hype cycle for e commerce, 2010

Research

Publication Date: 3 August 2010 ID Number: G00205840

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Hype Cycle for E-Commerce, 2010

Gene Alvarez

E-commerce continues to rivet the attention of enterprises struggling to return to growth. This Hype Cycle will help enterprises evaluate the suitability of an exploding number of e-commerce technological capabilities, long-established and emerging, and to understand their business value.

Publication Date: 3 August 2010/ID Number: G00205840 of 107

© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.

TABLE OF CONTENTS

Analysis ....................................................................................................................................... 5 What You Need to Know .................................................................................................. 5

Customer Experience .......................................................................................... 5 Social .................................................................................................................. 5 Globalization ....................................................................................................... 5 Mobile ................................................................................................................. 5 Software as a Service.......................................................................................... 5

The Hype Cycle ............................................................................................................... 6 Using the Hype Cycle .......................................................................................... 7 E-Commerce Foundational Components ............................................................. 7 Web Customer Experience .................................................................................. 8 Marketing ............................................................................................................ 8 Sales ................................................................................................................... 9 Service ................................................................................................................ 9 Mobile ................................................................................................................. 9 Social CRM ....................................................................................................... 10 New to the Hype Cycle ...................................................................................... 10

Mobile................................................................................................... 10 Social ................................................................................................... 11 Web Customer Experience ................................................................... 11

The Priority Matrix .......................................................................................................... 13 Off the Hype Cycle ......................................................................................................... 15 On the Rise ................................................................................................................... 16

Mobile Fraud Detection ..................................................................................... 16 Social-Shopping Sites ....................................................................................... 18 Context Delivery Architecture ............................................................................ 19 Persona Management ....................................................................................... 20 Rich Information Visualization............................................................................ 22 Customer-Centric Web Strategies ..................................................................... 23 Transactional Ad Units ...................................................................................... 24 E-Services......................................................................................................... 25 Online Advertising Data Exchanges ................................................................... 26 Social Commerce .............................................................................................. 28 Context-Enriched Services ................................................................................ 29 Open-Source E-Commerce Software................................................................. 31 Campaign Management SaaS ........................................................................... 32 Web Content Product Recommendation Engine ................................................ 33 Customer Interaction Hub .................................................................................. 33 E-Invoicing ........................................................................................................ 34 Mobile Web Applications ................................................................................... 38 Social CRM for Sales ........................................................................................ 40 Social CRM: Community Marketing ................................................................... 41

At the Peak .................................................................................................................... 42 Mobile Coupons ................................................................................................ 42 Campaign Optimization ..................................................................................... 43 Mobile Consumer Application Platforms............................................................. 44 Loyalty Marketing .............................................................................................. 45 Web 3.0 ............................................................................................................ 46 Cloud/Web Platforms......................................................................................... 47 Enterprise Feedback Management .................................................................... 49



Multichannel Campaign Management ................................................................ 49 Multicommerce MDM......................................................................................... 50 Consumer Web Mashups .................................................................................. 52 Predictive Campaign Analytics .......................................................................... 53

Sliding Into the Trough ................................................................................................... 54 E-Commerce on Demand .................................................................................. 54 Mobile Social Networks ..................................................................................... 55 Event-Triggered Marketing ................................................................................ 56 Content Analytics .............................................................................................. 57 Fraud Detection................................................................................................. 59 MDM of Product Data ........................................................................................ 61 MDM of Customer Data ..................................................................................... 63 Microblogging .................................................................................................... 65 Mobile Advertising ............................................................................................. 67 Customer Profitability Management ................................................................... 69 Distributed Order Management .......................................................................... 70 Virtual Environments for Consumer Sales .......................................................... 71 Online Video ..................................................................................................... 72 Virtual Assistants ............................................................................................... 74 Consumer-Generated Media ............................................................................. 75 Campaign Segmentation ................................................................................... 76 E-Mail Marketing ............................................................................................... 76 Preference-Driven Personalization .................................................................... 77

Climbing the Slope ......................................................................................................... 78 Consumer Digital Rights Management ............................................................... 78 Content Delivery Networks ................................................................................ 80 E-Commerce Web 2.0 Sales Tools .................................................................... 82 Mobile Search ................................................................................................... 84 Social Search .................................................................................................... 85 Web-to-Print Applications .................................................................................. 86 Integration as a Service ..................................................................................... 87 Knowledge Management for Customer Self-Service .......................................... 91 Wikis ................................................................................................................. 91 Web Analytics ................................................................................................... 93 Web and Application Hosting ............................................................................. 95 Sales Order Management.................................................................................. 96

Entering the Plateau ...................................................................................................... 97 Enterprise Portals .............................................................................................. 97 Podcasting ........................................................................................................ 98 Sales Configuration ........................................................................................... 99 Blogs ............................................................................................................... 100 Consumer Content Creation Tools ................................................................... 101

Appendixes .................................................................................................................. 103 Hype Cycle Phases, Benefit Ratings and Maturity Levels ................................ 105

Recommended Reading ........................................................................................................... 106

LIST OF TABLES

Table 1. Hype Cycle Phases..................................................................................................... 105

Table 2. Benefit Ratings ........................................................................................................... 105



Table 3. Maturity Levels ........................................................................................................... 106

LIST OF FIGURES

Figure 1. Hype Cycle for E-Commerce, 2010 .............................................................................. 12

Figure 2. Priority Matrix for E-Commerce, 2010 .......................................................................... 15

Figure 3. Hype Cycle for E-Commerce, 2009 ............................................................................ 103



ANALYSIS

What You Need to Know

The weak economy and five key trends are driving new investment and upgrades in e-commerce capabilities. Client interest in e-commerce has been increasing since the last release of this report; however, prudence and a focus on improving sales and customer experience is guiding all investment activities.

Customer Experience

Organizations want to improve their websites with rich online customer experiences. Driven by consumerization, organizations are improving their site user interfaces with rich Internet application (RIA) capabilities for all types of commerce — business to business (B2B) and business to consumer (B2C) — as websites are no longer compared with direct competitors, but are compared with leading consumer website customer experiences.

Social

Organizations are also adding social capabilities. Here, organizations are seeking to take advantage of many forms of social CRM capabilities. These range from building a following of "friends" in public communities, such as Facebook and Twitter, to enabling user-generated content to contribute to the organization's website and other activities that involve leveraging the "wisdom of the crowd."

Globalization

Organizations are going global for new customers; therefore, there is significant interest in enabling e-commerce in new countries and regions. This is driving requirements for localization capabilities, such as translation, localized currencies and payment processes, local implementation services at local rates, and other key international capabilities.

Mobile

Organizations want to implement mobile e-commerce capabilities to take advantage of the growing populations, using Internet-enabled smartphones and tablets for Web browsing and context-aware applications. Advancements in mobile technologies and devices and demand from consumers for mobile applications and Web browser access are also gaining more hype as devices, such as the Apple iPhone 4, iPad and other mobile devices, enable consumers and business partners to access an organization's website for product/service investigation and to possibly make a purchase directly through the device.

Software as a Service

The increasing number of providers and developments in e-commerce software as a service (SaaS), which is also referred to as e-commerce on demand, have opened e-commerce capabilities to a much broader audience of organizations than ever before, and the hype surrounding SaaS offerings is increasingly due to current economic and market forces.

Organizations that want to develop their e-commerce capabilities into next-generation customer experiences and to increase sales and customer retention should use this Hype Cycle to understand the hype, technology maturity and business impacts of leading e-commerce technologies. Because of the amount of technology available, organizations without this



understanding risk investing in technologies that may not provide returns, may hurt customer relationships and may negatively affect their already-complicated e-commerce capabilities.

The Hype Cycle

E-commerce trends and technologies are transforming the way enterprises interact with markets, including prospects, customers and partners. Research from the "Magic Quadrant for E-Commerce" uncovered how interest in e-commerce has expanded to industries outside traditional retail. The new industries investing in e-commerce capabilities are discrete manufacturing, distribution, telecommunication and publishing (see "Findings: CEOs Are Placing New Bets on E-Commerce as Part of Their Return-to-Growth Strategy").

B2C organizations still lead in innovation, however, tapping into communities of consumers via social-network software (such as Facebook, MySpace and Twitter) as a way to engage with customers and improve the overall online shopping experience. Moreover, B2C organizations are capitalizing on the increasing number of smartphones and Web-capable phones. Therefore, many are making sure that they have a mobile website that is easy to use via a mobile Web browser, and many are creating mobile applications for devices such as iPhone4 and iPad (see "How Mobile E-Commerce Should be Using Context, but Isn't" and "Top Eight Ways Context Will Make Your M-Commerce Applications Stickier").

Consumerization continues to put pressure on organizations to offer rich customer experiences as customers of all types continue to compare site capabilities with other popular sites, such as Google, YouTube, Yahoo, Amazon and eBay, regardless of the industry. Often, business partners will expect the capabilities of consumer sites for their purchasing requirements to be coupled with more-advanced B2B sales capabilities, such as sales configuration, customer-specific catalogs and links to electronic data interchange (EDI) capabilities. As organizations look to capitalize on these trends, they are also challenging IT organizations and business owners to lower operating costs and provide reliable, highly scalable, available and stable 24/7 environments.

The 2010 Hype Cycle for E-Commerce illustrates the varying hype and maturity levels of e-commerce technologies, as well as their business dynamics and complexities. The sheer number of technologies being hyped in the e-commerce market demonstrates the complexity of an organization's e-commerce technology portfolio and strategy.

E-commerce is often associated or confused with other synonyms, such as e-business, e-retailing or individual technologies (such as EDI). Therefore, we have provided a definition to use with this Hype Cycle: "E-commerce is a compilation of business models, processes and technologies that enable online sales, service and marketing for B2B and B2C commerce. It facilitates transactions over the Web, and supports the creation and continuing development of online relationships."

E-commerce technologies are critical to key initiatives, such as CRM, partner relationship management, process improvements, sales growth, reduction of sales costs, brand building, and delivering value to consumers and business partners. This is accomplished by enabling an enjoyable customer experience that exceeds sales and service expectations.

Organizations are unable to purchase a single e-commerce solution that is a complete match with all their unique business requirements as they exist, or that is agile enough to support changing requirements. Most organizations' e-commerce initiatives can have as many as 15 to 20 primary or core integration points to complete a business process, such as campaign to cash, and as many as five to 10 vendors to provide the complete operational site. Additionally, some B2B organizations find themselves managing multiple types of e-commerce beyond partner-direct (B2B), because of the varying IT capabilities of their partner networks.



Using the Hype Cycle

Use this Hype Cycle to investigate, evaluate and prioritize individual technologies that will enable you to create a unique Internet experience and address current and future e-commerce trends. The Hype Cycle for E-Commerce addresses 65 of the most-relevant and topical e-commerce technologies, and groups them into seven key areas:

E-commerce foundational components

Customer Web experience

Marketing

Sales

Service

Mobile

Social CRM

These groupings will enable you to align these technologies with your individual online strategies, tactical initiatives, and B2B or B2C objectives.

