundar Pichai told analysts on the call that in the coming months, Google will start rolling out AI built on its large language models into its products, starting with LaMDA (Language Model for Dialogue Applications). He said that both LaMDA and PaLM (Pathways Language Model) would be made available so that “people can engage directly with them,” which will help the company “continue to get feedback, test and safely improve them.”

LaMDA currently works with 137 billion parameters, while PaLM uses 540 billion. In comparison, GPT-3.5 — the large language model developed by Microsoft-backed OpenAI and the basis for ChatGPT — uses 175 billion parameters.

In addition to growth for Google Cloud, Google’s Other Revenues segment — which includes hardware and nonadvertising YouTube revenue — also posted a revenue increase, totaling $8.8 billion, up 8% from the year prior. Additionally, revenue in Alphabet’s Other Bets, a business segment that comprises projects such as health technology and driverless cars, rose to $226 million, up from $181 million in the fourth quarter of 2021.

On the analyst call, CFO Ruth Porat announced that starting in the first quarter of 2023, the AI subsidiary DeepMind would be reported as part of Alphabet’s corporate costs, instead of Other Bets, where it currently sits. Porat said this was to “reflect the increasing DeepMind collaboration with Google Services, Google Cloud and Other Bets.”

Alphabet’s results come mere weeks after the company announced it would be laying off around 12,000 employees. As a result of those job cuts, the company expects to incur employee severance and related charges of $1.9 billion to $2.3 billion, the majority of which will be recognized in the first quarter of 2023.

Additionally, Alphabet expects to incur a further $500 million of costs related to exiting leases early.

Despite the dramatic reduction in workforce size, Porat said the company will “continue hiring in priority areas with a particular focus on top engineering and technical talent as well as on the global footprint of our talent.”

Cloud Computing, Technology Industry

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , ,

When it comes to data, the first question isn’t whether you can measure something, it’s whether you should. What you can or should measure impacts what you can do as a business, potentially affecting your business model. Along with respecting regulatory compliance requirements and the privacy rights of individuals, it’s necessary to consider the business value of data. You can’t run a business if you’re unsure about data protection mandates or what can be measured. That’s why data governance must underpin the business model and strategy. It needs a seat in the executive suite.

The introduction of GDPR and other data protection regulations have forced every business to be aware of data privacy boundaries: What data can be measured and stored, and who has access? Data governance ensures only authorized individuals have access to specific data, with controls to protect sensitive data such as personally identifiable information (PII).

Getting it wrong has serious legal, financial, and reputational implications for your business. A strong legal team with data privacy experience is fundamental to understanding the risk and interpreting what laws affect your business. It’s a complex landscape with no single regulatory body and rules that vary from country to country.

There must be a specific group within IT operations, a data team, that ensures your business collects and stores the right information and controls accessibility. With those guardrails in place, only then can a data analyst or data scientist safely access and interpret that information to create business value.

The Benefits of Data Governance

Data governance delivers a straight quantifiable return on investment with improved operational efficiency and reduced business risk. For example, having employees searching through reams of data that have no impact on business outcomes is a waste of time and money. But with structured policies in place that determine who should have access to what data, you can avoid that problem. Plus, access to confidential information is carefully controlled, reducing the risk of costly data breaches and compliance failures while providing measurable financial benefits. Effective data governance also creates a competitive advantage. As a compliant business, you’re able to enhance your brand by building trust with consumers and partners.

Key Steps to Building a Data Governance Strategy

Comprehensive data governance must be planned and implemented as early as possible. Here are key steps to building an effective strategy:

Appoint a data champion on the executive team to lead the charge and incorporate data governance into your business.Build SMART (specific, measurable, achievable, relevant, time-bound) data goals that add business value.Develop a data dictionary with a well-documented glossary of metrics for your business.Categorize and determine what data is confidential to reduce legal risk, improve operational efficiency, and build a competitive advantage.Establish privacy and governance policies to ensure you collect the right data at the right time and limit access to necessary individuals.Build infrastructure and systems to back up your policies along with the budget to support them.Base all infrastructure and data platforms on security to ensure data is used responsibly at all times.Communicate with the business. Data governance should be well understood by company executives and respected as a critical part of day-to-day operations.