E-Commerce Foundational Components

These components enable B2B and B2C organizations to process orders; manage many types of content and product information; locate products, exchange data, services and suppliers, as well as analytics; and manage overall performance. Technologies in the group enable organization to conduct any type of commerce and are necessary to core functionality and business processes supported by e-commerce website. Technologies in this group include:

Cloud/Web platforms

Consumer digital rights management (DRM)

Content analytics

Content delivery networks

Context delivery architecture

Context-enriched services

Customer interaction hub (CIH)

Customer profitability management

Distributed order management

E-invoicing

Fraud detection

Enterprise portals

Integration as a service (IaaS)

Multicommerce master data management (MDM)*



MDM of customer data

MDM of product data

Online video

Rich information visualization

Web analytics

Web and application hosting

Web-to-print applications

*Technology that became obsolete before it reached the Plateau of Productivity (see Hype Cycle figure)

Web Customer Experience

These technologies enable organizations to provide an enjoyable Web experience at any point during the customer interaction life cycle. This customer life cycle will include marketing, sales or service activities delivered over the Web. The focus of these technologies is providing an enjoyable online experience that is intuitive and easy-to-use for all types of customers. Technologies in this group include:

Consumer content creation tools

Consumer Web mashups

Consumer-generated media

Customer-centric Web strategies

Persona management

Podcasting

Preference-driven personalization

Web 3.0*

Web content product recommendation engines

*Technology that became obsolete before it reached the Plateau of Productivity (see Hype Cycle figure)

Marketing

These technologies enable organizations to create customer demand and leads via the Web channel. The technologies in this section enable organizations to use online marketing techniques to acquire new customers, expand the number of product being offered to a customer and to win customers that may have left the organization. Technologies in this area include:

Campaign management SaaS

Campaign optimization

Campaign segmentation



E-mail marketing

Event-triggered marketing

Loyalty marketing

Multichannel campaign management

Online advertising data exchanges

Predictive campaign analytics

Transactional advertising units

Sales

These technologies enable organizations to select products and services and to process transactions over the Web channel. The technologies in this section enable organizations to improve their sales by offering full Web stores as a service, improvements to the user interface to increase conversion, to configure products and services without the aid of a human and other sales capabilities. Technologies in this area include:

E-commerce on demand

E-commerce Web 2.0 sales tools

Open-source e-commerce software

Sales configuration

Sales order management

Virtual environments for consumer sales

Service

These technologies enable organizations to service customers before, during or after a sale, and to resolve customer issues. These technologies also offer the ability to collect feedback from customers and enable online self-service. Technologies in this area include:

Enterprise feedback management (EFM)

E-service

Knowledge management for customer self-service

Virtual assistants

Mobile

These technologies enable organizations to provide mobile-based e-commerce (m-commerce) and can complement all phases of the customer life cycle. Particularly in the m-commerce space, many enterprises are beginning to develop context-enriched applications for the purpose of increasing customer loyalty and improving sales. Since it is the early days of context-enriched commerce, many different approaches are being taken, such as leveraging customer location and sending Short Message Service (SMS) messages. These technologies include:

Mobile advertising



Mobile consumer application platforms

Mobile coupons

Mobile fraud detection

Mobile search

Mobile social networks

Mobile Web applications

Social CRM

These technologies enable organizations to use social techniques within their Web stores or to take part in larger external (both public or privately created) communities of customers. Social CRM applications encourage many-to-many participation among internal users, as well as customers, partners, affiliates, fans, constituents, donors, members and other external parties, to support sales, customer service and marketing processes. Social CRM works in each of these domains, for example, to provide a social enterprise feedback mechanism in the service domain, as well as social monitoring or product development in the marketing domain:

Blogs

Microblogging

Social commerce

Social CRM: community marketing

Social CRM: for sales

Social search

Social shopping

Wikis

New to the Hype Cycle

The 2010 E-Commerce Hype Cycle covers 65 technologies. To respond to the market trends listed above and to assist organizations looking to capitalize on these trends, the following technologies have been added to the 2010 E-Commerce Hype Cycle:

Mobile

Mobile advertising

Mobile coupons

Mobile fraud detection

Mobile search

Mobile social networks

Mobile Web applications



Social

Social commerce

Social shopping sites

Web Customer Experience

Web content product recommendation



Figure 1. Hype Cycle for E-Commerce, 2010

Source: Gartner (August 2010)



The Priority Matrix

Vendors and companies are enabling e-commerce with a variety of technologies, in different forms and at different rates of adoption. The Priority Matrix presents the potential benefits attainable relative to the progression along the Hype Cycle. This is intended as a general guideline, because the benefits and maturity of any technology will partly depend on industry conditions, unique business circumstances and the organization's ability to use the technology effectively.

Transformational benefit, shorter time frame (less than two years): These technologies are aimed at addressing current or near-term transformational requirements of e-commerce from its current state. Technologies in this category can present a return on investment (ROI) with a short time frame or offer a compelling competitive advantage that can transform the way an organization does business. Only enterprise portals fall into this category, because they enable improvements to B2B e-commerce personalization, presentation and system integration.

Transformational benefit, moderate time frame (two to five years): These technologies are aimed at fundamentally changing the way organizations interact with customers online (e.g., via mobile consumer application platforms). Additionally, cloud/Web platforms can transform how organizations procure and implement new e-commerce capabilities. However, these technologies require some time to learn and understand where the opportunities are and how to use them properly.

Transformational benefit, longer time frame (more than five years): These technologies can enable a transformational change to an organization's e-commerce initiatives. However, due to their complexity and harder-to-quantify benefits to obtain funding, these technologies are more strategic in value than tactical. There are five in this category: content analytics, context delivery architecture, context-enriched services, social CRM: community marketing, and virtual environments for consumer sales.

High benefit, shorter time frame (less than two years): These technologies are more

substantial in an e-commerce strategy, but in the context of common business practices, they address current or near-term issues in the organization. They may apply to improvements in a stand-alone function or a new area, such as campaign tracking and measurement, consumer content creation tools, sales configuration, social commerce, and Web and application hosting.

High benefit, moderate time frame (two to five years): These technologies are more tactical

and require planning and incremental investments. Technologies in this group enable improvements in many areas of e-commerce. For example, improvements to online sales may involve the use of e-commerce Web 2.0 sales tools; for service improvements, technologies such as e-service and EFM may be used; for marketing improvements, event-triggered marketing and multichannel campaign management can provide improvements; and for foundational e-commerce capability improvements, technologies such as content delivery networks may be used. (Refer to the Priority Matrix for the complete list of technologies in this category.) The largest collection of technologies for the Hype Cycle is in this area.

High benefit, longer time frame (more than five years): These technologies are strategic and require long-term planning and incremental investments. There are seven technologies in this category and, similar to moderate time frame technology improvements, they can be delivered in several areas: marketing (campaign optimization, e-commerce foundational capabilities); CIH, customer profitability management, distributed order management and rich information visualization; service (virtual assistants and mobile); and mobile fraud detection.



Moderate benefit ratings: These technologies generally enable added capabilities to early-generation e-commerce deployments. Depending on the time frame, they can be deployed as rapid-implementation projects to deliver specific functionality, or built into longer-term plans to reduce capital outlays and operating expenses (see the moderate-level boxes in the Priority Matrix).

Low benefit ratings: Technologies in this group are not viewed as large contributors to overall operational savings or to increases in marketing, sales or service capabilities(see the low-level boxes in the Priority Matrix).



Figure 2. Priority Matrix for E-Commerce, 2010


Off the Hype Cycle

The following technologies were removed from the 2010 Hype Cycle for E-Commerce:



Electronic bill presentment and payment for telecom providers

E-marketing

Insurance self-service portals

Loyalty programs

Online supplier directories

Really Simple Syndication (RSS) for marketing

Retail B2C mobile commerce

Retail e-commerce usability and conversion analytics

Secure Web stores

Social CRM: customer service

Social tools for retail websites

Web 2.0

This was done for one or more of the following reasons:

The technology has reached maturity and is no longer part of the Hype Cycle.

The technology is specific to a vertical industry and can be found in that vertical industry's Hype Cycle.

The technology has been merged into another technology.

On the Rise

Mobile Fraud Detection

Analysis By: Avivah Litan

Definition: Fraud detection and prevention are used to protect customer and enterprise information, assets, accounts, and transactions through the real-time, near-real-time, or batch analysis of activities by users and other defined entities (such as kiosks) against accounts and records. The rapid and massive adoption of smartphone mobile applications is quickly driving the adoption of mobile-based transactions, generating the need for specific mobile fraud detection technologies and models that heretofore have been nonexistent or hard to find.

Fraud detection uses background server-based processes — transparent to users — that examine user and other defined entities' access and behavior patterns. Then, it typically compares this information to a profile of what's expected and considered "normal." If tuned properly, fraud detection systems can be highly effective at keeping criminals out. They are not intrusive to legitimate users unless the user's activity is suspect. Access and behavior patterns on mobile computing devices are notably different from those on fixed-connection computing devices — hence, the need for new fraud detection modeling and profiling technology.

Unlike mature fraud detection applications that exist through fixed connections — for example, on a PC or store-based — mobile fraud detection is in its embryonic stage, reflecting the emergence of mobile platforms used to conduct sensitive transactions. The migration of transactions to mobile platforms will create high demand for fraud detection that operates in mobile environments



and compensates for features in the land-based environment that do not translate into the mobile one. Fraud prevention techniques that are particular to mobile platforms include:

1. Mobile device identification — Identification is typically enabled through a JavaScript on the server that the user logs into or through APIs from communications service providers, which captures whatever information it can get from the user's browser and phone, depending on if the user is using a browser or native application. Client device identification is an effective tool for PC-based fraud detection, but it must gather different device parameters to be effective in the mobile world.

2. Location of device — The location of a device is relative to other location information an enterprise knows about the user: Enterprises may want to check the location of the device relative to anything else it knows about the user's location through other systems the user may interact with at the enterprise. For example, if the user's mobile phone is in Germany, but seconds earlier, the user was withdrawing cash from an ATM machine in the United Kingdom, the enterprise knows that one of those transactions (either the PC Web-based or the mobile Web-based) is suspect.

3. Mobile fraud detection models — Lastly, some online fraud detection vendors are starting to tune their risk-scoring models specifically for mobile applications — for example, by looking at the mobile device itself, the location of the phone and the behavior of the user while transacting from the phone. For example, some users may navigate an enterprise's mobile applications differently from how they navigate their fixed-connection browser applications. Likewise, some users may shy away from executing high-value transactions from their mobile phones, while they execute them frequently from their fixed-connection browsers.

This area is very new to the fraud detection vendors, as there is little mobile transaction experience to draw upon to build effective risk models and scores. It tries to combine some of the methods listed above, including mobile device identification and examining the location of the mobile phone in relation to other information known about the user and his or her location.

Position and Adoption Speed Justification: Fraud detection is already prevalent in the credit card market and is quickly gaining adoption in other markets, such as healthcare insurance, online transactions, benefits fraud, tax fraud and internal corruption. However, the mobile fraud detection market is embryonic, reflecting the fact that high-risk transactions conducted from mobile devices are just — but rapidly — beginning to gain traction with the rollout of smartphones from which Web browsing is a practical proposition. Furthermore, most of the malware attacking legitimate users and their accounts is targeted toward PC-based browsers, and there have been minimal attacks against mobile devices and their browsers, which until now has reduced the imminent need for mobile fraud detection. We expect this situation to change quickly, however, as fraudsters increasingly target mobile devices as attack vectors.

User Advice: Assume the criminals will start attacking mobile devices, primarily by dropping malware hidden in applications that users download to their mobile phones. Look for opportunities to use information from smartphones and network operators as context to make decisions about credit card and other payment instrument usage. Engage with vendors that provide mobile-based fraud detection based on mobile device identification, location awareness that users do not have to opt into, and fraud detection models specifically designed for mobile computing.

Integrate the mobile fraud detection system with your enterprise fraud detection system so that customer and account profiles can be shared and fraud alerts can be correlated across products and channels.



Business Impact: Mobile fraud detection watches for suspect user and mobile device activity specifically in the mobile computing environment. It will become a cornerstone for commercial context-enriched services and should be positioned as a benefit to and protection for consumers. It should be integrated with other enterprise fraud management systems, as users are highly unlikely to only use the mobile channel to conduct their transactions.

Benefit Rating: High

Market Penetration: Less than 1% of target audience

Maturity: Emerging

Sample Vendors: 41st Parameter; AT&T; RSA; The Security Division of EMC; ValidSoft; Vodafone

Recommended Reading: "Where Strong Authentication Fails and What You Can Do About It"

"Pattern Discovery With Security Monitoring and Fraud Detection Technologies"

"Location Technologies"

"Magic Quadrant for Web Fraud Detection"

"Case Study: Bank Defeats Attempted Zeus Malware Raids of Business Accounts"

Social-Shopping Sites

Analysis By: Gene Alvarez

Definition: Social-shopping sites are community websites where members are shoppers that "friend" each other based on similar shopping interests, such as taste in fashion. These communities enable shoppers to exchange information, opinions and, in some cases, shop together. These sites vary in how users post their interests; some leverage credit card transactions or e-commerce site purchases, while others enable consumers to post items of interest and link their posting to other like users. Here, users begin to share information about their buying habits and interests to discover new items, and obtain feedback on items of interest and other points about products.

Position and Adoption Speed Justification: Social-shopping sites are appearing rather rapidly as vendors attempt to take advantage of online social-software trends. The vendors hope to gather large user bases quickly to drive advertising revenue and pay-per-click revenue streams.

User Advice: Organizations should monitor their incoming Web traffic for traffic from these online social-shopping sites. This should include monitoring of leads that actually converted into sales. It should be sales that guides any advertising investments or relationships with these social-shopping sites, not just traffic.

Business Impact: Social-shopping sites can contribute to online sales; however, it should be part of a much larger online social commerce strategy for the organization. This is because this option can provide sales from certain smaller online segments to which the organization may not be marketing.

Benefit Rating: Low


Maturity: Embryonic



Sample Vendors: Blippy; Kaboodle; MyItThings.com; StyleFeeder; Swipely; ThisNext; Wists

Context Delivery Architecture

Analysis By: William Clark; Anne Lapkin

Definition: Context-aware computing is about improving the user experience for customers, business partners and employees by using the information about a person or object’s environment, activities, connections and preferences to anticipate the user’s needs and proactively serve up the most appropriate content, product or service. Enterprises can leverage context-aware computing to better target prospects, increase customer intimacy, and enhance associate productivity and collaboration. From a software perspective, context is information that is relevant to the functioning of a software process, but is not essential to it. In the absence of this additional information, the software is still operational, although the results of the software's actions are not as targeted or refined.

Most context-enriched services are implemented in siloed systems, where a particular person, group or business process profits from being situationally aware. To replicate, scale and integrate such systems, certain repeatable patterns emerge that will require a new enterprise solution architecture known as context delivery architecture (CoDA).

Gartner defines CoDA as an architectural style that builds on service-oriented architecture (SOA) and event-driven architecture (EDA) interaction and partitioning styles, and adds formal mechanisms for the software elements that discover and apply the user's context in real time. CoDA provides a framework for solution architects that allows them to define and implement the technology, information and process components that enable services to use context information to improve the quality of the interactions with the user. The technologies may include context brokers, state monitors, sensors, analytic engines and cloud-based transaction processing engines.

As context-aware computing matures, CoDA should also define data formats, metadata schemas, interaction and discovery protocols, programming interfaces, and other formalities. As an emerging best practice, CoDA will enable enterprises to create and tie together the siloed context-aware applications with increased agility and flexibility. As with SOA, much of the pull for CoDA will come from packaged-application and software vendors expanding to integrate communication and collaboration capabilities, unified communications vendors and mobile device manufacturers, Web megavendors (e.g., Google), social-networking vendors (e.g., Facebook), and service providers that expand their roles to become providers and processors of context information.

The CoDA architecture style considers information, business and technology domain viewpoints. The technology domains are application infrastructure, communications infrastructure, network services and endpoints (devices). Thus, CoDA provides a framework for architects to discover gaps and overlap among system components that provide, process and analyze contextual information. A key challenge of CoDA will be information-driven, not technology-driven. This key challenge will revolve around what information sources can provide context, then what technologies enable that information to be provided in a secure, timely and usable manner, and how this information can be folded into processes.

Position and Adoption Speed Justification: Gartner introduced the term CoDA in 2007, based on developments in areas such as mobile communications and cloud computing. By 2011, we expect that aggressive enterprise architects and project managers will weave elements of CoDA into their plans to orchestrate and build context-enriched services that rely not only on federated information models, but also on federated delivery services. CoDA relies on SOA as an underpinning and also is related to EDA, because enterprise architectures need to be agile and



scalable to support context-aware computing. SOA and EDA have not yet reached the Plateau of Productivity. We expect CoDA to reach the Plateau of Productivity gradually, after 2014.

User Advice: Although CoDA, is an emerging architectural style, Type A organizations can benefit in the short term by applying its principles as they experiment with use of context information to provide improved user experiences in both customer-facing services and enterprise productivity. Leading-edge organizations need to begin to incorporate CoDA constructs in infrastructure and services to gain competitive advantages with the early use of context-aware computing. Type A organizations should now be identifying which information sources, both within the enterprise and external to it (e.g., from social-software sites), will provide context information to a range of applications.

Build competencies in CoDA's technology domains, particularly in communications, because the migration of voice from silos to general applications will be a key transformation, opening up further opportunities to create applications enhanced by context-enriched services. An understanding of mobile development will also be key. The refinement of your enterprise architecture to include CoDA constructs assumes prior investment in SOA. Most mainstream, risk-averse organizations should not invest in building a CoDA capability, but should explore the acquisition of context-enriched services through third parties.

Business Impact: Context awareness is a distinguishing characteristic of some leading software solutions, including Amazon e-commerce, Google Search, Facebook, Apple and others. During the next three to five years, context-aware computing will have high impact among Type A businesses in two areas: extending e-commerce and mobile commerce initiatives toward consumers, and increasing the efficiency and productivity of the businesses' knowledge workers and business partners.

Context-aware computing will evolve incrementally, and will gain momentum as more information sources become available and cloud-based context-enriched services begin to emerge. However, these will be siloed and will not use a standard or shared CoDA model. Emergence of formal CoDA protocols and principles will translate into a new technology category and feature set, affecting all application infrastructure and business application providers.

Benefit Rating: Transformational


Maturity: Emerging

Sample Vendors: Appear Networks; Apple; Google; IBM; Interactive Intelligence; Nokia; Pontis; Sense Networks

Recommended Reading: "Fundamentals of Context Delivery Architecture: Introduction and Definitions, 2010 Update"

"The Seven Styles of Context-Aware Computing"

"Context-Enriched Services: From Reactive Location to Rich Anticipation"

"Fundamentals of Context Delivery Architecture: Provisioning Context-Enriched Services, 2010 Update"

Persona Management

Analysis By: Adam Sarner



Definition: Persona management is the nascent class of tools to help people keep track of what they are saying and posting to the different online communities in which they participate. As people go through their day, they constantly slip between several different personas; one minute they are a boss, the next an employee. They are parents as well as spouses and, often, children; rock music fans and cloud-computing experts. Navigating these different roles in the real world can be tricky, but millennia of practice have made humans reasonably adept at handling these shifts.

In the online world, it is not so straightforward. As private and business interactions in the online world increasingly overlap, social-media participants are faced with a dilemma: How can they manage communications and interactions from all the different roles they play in their complicated lives? Persona management helps people establish different personas and channel communications, as appropriate. For example, a persona manager would ensure that photos from a college reunion would only appear on social networks where those friends participate, and not be posted to business-oriented networks.

Position and Adoption Speed Justification: The need for persona management is much greater than the technology currently available to help do it. A few basic tools are available to manage multiple Twitter accounts, or establish groups on Facebook and other social-networking sites to channel postings, but these fall well short of what real persona management would require. Some requirements for a hypothetical persona management product include:

Control of interactions across multiple public and corporate social-networking sites

Filters to channel postings to appropriate sites based on semantic analysis and predefined policies

Strong cross-directory authentication and single sign-on facilities

Impeccable security and operational infrastructures

Recall functions to withdraw "mistakes"

This is a formidable list of requirements, so it will take some time for this technology to establish itself. Identity management initiatives like OpenID and Windows Live ID address some of the security and identification aspects. Aggregation services like Ping.fm or FriendFeed distribute postings to multiple sites. Neither of these types of services include the wider facilities needed to manage personas, although any of these could develop into persona management.

We expect to see startups entering this market with specific offerings, as well as established players like Google, Microsoft and IBM making a play. Existing social networks like Facebook and LinkedIn are also likely to add elements of cross-network management to their offerings, which could evolve into useful persona management.

User Advice: In the absence of effective personal management, individuals are largely on their own to manage how they conduct their online lives. In the absence of technological assistance, prudence and forethought are the next best things. Enterprises need to establish guidelines as to what are acceptable and desirable behaviors for their employees when participating in public social media.

Business Impact: Individuals will receive the primary benefits of persona management, since it will make managing their personal and business online lives easier. Enterprises will also benefit, however, as these tools will reduce the embarrassment and worse from misplaced postings. As community and social-media sites proliferate both for business and personal use, these kinds of tools become even more important. Without them, many communities will lack participation,



simply because users cannot cope with any more places to put "stuff," shutting off potentially rewarding avenues of participation.