Streamlining Data Use

Data access can be streamlined by establishing workflows that automatically route requests to the right people and instantaneously grant access once approved. This takes pressure off the data team, empowers data owners, and ensures everything is monitored and governed.

Preparing for the Future

Data privacy is complicated. Security will continue as an essential part of the data governance journey. Data governance must continually evolve in step with regulatory changes and new business opportunities. Subsequently, businesses should consider future scenarios, create a multi-year plan and shore up data protection defenses.

To achieve enduring success, companies must have the technology, people, and processes in place to support data governance, enable analytics, and drive business growth. Get your data governance program blueprint for the five components every data governance program must have, including pitfalls to avoid and six best practices to employ. Download the whitepaper.

Data Governance

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , ,

Revenue growth at Amazon’s cloud computing division, Amazon Web Services, continued to slow in the fourth quarter as enterprises advanced their cost-cutting measures, brought on by uncertain macroeconomic environment.

Despite a 20% year-on-year increase in revenue, reaching $21.4 billion in Q4 2022, this growth rate is slower compared to the 27.5% and 33% growth seen in third quarter and second quarter, respectively.

“Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions,” Brian Olsavsky, chief financial officer at Amazon, said during an earnings call with analysts. “As expected, these optimization efforts continued into the fourth quarter,” Olsavsky added.

Enterprises’ cost optimization to persist for next two quarters

AWS expects the slowdown in customer spending to persist for at least the first half of fiscal year 2023, spanning the next two quarters.

“As we look ahead, we expect these optimization efforts (reduced spending) will continue to be a headwind to AWS growth in at least the next couple of quarters,” Olsavsky said. In January, AWS revenue growth was in the mid-teens, the CFO added.

The slowdown in spending, according to Olsavsky, is impacting all industries with financial services, cryptocurrency and advertising being particularly sluggish.

“As there’s lower advertising spend, there’s less analytics and compute on advertising spend as well,” Olsavsky said, according to a Motley Fool transcript. Amazon CEO Andy Jassy added that enterprises are seeking to lower their short-term AWS bills by performing certain tasks less frequently.

Both, Jassy and Olsavsky stated that AWS was working with customers to lower costs in the short term through solutions such as switching to lower-cost products or offering different types of storage for different data types.

Cloud computing industry faces the heat

Microsoft and Google, which compete with AWS for cloud computing market share, have reported similar reduction in customer spending, impacting growth in their respective cloud businesses.

Microsoft, which reported fourth-quarter earnings last month, saw its Azure and other cloud services revenue growth slow to 31% from 35% in the previous sequential quarter.

Note that Microsoft does not separately report Azure revenue.

Google’s cloud revenue growth also slowed to 32% for the fourth quarter, down from 38% in the previous sequential quarter. In the fourth quarter, Google Cloud reported revenue of $7.3 billion and an operating loss of $480 million.

Amazon Web Services, Cloud Computing

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , ,

Enterprise software and workplace management orchestrator ServiceNow announced rosy revenue numbers in its Q4 2022 earnings call Wednesday evening, saying that total revenues topped $1.9 billion, which represents a 20% year-on-year increase.

IDC analyst Stephen Elliot noted strong corporate management and the company’s expansion into the workplace experience market as contributing factors in the reported growth.

Most of ServiceNow’s revenue came from service subscriptions, which rose to $1.86 billion in the quarter, a 22% year-on-year rise. The company’s current remaining performance obligations, which represent contract revenue that will be recognized as such in ServiceNow’s numbers within the next 12 months, rose to nearly $7 billion as of the reporting date. That’s a 22% increase compared to the fourth quarter of 2021.

Chairman and CEO Bill McDermott was bullish on the company’s performance, saying that the market conditions that have helped grow ServiceNow’s revenues should remain strong in the foreseeable future.

“Our Q4 surge in new business shows that the secular tailwinds of digitization aren’t going anywhere,” he said in a statement accompanying the results. “The world works with ServiceNow as the end-to-end platform for digital transformation.”

ServiceNow’s substantial growth exceeded profitability guidance, according to CFO Gina Mastantuono, who credited net-new annual contract value gains for much of the surge.