Benefit Rating: Moderate


Maturity: Embryonic

Recommended Reading: "Policies and Procedures to Manage Enterprise Internet Reputation"

"Five Major Challenges Organizations Face Regarding Social Software"

"CMOs Need New Skills to Engage Generation Virtual"

"The New World of Two-Way Engagement With Customer Personas"

"What's 'Hot' in CRM Applications in 2009"

Rich Information Visualization

Analysis By: Michael Maoz

Definition: Context is critical to both consumers and the employees of an enterprise. Customer service agents, for example, use rich visualization to receive customers' account information, analyzed in such a way that it can be displayed in a highly understandable manner. The need to visualize includes a customer's physical location, preferences, value, appearance, circle of friends, family, affiliations and most-frequent "interaction paths" — Web, telephone, kiosk, automated teller machine and other sources. The requisite technologies exist in the form of analytics, CRM information, GPS, satellite mapping and Internet Protocol (IP)-enabled video cameras, as well as face and voice recognition. However, the software applications have not yet been developed. Organizations quickly discover that visualization is only as good as the data that underlies it, making master data management (MDM) a big factor.

Position and Adoption Speed Justification: Small design firms, rather than commercial tools, deliver rich visualization capabilities. Privacy issues and the need for product development will continue to hinder adoption during the next five years. Analytics vendors will be key to mainstream adoption. Consumers are ever-more sophisticated regarding anonymity and privacy issues (that is, little is not already known), and this will lower barriers in the five- to 10-year horizon, accelerating adoption. Software as a service (SaaS), the computing power of the desktop — and, to a lesser extent, PDAs — will be available during the next 10 years, as well as more-efficient screens for agents and consumers to enable a series of successful "single view of the customer" projects (for agents viewing the customer) or consumer applications that will provide increased viewing of their relationships with the business.

User Advice: Type A organizations (aggressive technology adopters) should place a mental check mark next to "rich visualization." In the meantime, they should ask questions such as, "How do we prepare for this opportunity to better understand more dimensions of our customers?"

There is a close link to analytics. Bringing this content together to form a complete picture will require strong integration with analytical systems. Systems will need clean data that has been structured for purpose and target.

Business Impact: The business impact is high because getting rich visualization "right" from a timing perspective will yield a first-mover advantage. Jumping in too soon will expose organizations to claims of invasion of privacy.





Maturity: Emerging

Sample Vendors: Adaptive Engineering; Google; Microsoft

Customer-Centric Web Strategies

Analysis By: Michael Maoz

Definition: A customer-centric Web strategy (technology strategy and business strategy) is a cohesive approach to ensuring that a website is intuitive to the visitor of that site, placing the customer at the center of the relationship. It focuses on tying the customer, prospect or partner deeply into the enterprise or organization, and harmonizes the various interaction channels. It starts with improvements to the website, but extends beyond it to other related interaction channels and external services, such as social networking and other forms of social media. The technologies, integrations, analysis, content, communication and business applications are designed and deployed through a collaborative effort between the business and the external customer to achieve this goal of serving the customer need consistently with business goals. It will be used to optimize advertising via e-mail, search or other online approaches.

Position and Adoption Speed Justification: A customer-centric Web is still a very immature concept and strategy for most businesses outside of online retail, where the concept is maturing. The challenge (beyond the process synchronization required) is that the technologies are not available as a suite, but rather cobbled together. There have been good reasons for this: the need to rapidly innovate because of the evolving nature of user interaction patterns; emerging technologies, such as real-time analytics, social networking and recommendation/reputation engines; and highly fragmented reporting structures for the people tasked with building Web capabilities. Creating a Web presence that draws customers in because it is engaging, responsive, reliable and intuitive to their needs will be a strong business differentiator.

User Advice: Create an inventory of tools, technologies and applications required to deliver a customer-centric Web. Appoint a project leader who has the approval of the board or CEO to run a customer-centric Web effort. Tap the community of customers, prospective customers, partners and employees as a way of uncovering the true impact and effectiveness of your website. Look for redundancies in systems, and overlapping organizational responsibilities. Test ideas by measuring the impact before deploying fully.

Business Impact: The business impact is high, because businesses waste a tremendous amount of money on marketing, sales and technical support as a way of overcoming the weaknesses in their websites. The desire to better control and optimize spending, and measure costs and Web effectiveness, will drive customer-centric Web programs.



Maturity: Emerging

Sample Vendors: Accenture; Deloitte

Recommended Reading: "A Framework for Creating the Future Customer-Centric Web"



Transactional Ad Units

Analysis By: Andrew Frank

Definition: Transactional ad units are advertiser-supplied active display elements that can occupy a standard position on a Web page or mobile or interactive TV application, such as a banner or text overlay, and that expands to present a secure transaction. When engaged by a consumer using a mouse, touchscreen or remote control, these units will generally fill the screen or browser to provide additional space for merchandising and interaction, but they do not take the user away from the underlying page, app or program. Like any display ad, they can be placed using a variety of methods, such as contextual or behavioral targeting.

Placement can be within an app or Web page, in which case the underlying content provider can be compensated using a number of possible payment conventions. Placement can also be triggered by external input, such as a camera or map in an augmented-reality scenario that provides overlays to a live image.

In addition to direct sales, transactions can include applications such as secure couponing, lead generation, secure notification, and authentication-based upsell and cross-sell sample scenarios.

Position and Adoption Speed Justification: The idea of embedding transactions in Web ads first surfaced in the late 1990s, but failed to gain much traction primarily due to security concerns and technical challenges. In 2010, the concept got a strong boost from Apple, whose iAds platform was announced with great fanfare and featured transactional capabilities within the app advertising platform.

The benefits of this type of unit are clear: Collapsing the chain of events between advertising and sales not only enables advertising to become much more efficient and accountable for merchants, but also causes publishers to see much higher yields as a result of hosting sales on their sites. For consumers, the availability of impulse-buying opportunities in relevant contexts could also be seen less as intrusive advertising and more as an attractive feature of a site.

There are, of course, impediments as well. Security concerns are an issue due to the possibility of phishing attacks (as the merchant's URL will not appear in a protected browser field), although this could be seen as an advantage for name brand publishers and tightly controlled platform-based ad networks, like Apple's, which have the capacity to supply a trusted context that is absent within unknown sites and blogs. Perhaps the biggest issue, however, is channel conflict. E-commerce sites have strong incentives to process transactions on their own sites, both to minimize revenue payouts and protect their own brands and traffic, while manufacturer brands may be wary of undercutting established online channels with experimental ones, especially in a shaky economy. Still, the improvement in the cost per sale for many manufacturers and merchants will prove hard to resist.

In addition to Apple, several large Internet companies, including Google (Checkout), eBay (PayPal) and Facebook (Pay With Facebook), are reportedly experimenting with transactional ad units. With the drive to raise efficiency and squeeze more revenue out of the online channel for commerce, it's likely that transactional ad units will eventually become a productive staple of digital marketing, particularly for impulse purchases of soft goods and gifts.

User Advice: Online publishers, especially those with trusted offline brands, should look for opportunities to employ embedded transactions in websites and apps, and build predictive models to optimize decisions about transaction targeting, based on behavioral and other relevant visitor data.



Online merchants should evaluate transactional ad units as a method to extend their storefronts across the Web. Online merchants will also need to make marketing and merchandising work together to enable these opportunities.

Ad networks and agencies should develop near-term strategies for evaluating transactional ad unit models and performance, either with partners or on their own.

Business Impact: Although sales within ad units may initially be limited to certain categories, when the concept is extended to include opt-in lead generation, couponing and other nonsales types of transactions, the impact becomes broad across a wide range of product categories.

Transactional ad units have the capacity to significantly raise ad yields for publishers, while simultaneously lowering the cost per sale for marketers.



Maturity: Emerging

Sample Vendors: Adgregate Markets; Alvenda; Apple; Lemonade; Mpire; nooked; Pontiflex

E-Services

Analysis By: Juergen Weiss

Definition: E-services are offered by life insurers to their customers as part of their client-facing websites. E-services are usually part of a secure Web environment and include, in our definition, a wide range of customer self-services, including some or all the following service functions:

Displaying policy details

Downloading policy documents

Switching investment funds (in the case of life insurance unit-linked products)

Change of address

Changing bank details

Displaying premium bills

Paying premium bills

Creating alarms or notifications

Downloading additional documents, such as tax declarations

Changing passwords or requesting new ones

Access to these e-services is usually restricted to existing clients in a type of personalized "my account" section of the insurer's website, and it requires previous registration. Gartner doesn't consider simple e-mail forms or requests that can be downloaded, printed and then physically sent to the insurer as e-services.

Position and Adoption Speed Justification: Gartner has decided to add e-services as a new entry on the 2010 Hype Cycle for life insurance, because more and more life insurers in many regions are adding e-services to their customer websites. There is a lack of adoption among insurance customers, though, because of cumbersome onboarding procedures and the absence



of incentives from life insurers. Gartner expects more life insurers to add e-services to their customer portals because of potential cost savings and other reasons. This will constantly move e-services along the Hype Cycle, but because of staggering customer adoption, this technology will not reach the Plateau of Productivity before the next two to five years.

User Advice: Life insurers that plan to introduce e-services, or aim to expand their use, should consider incentives, such as discounts or transaction fee savings, to promote e-service adoption in their customer base. In addition, life insurers need to analyze the back-office business processes that they want to offer as e-services to clients. Some of these processes won't be suitable for real-time or near-real-time online access, because they're batch-based and will fail to meet customer expectations. Customers who pay premium invoices via the Internet will, for example, expect to see the impact on their outstanding receivables immediately, and won't wait for a batch run to happen every week.

Finally, life insurers shouldn't consider offering any e-services without a proper and scalable back-office integration with relevant systems, such as policy administration or billing. Having fewer but tightly integrated services is much better than having many services that are based on simple online forms, and where information has to be manually entered in the back office.

Business Impact: Life insurers pursue a number of goals by providing e-services to their client base. The most obvious and most often mentioned reason is convenience for the policyholders. Instead of having to call the insurer or its agents/brokers, clients can have access to basic self-services in an almost 24/7 mode, thereby eliminating the submission of paper-based documentation. In Gartner's opinion, there are at least two other reasons — costs and customer retention. Life insurers that offer e-services with a sophisticated back-office integration (without manual re-entry of data) can save a considerable amount of costs. Organizations will not only avoid interactions with their call centers and reduce error rates because of manual processes, but they will also be able to shift routine tasks to their customers.

Another important driver for e-services is customer retention. In general, life insurers face the problem of having very few interactions (actually often none at all) per year with their clients. Offering e-services is a means of increasing the frequency of interactions (for example, allowing clients to periodically review and adapt their portfolios), and also a means of meeting changing customer expectations. Internet users are used to initiating requests via the Internet without having to print and physically send in forms.


Market Penetration: 1% to 5% of target audience

Maturity: Emerging

Sample Vendors: MajescoMastek; Oracle; SAP; StoneRiver

Recommended Reading: "Life and P&C Insurers Lack Incentives to Drive E-Service Adoption Among Customers"

"Creating a Comprehensive Service Strategy for Life Insurance and Annuities"

Online Advertising Data Exchanges


Definition: An online advertising data exchange is a Web-based trading platform that enables partners to buy and sell data intended to boost ad-targeting effectiveness for Web display advertising.



In contrast with an online ad network or ad exchange, data exchanges do not sell ads or impressions. The separation of data from media is intended to benefit publishers, e-commerce sites and marketers that desire the benefits of an exchange for targeting (liquidity, scale and openness) without having to bundle data with media inventory. This gives data suppliers the chance to monetize ad impressions beyond their own share of Web traffic, and data buyers the chance to reach targeted consumers in a wider variety of contexts.

The data involved is generally consumer intent data, also known as behavioral targeting (BT) data, that identifies a cookied website visitor as being in-market for (or at least interested in) a certain product category, based on the observed browsing history. However, other data, such as demographics derived from registration data or other sources, may also be offered.

Position and Adoption Speed Justification: Advertising data exchanges first appeared in 2007 with the launch of an Israeli firm called eXelate, but didn't get much traction until 2008, when trends aligned to build enough favorable opinion to attract major publishers that were under pressure to increase online revenue and saw an opportunity to leverage both data and brand. (The brand aspect comes into play as a trust factor, since the quality of such data is almost impossible to verify ahead of its use to generate a response, which is often delayed.)

Unlike the ad exchange model, data exchanges do not have as much pressure to attract marketers on the buy side, as publishers can trade data among themselves and use it to raise yields on their respective sites that they can still sell directly to advertisers.

In 2009 and 2010, the rise of real-time bidding (RTB) has given a boost to these systems, as RTB increases the opportunities to utilize targeting data in a real-time context. This has given rise to a new generation of data providers offering more-segmented selections of targeting data.

Meanwhile, 2010 saw an upturn in the cyclical pattern of privacy concerns, focused in part on the issue of giving consumers transparent access to their BT profiles. In April, U.S. congressman Rick Boucher floated draft legislation to require ad networks to either obtain users' opt-in consent prior to tracking them, or provide "prominent notice" and supply consumers access to view and edit profiles to qualify for opt-out consent status. Responding to this, BlueKai, a prominent data exchange, recently released a white-label tool to give Web publishers the ability to allow consumers to access and edit the targeting segments they have been placed into. Adoption by publishers and consumers, as well as the course of legislation, remains speculative, although Gartner considers it unlikely that legislation will have a significant chilling effect on the current self-regulated online ad-targeting marketplace in the U.S. Other regions (particularly in the European Union) with more-stringent prohibitions may remain unattractive to data exchanges.

Another question regarding the future of data exchanges is whether they will ultimately be consolidated into ad exchanges. There is a growing glut of online consumer data available from various sources at a time when some marketers are beginning to question the ubiquity of behavioral targeting, putting pressure on the extent to which transaction values can continue to exceed overhead. While separation of data from media may produce efficiency advantages, there are likely to be economies of scale and performance benefits from combining these two types of transactions on the same exchange platform, meaning that data exchanges may wind up consolidated with ad exchanges at Google, Yahoo and Microsoft. This may provide an attractive exit for some pioneers in the category, and the independent data exchange concept may ultimately fade.

User Advice: Publishers and online merchants should investigate the possibility that online advertising data exchanges could be a source of both direct revenue and more targeting value for their advertising customers or activities, respectively. Before participating as sellers, they must verify the quality of their data by its ability to generate positive results (higher click-through rates



and more conversions) in trials with partners. Before participating as buyers, they should have in place methods for tracking data quality through similar metrics and keep score of sources.

Ad agencies and ad networks need to regard data exchanges as both potential partners and potential disintermediaries. Advertising holding companies need to consolidate data pools at their media agencies and may consider acquiring or building data exchanges of their own. However, privacy and client confidentiality issues must be well vetted and protected against data leakage.

E-commerce merchants are likely to have behavioral data of value to manufacturers and category publishers, but need to prevent its sale to competitive retailers. On the buy side, BT is an effective way to increase marketing efficiency.

All potential users should subject plans to scrutiny by privacy experts (both legal and technical) prior to participating, and carefully monitor issues as they arise. Best practices and industry group standards should be studied and adopted as they emerge.

Business Impact: Online data exchanges represent acquisition targets for large ad exchanges or networks.

Brand-name publishers and e-commerce merchants have the strongest opportunity to tap new revenue from the sale of anonymous consumer data.

Communications service providers (CSPs) have examined the potential to use techniques such as deep packet inspection (DPI) to acquire and market targeting data from ISP traffic; however, the privacy backlash at this time appears prohibitive.



Maturity: Emerging

Sample Vendors: Adknowledge; BlueKai; eXelate; Media6Degrees

Recommended Reading: "Targeted Advertising and the Privacy Predicament"

"Making Digital Advertising Work for Media Companies"

"Online Ad Exchanges Change the Game"

"Real-Time Bidding Heralds Growth in Cloud Advertising"

Social Commerce


Definition: Social commerce is the use of social-software tools and user-generated content within an e-commerce context. Social commerce is used to create sales lift by providing customers with information and content from other customers that assists with the evaluation of a product or service. Techniques can vary from the creation of an online store within an existing community, such as Facebook, to the use of product reviews, blogs, wikis, and question-and-answer threads to drive sales.

Position and Adoption Speed Justification: Facebook has reached 500 million users and the percentage of time that users spend on their Facebook accounts continues to grow. Organizations have begun to see Facebook as a viable marketing and sales channel. In addition, user-generated content, such as product reviews, videos, wikis and blogs, continues to grow in its influence on consumers' buying decisions. Techniques like a company store within Facebook or



the use of user-generated content on one's website are the foundation of social commerce, and it is growing due to the consumer's ability to filter out traditional market media, such as direct mail, e-mail and TV advertisements. Therefore, we believe that social-commerce techniques and technology will rapidly climb in hype, and as organizations discover the pros and cons of social commerce, they will move this technology quickly through the Hype Cycle to maturity.

User Advice: Business-to-consumer (B2C) organizations should use social-commerce techniques and technologies in 2011 and 2012 for B2C sales initiatives. However, these should be targeted and focused on the specific propose of driving sales, not just the number of followers or friends. Therefore, organizations should focus on techniques with proven value, such as sales on top-rated products or friends-only promotions. Moreover, organizations should experiment with various tools, because one tool may only address a single customer segment.

Business Impact: Social commerce can create new customer segments that are based on a consumer's interests in a Web environment. This can enable the targeted selling of products that are related to group interests and activities.

In addition, social commerce can help to drive down the cost of sales, because it is used in the more cost-effective digital channels (marked by considerably less need for human intervention), and can be an extension of brand personality to create greater brand awareness.



Maturity: Emerging

Sample Vendors: Bazaarvoice; Dell (Dell Swarm); Demand Media; Groupon; Jive Software; LivingSocial; ShopIgniter

Recommended Reading: "Magic Quadrant for Social CRM"

Context-Enriched Services

Analysis By: William Clark; Anne Lapkin

Definition: Context-enriched services use information about a person or object to proactively anticipate the user's need and serve up the content, product or service most appropriate to the user. The IT industry is beginning to recognize a pattern where augmented reality offerings, mobile location-aware ads, mobile search and social mobile sites fall under the umbrella term "context aware." Context-enriched services are the fundamental unit of software for improving user experiences through context, and are an implementation foundation for context-aware computing. These terms denote services and APIs that use information about the user to optionally and implicitly fine-tune the software action with better situational awareness. Such services can proactively push content to the user at the moment of need, or suggest products and services that are most attractive to the user at a specific point in time.

Context is relative and describes the environment, history or setting in which a user interaction occurs. From a software perspective, context for a service is information (data) that can add value to the functioning of the service, but is not essential to it. In the absence of context information, the service is still operational, but may not provide results that are as finely targeted. The currency and quality of the context information will determine the value it adds to the service. Most applications that benefit from context-enriched services will subscribe to them using service-oriented architecture (SOA) techniques and implementations.



Context-enriched services will also require sophisticated reasoning to determine how software actions should be changed to make them more appropriate for the user's context.

The more current and selective the context information, the more precise the functioning of the service. Context-enriched services are provided by context brokers, which are designed to retrieve, process and stage this information so that subscribing functions can use relevant context in addition to processing incoming data. When an application uses context-enriched services, it is a context-aware application. As a best practice, context-enriched software services have the modularity and accessibility of SOA and use SOA-related standards.

Position and Adoption Speed Justification: Context enrichment refines the output of services and improves their relevance. We observe implementations today in mobile computing, social computing, identity controls, search and e-commerce — the areas in which context is emerging as an element of competitive differentiation. However, the current context-aware solutions are fragmented — they are individually designed, custom-developed and deployed, and, because of their competitive importance, are often not widely distributed or advertised. The movement in social computing to open and share social-relationship (social graph) information is an early step toward the standardization of context-aware computing APIs; however, most of the required standardization effort has not yet begun. Context-enriched services will require multiple stages of innovation and platform technology evolution before their essential benefit is well-understood in the broad mainstream computing markets.

In 2010, we are seeing the beginning of generic services, whereas before all these services were custom-built. Context-enriched services have advanced significantly during the past year, moving from an early post-trigger position to a point half way up the Slope of Enlightenment. We are seeing an increasing number of applications that, while they may not use the term context-aware computing, are clearly using context information to improve the user experience. These include Apple's recent developer guidance regarding location-aware advertising, the augmented reality systems that give you information on an object shown in the camera lens of your phone, and the ability of Google Android-based phones to augment services based on the user's contacts, behavior and other components of context information.

In the long term, there will be a shift from reactive to proactive services, so push and subscribe will be more prevalent, and the number and richness of information sources will rise.

User Advice: Context-enriched services will begin with simple scenarios (one category, such as location) and evolve into compound patterns (e.g., taking into account location, presence and group behavior). Application developers and service providers should take advantage of the wide range of contextual opportunities in their e-commerce, security, social-computing and mobile-computing systems. Some early context processing can be achieved using event processing and complex-event-processing technologies; enterprises need to plan to incrementally develop or source more context enriched services in step with their ambition levels of improving user experience.

Business Impact: Context-enriched services will be transformational for solution providers. Context enrichment is the next frontier for business applications, platforms and development tools. The ability to automate the processing of context information will serve users by increasing the agility, relevance and precision of IT services. New vendors that are likely to emerge will specialize in gathering and injecting contextual information into business applications. Most context-aware applications are likely to arrive as incremental enhancements to SOA, without a major disruption to prior architecture. However, the new kinds of business applications that will emerge as the function of full context awareness may end up being revolutionary and disruptive to established practices.