“What’s more, our results were generated with a lower mix of early renewals from 2023, providing us more opportunities to drive further expansion throughout the year,” she said in the statement.

Despite the growth, ServiceNow’s stock price dropped nearly 8% in after-hours trading, for reasons that weren’t immediately clear. McDermott, however, has vowed “absolutely no layoffs in 2023,” according to a report from Bloomberg, bucking a trend among technology vendors of late.

IDC’s Elliot, who is group vice president of I&O, cloud operations, and DevOps, credited a healthy corporate culture for ServiceNow’s continued success, saying that, while rapid growth can sometimes cause companies to lose some of their strengths over time, ServiceNow has managed to avoid that.

“I’d say that they’re hitting on all cylinders,” he said. “I also think that they have been very consistent and focused on what customers are looking for, and translating that into investments in the company.”

This isn’t a surprise, Elliot added, given the strong leadership across ServiceNow’s management ranks. He credited McDermott, in particular, for helping to minimize internal politics and other distractions that can sap a company’s momentum as it expands into new business areas.

“They’ve had so much success with the IT management business,” he said. “And over the course of the past five years, the expansion into field service management, HR, employee experience businesses; [their focus] has continued to drive them.”

ServiceNow, Technology Industry

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , ,

Differentiating your brand in the telecommunications market is hard—just ask Vodafone’s CDIOScott Petty.

Despite the British multinational telco’s continued investments in fibre and 5G, and growing consumption of broadband and cellular services, intense price competition, rising energy prices, market regulation and economic headwinds have made for an industry where single-digit revenue growth is difficult to find.

But with a new insourced operating model and a ‘mixed matrix’ team—which gives autonomy centrally and to local markets—Petty believes Vodafone is on a journey to become a next-gen telco.

Vodafone’s digital transformation strategy

Over the last three years, Vodafone has used digital transformation as a centrepiece for how it unlocks efficiencies and new growth opportunities.

Underpinned by its 2025 tech strategy—which commits to building in-house scaled platforms, launching products and services to market faster, building a talent pipeline, and establishing Vodafone as a gigabit broadband leader—the firm’s digital transformation strategy has three pillars.

Operational efficiency: The company is leveraging automation and observability tools to improve efficiency, as well as data analytics, machine learning (ML) and AI through Google Cloud Platform to make better decisions and find incremental savings. An example of the latter is its use of ML and AI to overlay data—such as customer movements from social media as well as profitability—to find out where to deploy new base stations. Dubbed ‘smart capex’, Petty says Vodafone has found a 15% efficiency and £500m in cost savings through this since 2019.Digital channels: Petty says digital channels enable Vodafone to “sell more, service better and reduce costs”. The company app, chatbots and websites have all driven opportunities to better serve customers, particularly through retail-specific events, such as the launch of Apple’s iPhone 14, where web traffic can grow 500% within an hour.New platform businesses: Created in parallel to its legacy connectivity business, new platform businesses aim to drive revenue growth. Vodafone now has an IoT platform connecting 150 million devices, including connected cars, smart meters and smart home monitoring systems. In Africa, it claims to run the largest payment platform, while it’s adding new financial servicing in Europe—such as handset insurance—to wrap around standard tariffs. Petty says that 10% of total company revenue is now coming from these platform businesses.

New operating model, a mixed matrix team

The key to achieving transformation at scale, and delivering better products and services for customers, has been the creation of a European digital and IT organisation that combines the expertise of local markets with the breadth and scale of centralisation.

Last April, Vodafone Technology created a pan-European digital & IT organisation with nearly 17,000 employees led by Petty, bringing together IT functions from 12 European markets to work as one team.

Formerly CTO for Vodafone UK, Petty says Vodafone previously operated independent sets within countries, so each market was responsible for their region, with shared services for data centres and platforms, such as ERP. But this up and down model made code reuse difficult. Historically, scaling across markets was also complicated, with many overlapping projects, high expenditure and limitations in how many projects Vodafone could run simultaneously.