Maturity: Embryonic

Sample Vendors: Appear Networks; Apple; Google; Pontis; Sense Networks

Recommended Reading: "Context-Aware Computing: The Future Is Now"

"Key Issues for Context-Aware Computing, 2010"

"Context-Enriched Services: From Reactive Location to Rich Anticipation"

"Context-Aware Computing: It's Time to Carefully Choose Your Vendors"

"Apple Note Signals Move to Claim Context-Aware Advertising"

Open-Source E-Commerce Software


Definition: Open-source e-commerce software enables the creation of all (for example, an entire Web store application) or part (for example, a shopping cart) of a Web store. This software has features such as shopping cart functionality, product catalogs and other capabilities that enable store owners to set up, run and maintain online stores. This software is available for free under a GNU general public license; however, other fees may exist for varying types of membership. This does not include the use of open-source software (OSS) used for development, Web, database or application servers commonly known as the LAMP platform. However, open-source Ajax toolkits are part of the portfolio of OSS packages that can indirectly enable e-commerce sites (in the same fashion as application servers, relational database management systems [RDBMSs], etc.).

Position and Adoption Speed Justification: Web 2.0 companies that were created using the LAMP platform, such as Facebook and Wikipedia, have captured so much market attention that e-commerce managers are frequently asking Gartner about their open-source options for e-commerce. Although adoption of OSS for certain aspects of e-commerce, such as application servers, operating systems and databases (LAMP platforms), has been a mainstream activity for at least five years, enterprises have been wary of adopting open source for actual e-commerce application software.

The key issue that has clients concerned about open source for e-commerce is the question: "Is e-commerce OSS scalable, secure and robust enough for large-scale transactional sites, given that many Web 2.0 startup companies that use open source are not transactional?" The answer is that it will take at least five years for this software to mature to the standards of today's enterprise e-commerce licensed software, and at least the same number of years to match the capabilities of the current software-as-a-service (SaaS) e-commerce offerings. However, these packages were not designed to compete with high-end, complex e-commerce solutions. They were designed to service low to midrange requirements that can meet the requirements of organizations with low to midrange e-commerce transactional needs.

User Advice: Enterprises that have large-scale transactional Web stores should not use these open-source e-commerce software solutions. Instead, they should employ other aspects of open source in their stacks — the most common being the application server. Users of publishing sites that have databases of content they wish to publish for free can use these open-source solutions.

Business Impact: In their current state, open-source e-commerce software offerings remain incapable of meeting the needs of a large enterprise. However, for startup companies and small enterprises, these offerings can be beneficial solutions, because they are low-cost alternatives.





Maturity: Emerging

Sample Vendors: AgoraCart; CubeCart; dashCommerce; Interchange; LiteCommerce; Magento; Nexternal Solutions; osCommerce; Shopify; VirtueMart; X-Cart; Zen Cart

Campaign Management SaaS


Definition: On-demand campaign management involves the deployment of campaign management solutions in a subscription-based, multitenant model.

Position and Adoption Speed Justification: Specific campaign management functions — such as e-mail, A/B testing (a technique to isolate and test campaign variables), online cross-selling and upselling, and customer-focused Web analytics and lead management — are available in an on-demand model and are mature. However, more-complex implementations (such as multichannel campaign management applications) often require more connections with multiple back-end systems that are less mature. The speed of adoption has accelerated, with multiple new (and often lower-priced) software-as-a-service (SaaS) campaign management offerings released during the past 18 months.

User Advice: Marketers should consider on-demand deployment models for more-tactical campaign management deployments, particularly in e-marketing areas. To date, e-marketing-focused applications (such as Web analytics, e-mail marketing, online dialogue management and online A/B split testing) are being offered as on-demand deployment models. More-strategic and complex integration requirements for multichannel campaign management are still likely to require on-premises implementations.

Business Impact: Less internal IT involvement, lower maintenance costs and predictable, subscription-based cost structures are the potential benefits of campaign management on demand. Companies can use specific functionality — such as A/B testing, lead management, community marketing or e-mail marketing, which are available in an on-demand offering — to justify building larger, multichannel campaign management initiatives. For example, in B2B organizations, companies use lead management applications in on-demand models. Business-to-consumer organizations use A/B and multivariant testing tools to serve up optimal offers or the most effective page layouts. Large vendors are likely to offer more-complete multichannel campaign management and a choice of deployment options (hosting on-premises and licensed software).



Maturity: Adolescent

Sample Vendors: ATG; Eloqua; Marketo; Neolane; Responsys; RightNow; smartFOCUS; Unica

Recommended Reading: "Software as a Service in Campaign Management, 2008"

"Magic Quadrant for Multichannel CRM Campaign Management"



Web Content Product Recommendation Engine

Analysis By: Bill Gassman

Definition: A Web content product recommendation engine provides an algorithmic derived list of items to be published in a Web page or other online content such as e-mail or display advertising. The algorithm can be configured to provide items that most others have searched for, put into a shopping cart, purchased or recommended to others. Recommendations can be biased by stock-on-hand, brand or price affinity and user profile dimensions, such as geography, time of day or historical behavior. The algorithmic engine can be run as a cloud-based service or on-premises. Recommendations are fed into content management systems or substituted directly into dynamic content formats.

Position and Adoption Speed Justification: Although this is the first year that this technology is being tracked in our Hype Cycles, it has been adopted in high-end retail sites for some time. In addition, manual approaches are used by some organizations. The cost to deploy is still fairly high, keeping it away from low volume sites, but prices should fall as demand picks up. Evolving uses include service resolution recommendations, greater ties with customer and transaction information from back-office systems and context aware computing. Placement in the pre-peak hype segment is justified by the relatively low penetration of commercial products but increasing number of vendors coming to market.

User Advice: Start with an ROI calculation to see if an uplift of 5% in website revenue will justify the cost. This is a conservative but realistic result. Dedicate at least one full-time resource to learn and operate the tool, and to train others to work with the rules that bias the recommendations. Develop an attribution model with a control that takes into account how many people would buy an item anyway. Adopt the advanced features such as inventory and margin data integration once the basic skills are mastered.

Business Impact: The potential is high, but most organizations we have spoken with are realizing a 2% to 5% uplift in revenue. As the algorithms improve, along with context-aware computing and integration with back-end systems, so will the customer experience and uplift yield.



Maturity: Emerging

Sample Vendors: ATG; Baynote; Certona; Coremetrics; MyBuys; Omniture; RichRelevance

Recommended Reading: "Tutorial: Web Content Product Recommendation Engines"

"Coremetrics' Intelligent Offer Recommendation Engine"

Customer Interaction Hub

Analysis By: Johan Jacobs

Definition: The customer interaction hub (CIH) is a multichannel infrastructure that includes voice, Web chat, e-mail, fax, self-service, interactive voice response (IVR), collaborative browsing and social feeds like Twitter, and that focuses on centralized processing for external customer interactions. It is integrated with back-end CRM, ERP and supply chain management (SCM) systems. The key functions are centralized business rules, aggregated integration points, channel independence and customer experience management.



The primary objective of CIH is to solve as many transactions as possible in an automated manner, or to provide operators with the necessary information and tools in one interface to resolve an interaction request at the first point of contact. The CIH must ensure that every interaction is understood (analyzed) and dealt with in an optimal manner (priority, agent, channel, automated or manual, etc.). For example, an inbound fax might trigger an outbound phone call if the content was important.

Position and Adoption Speed Justification: Automation, self-service, and the consolidation of Web customer service and voice channels are some of the top issues for customer interactions (or any interaction). Reducing the cost of solving inquiries, while delivering a consistent experience across all the channels, is high on the priority list for customer service organizations, because customer satisfaction increases when problems are resolved faster and better. Therefore, bringing in and supporting new channels at a minimal cost will be a key focus area for the next five years.

This integrated framework or hub can be used for providing a real-time, thorough view of the customer across all channels to all relevant customer-facing employees and partners currently and for the future, and will consist of solutions from many different service providers. Until the business processes of the organization become more integrated and customer-centric, the CIH will be considered a Technology Trigger for consolidation and integration toward a single-source solution, which is expected in five to eight years.

User Advice: Establishing an infrastructure deployment requires several technology solutions to be integrated, with few vendors currently promising a complete solution. Therefore, focus on the existing customer service technology stack to leverage what you already have, or integrate new solutions without breaking down or doing away with working solutions. Focus also on extending into new channels, and on aggregating processing for all existing and new channels through the hub, while delivering a consistent customer experience across all channels.

Business Impact: The CIH can help centralize interaction resolution, automate transaction execution, reduce the cost of operations, and leverage existing efforts and modules into new channels.



Maturity: Emerging

Sample Vendors: eGain; Interactive Intelligence; RightNow; SAP

E-Invoicing

Analysis By: Paolo Malinverno

Definition: Electronic invoicing (e-invoicing) cuts through many disciplines, requires a lot of knowledge (spanning business, regulations and IT) and involves a lot of complexity. A good definition of e-invoicing is "the interchange and storage of legally valid invoices in electronic format only among trading partners." (See "Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed"for more details.)

The interchange does not use or require paper-based invoices. The e-invoices have legal validity, and can be used to prove compliance or as tax originals. In general, most considerations for e-invoicing apply whether you are sending e-invoices or receiving them. Operationally:

The seller must ensure that the invoice contains the correct data and is authentic.



The buyer must verify the authenticity of the invoice, match it to goods or services received, and execute payment.

Both the seller and the buyer (or a third party on their behalf) must store the readable and authentic (this comes with a lot of added strong security) invoice for a period of time, and must make it available to a tax authority on request.

Position and Adoption Speed Justification: E-invoicing touches internal business processes, mutual agreements among business partners, financial transactions, tax and legal implications, and a lot of the IT infrastructure that supports all that. Several studies and surveys are available on the current e-invoicing uptake, and on the projected growth of the market in the next years. The results are somewhat different, as there are several vested interests in play, but a conservative estimate indicates that, in 2009, tens of thousands of European corporations and several million consumers exchanged tens of millions of e-invoices. So, e-invoicing is possible, viable and beneficial today, not only in Europe, but across the world.

Normative standards abound across the world; as always happens in B2B, standards accumulate, and too many standards means that there is no standard at all. In Europe, the European Union (EU) issued a directive in 2001, and revised it in 2006, with a view to "simplifying, modernizing and harmonizing the conditions laid down for invoicing with respect to value-added tax in the EU" for all member states. A core theme of the directive was to promote the efficient cross-border creation, transmission, acceptance, storage and retrieval of invoices. To allow for technological differences among all member states, and to stay technology-neutral, the directive allowed several ways of meeting conditions for e-invoicing. For example, the requirements to ensure authenticity and integrity can be met either through advanced or qualified electronic signatures, or through electronic data interchange (EDI) with contractual security measures.

Unfortunately, this technological flexibility has led member states to adopt state-specific versions of the directive that have disparate requirements for meeting the functional objectives. These requirements, in turn, have led to more-stringent or less-stringent controls, depending on the member state. Several governments in Europe (and other governments around the world) mandate the use of e-invoicing for government agencies, and more are likely to follow suit in the next year or two.

Many intricacies are associated with cross-country e-invoicing projects (supplier e-invoicing and generic e-invoicing projects with all business partners in one country are considerably easier). There are several axes of variance for e-invoicing requirements (internal and multienterprise business processes, IT infrastructures, law and security, to name a few), and they cause many differences from the seller's and the buyer's perspectives; frequently, for example, different laws apply to buyers and to sellers. This is, by far, the most common source of difficulties in e-invoicing projects, and is compounded by regulations and general requirements not fixed in time. Another complication is that most requirements, in practice, are not published by member states and are extremely difficult or expensive for businesses to obtain, interpret and monitor.

The European Association of Corporate Treasurers identified the average processing cost of a paper invoice across Europe to be around €30. It also determined that by using e-invoicing, an 80% cost savings is possible. Confirming that data, initial case studies also indicate that e-invoicing has been proved to reduce the cost of processing a single invoice to less than €7. E-invoicing offers a range of potential benefits, including improvements in accounts payable (AP) processes by reducing invoice processing time and minimizing manual intervention, thus leading to a reduction in operating expenses. This fact alone has prompted some companies to start e-invoicing projects; it makes many others look deeper into the e-invoicing conundrum.

http://ec.europa.eu/taxation_customs/taxation/vat/traders/invoicing_rules/index_en.htm



However, after a few dormant years, e-invoicing adoption is finally taking off. None of the following reasons in isolation is enough to warrant continued growth, but all of them together are driving and will drive more widespread adoption:

Strong user demand, because of the benefits, especially savings

Increasing supply, and an associated increase in the maturity and effectiveness of e-invoicing solutions; in particular, several banks are promoting e-invoicing in their strategies (especially in Spain, Finland and Switzerland)

More governments mandating e-invoicing, especially in the EU

Increasing availability of viable (and compelling) e-invoicing references and case studies as more companies adopt e-invoicing

E-invoicing will grow steadily in the next few years, despite all the difficulties associated with it, simply because the momentum of the four factors above is stronger than the decelerating force of the difficulties. However, many difficulties are associated with normative functions in different countries, so we do not expect e-invoicing to reach the Plateau of Productivity before three to four years.

User Advice: Calculate your current average invoice processing cost, and confirm it with the business. Focus your initial e-invoicing projects in countries where B2B and invoice exchange are already happening and maturing, such as the Nordic nations, Germany and the U.K. Be aware of the further constraints and limitations based on where the countries you do e-invoicing to and from allow e-invoices to be stored.

E-invoicing services are sprawling across the world, especially in Europe and South America, so make sure the solution you choose addresses internal and multienterprise business processes, IT infrastructures, laws and security, and that it's certified by tax auditors for as many countries as possible, especially those where you have a steady flow of invoices to and from that connect with other service providers, certified e-invoice networks and banks.

Multicountry e-invoicing projects last years, so don't sell the benefits internally to your company too quickly. In a large project, if you make 50% of your invoicing traffic electronic in two years, you're doing great. Never underestimate the consequences of the diversity of regulations across countries; work with your auditors and process architects, because e-invoicing is cross-functional by nature. Research and track on an ongoing basis the value-added tax (VAT) laws and e-invoice requirements in each country, or work with your e-invoicing solution supplier to provide these services.

Implement e-invoicing in conjunction with e-procurement or another procure-to-pay or B2B infrastructure, if possible, to leverage purchase order information for a higher match rate to the invoice.

No matter what vertical or financial shape your company is in, start looking for e-invoicing project savings opportunities now. Don't hold out for regulations and interoperability to get better; you can reap good benefits from e-invoicing today.

Business Impact: Plan your e-invoicing projects according to how many invoices you can process automatically in the countries the invoices will progressively touch; plan globally from the start, even if you are starting to execute locally. The faster you build critical mass, the greater the difference to your company's bottom line.

Current case studies indicate that you can quantify e-invoicing savings in many ways: the cost per invoice, the total savings due to reduced number of resources and computing power (60% to



80%, compared with paper invoice processing), or a percentage of a midsize to large company's turnover (around 1%). Whichever way you put it, the clear indication from case studies is that the savings for companies that have to deal with a large volume of invoices (more than 100 per day, inbound and outbound) are significant (see "Supplier E-Invoicing Networks"), because of the economies of scale obtained by aligning technical, business and compliance strategies.

Other benefits of e-invoicing, when implemented through e-invoicing networks or as part of a broader B2B solution with ad hoc applications, include:

Better spending analysis, leading to some spending reduction

Faster processing times and payment cycles

Enhanced contract performance analysis

Better tracking and enforcing of trading partner compliance with commercial terms

Improved dispute handling and avoidance

Opportunity to realize more supplier rebates and discounts

Better auditability of invoices through integrity and authenticity guarantees

Easier availability of data for regulatory compliance, e.g., for supply chain traceability

Greener approach, big reductions in consumption of paper

The potential for benefits is much greater for the buyer than the supplier/customer, because the buyer is improving its internal processes for handling invoices, and typically has to process a lot of them, compounding the benefits (which is why we are seeing a bigger uptake in buyer e-invoicing and then customer e-invoicing). However, e-invoicing does provide benefits to senders, too, such as improved customer satisfaction, reduced administrative costs in credit collection, more-effective capital management and cash flow control (suppliers can see when invoices will be settled, so they can forecast receipts more effectively) and, above all, lower customer churn. This would apply also to smaller senders, which would not have the e-invoicing volumes of the suppliers. However, small and midsize companies are likely to have to send e-invoices to several networks, depending on the demands of the organizations they supply. This problem can be addressed by managed service-based solutions, and is a well-known general issue in B2B, certainly not limited to e-invoicing.

As always in B2B, the key in e-invoicing projects lies with the recognition of the shared benefits that suppliers and buying organizations alike can realize; this typically implies improved business processes (with the associated organizational and change management challenges) and technology additions.



Maturity: Emerging

Sample Vendors: Anachron; Basware; Comarch; Crossgate; Edicom; GXS; Maventa; OB10; Tieto; TrustWeaver

Recommended Reading: "Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed"

"Electronic Invoice Presentment and Payment Vendor Landscape"



"Magic Quadrant for Integration Service Providers"

"Supplier E-Invoicing Networks"

"Taxonomy and Definitions for the Multienterprise/B2B Infrastructure Market"

"EU Enterprises Face Obstacles in Using Electronically Signed Invoices"

"Accounts Payable Invoice Automation"

"EIPP Can Improve Finance and Purchasing Management"

"The Role of Evaluated Receipt Settlement in EIPP"

"The Role of Procurement Cards in EIPP"

"The Role of Procurement Networks in EIPP"

"The Role of Supplier Portals in EIPP"

Mobile Web Applications

Analysis By: David Mitchell Smith; William Clark

Definition: Mobile Web applications refer to applications for mobile devices that require only a Web browser to be installed on the device. They typically use HTML and Ajax (and, increasingly, HTML5 components), although they may make use of augmented rich Internet application (RIA) technologies, such as Flash, JavaFX and Silverlight, but are not written specifically for the device. Rich, mobile Web applications have roughly equivalent usability to PC-rich Web applications (or RIAs), when designed specifically for the smaller form factor. Simple mobile Web applications limit the use of RIA technologies and aim to present information a readable, actionable format. Mobile Web applications differ from mobile native applications in that they use Web technologies, and are not limited to the underlying platform for deployment.

Position and Adoption Speed Justification: For many years, there has been hope for mobile Web applications going mainstream. While acceptance in some geographies has been higher than in others, the experience had been less than ideal, until the introduction of the iPhone by Apple. Its Safari browser, along with good JavaScript support and overall ease of use, has made the difference.

When the iPhone was introduced, the only way to develop for it was via Web programming. Although, subsequently, Apple has moved emphasis toward native applications (via the Apple App Store), its contribution greatly raised the bar for mobile Web applications. In addition, Apple and other vendors (for example, PhoneGap, WebApp.Net, CiUI and MotherApp) have libraries that allow for a richer-than-expected user experience, using primarily HTML and Web technologies. Often, these are used in conjunction with extensions or native code wrappers for JavaScript that enable mobile Safari applications to access the accelerometer, geolocation, multitouch and, in the future, camera, sound and vibration functions.

Google's Gmail is a Web application without any wrapper that uses Safari's HTML5 functions and SQLite offline storage to provide a user experience comparable to the native iPhone Mail application, without any installation or upgrade. Improvements in other platforms and browsers (e.g., Google's Android and Palm's webOS), continue this push. Research In Motion (RIM) has acquired a WebKit-based browser, and is in the process of integrating it into its BlackBerry smartphones. Nokia has long been focused on the mobile Web, and has continued its efforts and emphasis on widgets. Nokia's Web Runtime (WRT) framework allows Web applications to



approximate a rich user experience through asynchronous and synchronous functions for accessing on-device resources, such as the user's contact list.

Microsoft has incrementally improved its browser support, and continues to gradually improve its offerings as it moves toward its Windows Phone 7 release. The real movement will happen as critical mass for various pieces of HTML5 materializes; however, testing and interoperability issues will remain due to implementation differences. For example, the HTML5 spec leaves some caching implementation details to the browser supplier; thus, there will be differences in how offline modes operate. The proliferation of WebKit-based browsers in mobile will help with this. HTML5 is early in the Hype Cycle, but is seeing adoption of components of the specification now. The hype has not yet peaked.

User Advice: The mobile Web experience is driven by consumer applications first. It is a result of the direct impact of consumerization on the organization. Organizations wishing to address mass-scale opportunities through mobile Web adaptation platforms need to consider Netbiscuits, InfoGin, Volantis Systems and Usablenet. The iPhone points the way toward a new consciousness of richer user interfaces and services on mobile clients.

Portability among applications in the mobile world remains a challenge. Gartner recommends Web standard approaches when portability and ease of development are goals.

Other issues such as form factor (small screens are not optimal) and connectivity (intermittent and costly in many cases) also need to be factored into decisions.

HTML5 and Web technologies make most sense for uses when reach across multiple platforms is a strong requirement. Native approaches make more sense when needing to take advantage of the leading-edge device capabilities.

Business Impact: Mobile presence, as a result of the success of the iPhone, has become a critical requirement for reaching consumers and, increasingly, business users. The mobile Web, as first delivered in a satisfactory way by the iPhone, has made mobile Web clients feasible. While many organizations may have started down a mobile Web path with early-generation technologies such as Wireless Application Protocol (WAP), the advent of native applications for the iPhone and other smartphones has recently been the focus. Online strategies must increasingly take into account not just a native mobile application experience, and need to reach more platforms; a mobile Web experience is a good way to do this.

The major reasons to go with mobile Web applications are to hedge your bets regarding platforms and to support multiple platforms. Another consideration is security, because direct access to device software introduces additional security concerns. Java has not delivered its promise of cross-platform deployment in mobile (Java Platform, Micro Edition does provide some standardization) in the mobile sector. Flash and Silverlight are choices only for a subset of devices (i.e., not the iPhone). Mobile Web applications can, in certain scenarios and with careful attention to application programming interfaces and extensions, provide a rich user experience that does not equal native applications, but approximates it at a fraction of the development effort and with greater portability and flexibility.