Vodafone didn’t move to centralisation—a model where you don’t have “proximity to the local market”—but rather to a ‘mixed matrix’ model, where each operational local CIO had a broader technology role for the organisation in addition to their local jurisdiction.

“Our UK CIO runs everything in the UK, but also digital engineering for all of Europe,” says Petty. “Our Spanish CIO runs digital channels and the Spanish technology. That model is replicated down into the organisation, so everyone has an operational function close to the markets they operate in, and a domain function, which is trying to execute our strategy. That creates interlocks between each other.” He also highlights that, for instance, the Italian CIO responsible across Europe for data and analytics needs analytics to run well in the UK, and to have a close working relationship with his UK counterpart to ensure digital engineering operates effectively in Italy.

Insourcing and reuse in engineering

A key component of this strategy was Vodafone’s approach to insourcing. Petty says the telecom provider was previously 30% insourced, and 70% outsourced, with a heavy reliance on system integrators and third parties. He says that model isn’t effective and doesn’t scale, with system integrators not incentivised to build replicable platforms.

“Our belief is you have to have a significant portion of your own engineering,” he told CIO.com. “There will always be a role for systems integrators, but integrating into our platforms and standards, not a free-for-all.”

Petty also says that investing in in-house engineering has an upfront benefit as its cheaper, but that it also gives the organisation the technical and engineering talent to build “horizontal scale”.

Vodafone, which has 13,000 software engineers with ambitions to reach 16,000 by 2025, sees a greater willingness for teams to share and reuse through this same model.

“They are more open to sharing and reusing,” he says. “And as they replicate that model in their teams, you just create the connections. Ultimately, culture is about humans and how they interact.”

Petty says staff across the European markets will volunteer their time for projects, such as building APIs for new cloud platforms, sensing the opportunity to do interesting work and develop their core skills. It’s this collaborative approach that’s also improving efficiency. He contrasts the new approach with how the Vodafone UK team once operated. Spending approximately £80 million each year on digital investments, and with 1,000 engineers developing capabilities in Spotify-style squads, the company experienced more defects, cybersecurity issues and slower business speed as the number of projects increased.

The new operating model and team restructure saw technology squads split into technical functions, such as cloud engineering and economics, with these squads responsible for service maintenance, cybersecurity quality and achieving performance across the various European markets.

“Taking this approach dramatically improved our velocity,” says Petty. “Our biggest supporter of hyper-scaling is our CFO because he sees that the more money he pours into engineering, it comes back as increased velocity and capacity. The business can go faster.”

Petty gives the example of Vodafone’s rewards app. Previously, the mere difference between a latte in the UK and café con leche in Spain would have meant the two regions building separate solutions. Under the new reuse model, the rewards platform was developed 100% in-house in Turkey, then launched in Portugal inside three months. The next market, Germany, took just one sprint to bring it to market.

He says the cost difference is significant too, explaining that while the first market spends 110% of their capacity (10% more to make the platform reusable), the payback comes as each subsequent market adopter spends significantly less.

“You start to get a flywheel effect on creating that reuse across your platforms.”

CDIO becomes CTO

Despite progress, there are hurdles ahead for Petty. He admits the skills shortage remains a critical issue, particularly in data science, and there’s the migration of on-premise platforms to Google Cloud Platform (GCP), through which Vodafone hopes to unlock more data and release new capability. Investment must continue on fibre and 5G through recession, too, while Vodafone has started exploring quantum-safe cybersecurity with IBM.

There are deeper changes in the boardroom as well. In early December, Vodafone announced its CEO of nearly 20 years, Nick Read, would be stepping down with finance director Margherita Della Valle taking over as an interim replacement. And with global CTO Johan Wibergh retiring in December 2022, a new role beckons for Petty, too, as he starts as the new CTO in early 2023. Together with Alberto Ripepi, the new Chief Network Officer, he will join the executive committee and expected to co-lead the Vodafone Technology group.

Petty says the hires were down in part to the success of the insourcing model, and a realisation that technology executives can challenge the business. “When we changed the operating model, we saw benefits for technology to challenge the business a little bit more,” he says. “You can work as a team to try and drive the right outcome.”

CTO, Data Engineering, IT Leadership, IT Operations, IT Skills, Operating Systems