Maturity: Early mainstream

Sample Vendors: Apple; Google; InfoGin; Microsoft; Netbiscuits; Nokia; Palm; Research In Motion; Usablenet; Volantis



Recommended Reading: "Magic Quadrant for Mobile Consumer Application Platforms"

"Using the Web to Improve the Customer Experience"

Social CRM for Sales

Analysis By: Michael Dunne; Chris Fletcher

Definition: Social CRM for sales represents a segment that exploits social-software technology to facilitate internal communications, interactions and information sharing within sales teams; among sales, marketing and customer support departments, and externally between sales and customers, or sales and indirect sales channels. Social CRM for sales allows users to leverage communities, discussion forums, blogs, wikis, polls and voting, instant messaging, tracking and monitoring applications (publish-and-subscribe functionality, triggers and filtering features, relationship matching), search and related analytics.

Position and Adoption Speed Justification: Significant hype is rapidly emerging for social CRM for sales, in many cases driven by vendor marketing, and by the more general excitement around social software and the interest of employees in direct and indirect sales roles (sales management, business development, operations, field marketing, IT, etc.). Despite increasing visibility around social CRM for sales, efforts to exploit social software as a formal strategy remain limited and in the preliminary stages for many sales organizations, due to concerns about how best to integrate these technologies with sales practices and enterprise systems. In addition, the number of software solutions targeting sales as a constituency remain few and relatively new, while quantifiable, practical business benefits and use cases will be realized only after a period of experimentation.

Going forward, adoption will be gated by sales management concerns over managing confidential information and due to concerns over distracting sales teams with too much information or new features. To date, key entry points for social software in sales and marketing organizations are primarily focused on support prospecting, lead management (mining leads from external communities, across the Web, etc.), customer interactions, peer networking, connecting sales to subject matter experts, and administrative tasks (e.g., HR job referrals).

User Advice: Above all, be practical, and avoid distracting the sales organization. Social CRM for sales is often a by-product of the hype resulting from dramatic developments in adjacent CRM domains, specifically marketing, PR and, to a lesser extent, in customer support. Firms should carefully consider the practical entry points for social software that present paths for easiest adoption by sales channels and quick wins in realizing business benefits. In the near term, sales organizations, particularly those with B2B sales models, should concentrate on experimenting with applications supporting prospecting, front-line account research and accessing subject matter experts for specific content (i.e., product specifications, competitive intelligence, proposal language, etc.), as well as networking with peers for assistance in handling specific scenarios in sales cycles (i.e., objections, key sales messages, sales tactics, etc.).

Business Impact: Social CRM software provides new interface paradigms and tools made popular by trends in consumer IT that are more user-friendly for nontechnical salespeople who often struggle with conventional sales automation applications. For near-term impact, social CRM for sales will improve the effectiveness of sales organizations in conducting narrowly defined responsibilities, such as managing contacts, front-line account research, recruiting and developing sales deliverables (i.e., presentations, RFP responses, proposals and product demonstrations). Innovation in contact management (establishing connections, gaining insight from peers, self-policing and correcting inaccuracies or outdated details) will prove helpful to sales teams in improving the quality of data in sales systems, especially for those that spend significant amounts of nonselling time sourcing leads on their own (more than 20% of a work



week). Similarly, teams that need to research accounts will benefit from technologies that mine key details of prospects and clients from social sites across the Web (in one case, salespeople were able to reduce the time to research accounts by more than 50%).

For sales organizations that rely on bid response teams, sales engineers or other subject matter experts to advance sales cycles, communities will help improve agility in sharing critical information across sales teams and departments. For organizations struggling to hire salespeople, social networks help sales management with accelerating efforts to gather job candidates. To earn a higher business benefit rating, over the long-term, social CRM software for sales will need to demonstrate broader practical contributions to improving sales processes, help facilitate closer collaboration between sales and marketing, and provide tools that increase the impact of sales interactions with prospects and accounts (i.e., elevate sales effectiveness).

Benefit Rating: Low


Maturity: Emerging

Sample Vendors: Comcast; Doostang; Hubbard One; InsideView; Jive Software; LinkedIn; Lithium Technologies; Oracle CRM On Demand; salesforce.com; Spoke Software; Thomson Reuters; Viadeo; Xing; Yammer; ZoomInfo


"Social CRM Market Definition and Magic Quadrant Criteria"

"Cool Vendors in CRM Sales, 2010"

"Lithium Buys Scout Labs for Social Media Monitoring"

"Jigsaw Buy Will Give salesforce.com Data Services in the Cloud"

Social CRM: Community Marketing


Definition: Community marketing is the harnessing of customer input and the cultivation of customer advocates. It includes social monitoring, moderated message boards, blogs, podcasts, list server applications, rating and reputation systems, customer review entries, and other word-of-mouth techniques. Community marketing can use company-sponsored public communities (anyone can join) or private communities (invited or registered users only). Marketers also participate in communities created and maintained by communities themselves.

Position and Adoption Speed Justification: Web 2.0 (which includes concepts and technology surrounding community input) is raising visibility and speeding up adoption around the power of communities and how marketers can start tapping into that power to get a fuller understanding of customers' wants and needs. Ownership and maintenance of community-enabling technology, such as podcasts or message boards, are still forming, because technology can be "operated" by companies or other communities. In addition, other collaboration and community-marketing methods are still emerging. Data collection for segmentation, reputation and even influence scoring capabilities are developing in mainstream markets, such as Web analytics and multichannel campaign management.

User Advice: Consider an online community as a pipeline for customer feedback. Marketers can participate in and collect data from communities to define, create and improve marketing campaigns and promotions, as well as future product and service planning. Feedback isn't always



positive, and harnessing a group and establishing trust means relinquishing a great deal of control to the community. If a company is hosting a community, then some ground rules can be set, such as conduct, but companies must be prepared to accept the bad with the good. Accepting the negative feedback with the positive feedback will show that the company is truly interested in receiving contributions. If a company isn't willing to address any of the negative comments, then it shouldn't host a community or actively solicit customer input.

Business Impact: Community marketing can keep people engaged with a company, align products and services with individual needs, and lead prospects through a buying process. It creates customer advocates who can be powerful influencers of purchasing decisions. Customer suggestions, feedback (such as links to a formal enterprise feedback management strategy), desires and more can be collected from community sites and used for branding, campaign management, loyalty, segmentation data or group/individual satisfaction measurement, and sales conversion.



Maturity: Emerging

Sample Vendors: Communispace; Jive; KickApps; Leverage Software; Lithium Technologies; Mzinga; Passenger


"The Business Impact of Social Computing on CRM"

"Five Best Practices for Establishing an Online Community for Marketing Benefits"

"World-Class Building Blocks for Multichannel Campaign Management"

At the Peak

Mobile Coupons

Analysis By: Hung LeHong; Gale Daikoku

Definition: Mobile phones are becoming a device on which consumers can receive coupons and information on promotions. There are two main categories of mobile coupons and promotions. The first consists of coupons or vouchers that are identified through a code, bar code or other means and can be sent to a mobile phone via SMS, mobile application, mobile URL or other mobile technology. These types of coupons are controlled in their distribution and redemption. They are usually made available to a subset of the overall customer base (either by consumers requesting the coupon or by being sent to a customer segment). The second category consists of communications of promotions that are available to all consumers. For example, a retailer may send out an SMS message to consumers who opt in that a sale on women's outerwear will take place next week. This sale is available to all consumers and is also advertised and communicated through other channels such as in the store and through print and broadcast. In this situation, mobile phones merely act as another communications channel rather than as a distribution channel for a coupon.

Context-aware technology (such as location awareness on mobile phones) and print-to-mobile coupons (such as scanning a bar code or texting a code advertised on print material) are emerging technologies in mobile couponing. The biggest advantage that mobile coupons have over e-coupons obtained on the Web or paper coupons is that they are immediately execution-



ready (that is, transportable via mobile device). Mobile coupons do not have to be retrieved, printed and brought to store via paper.

This was part of the Retail B2C Mobile Commerce entry in the 2009 Retail Technologies Hype Cycle. In 2010, we decided to separate it out to be able to more specifically describe this technology's progression in the retail industry.

Position and Adoption Speed Justification: The retail industry is still immature in the distribution and redemption of mobile coupons. It is also immature in the communication of promotions via the mobile phone. Our consumer surveys in 4Q09 showed that there is willingness to adopt mobile coupons and promotions but that many consumers have still not shown interest (see the Recommended Reading section). Retailers such as Kroger, Target and JCPenney have started using mobile coupons.

User Advice: To get a quick start with mobile couponing, retailers can use outsourcers and mobile-only coupon technology vendors. However, in the midterm to long term, mobile coupons will have to be part of a multichannel e-coupon strategy. The biggest mistake that retailers can make is to implement a mobile-only system and not expect to integrate it with other channels. Consumers will want to be able to access and redeem a coupon in any channel, so retailers will need to make sure that technology used in the mobile coupon process is multichannel-capable. Tight integration between campaign systems and the couponing systems of the brand manufacturers will be required. Retailers will also need to be able to tightly control opt-in and privacy settings to avoid spamming customers.

Business Impact: The benefits of mobile coupons center on increasing the frequency of visits and transaction value. Sales, margins and customer loyalty are all targeted to increase as a result.



Maturity: Emerging

Sample Vendors: Air2Web; Cellfire; CodeBroker; Coupons.com; Infinian; Scanbuy; Sybase; You Technology; Zavers

Recommended Reading: "Mobile Coupons: U.S., U.K., Canada and France Consumer Preferences, 4Q09"

"How Can Retailers Get Started in Mobile Commerce?"

"How Retailers Should Develop Their Mobile B2C Capabilities"

"Personalized Offers: Do Consumers Value Them?"

Campaign Optimization


Definition: Campaign optimization is the balancing and coordination of multiple constraints (such as budget, channel, customer value and customer contact saturation) to maximize the expected value from single-campaign offers or multiple campaigns. Campaign optimization functionality helps marketers decide which campaign is best for which channel, and details the expected value and outcome of each campaign.



Position and Adoption Speed Justification: Campaign management continues to evolve from single-step, direct-mail campaigns to a multichannel, multistep, multicampaign environment. This is an advanced use of campaign management, and deployments have been limited to 60% of Type A organizations and approximately 15% of Type B companies. During the next two years, we will see significant online channel optimization adoption, where marketers can utilize new and older-type behaviors to improve interactions, particularly involving online interactions through the use of Web analytics.

User Advice: Marketers should view campaign optimization as an iterative process. Start with a reconciliation of available campaigns targeted at specific segments, and prioritize the value benefits of each campaign. Then, move to other factors, such as channel, timing and client interaction saturation constraints. Each additional factor will raise the complexity of the project. More-advanced campaign offerings, such as predictive analytics (including Web analytics), can provide further input to optimize the outcome in a more comprehensive way.

Business Impact: Campaign optimization results can significantly affect campaign profitability and return on investment (ROI) by determining the most valuable campaign and offering mix, as well as reducing cost by eliminating ineffective campaigns. Although this is particularly relevant when marketing budgets are highly scrutinized and audited, profitability and ROI are always important.




Sample Vendors: Experian; Omniture; Portrait Software; SAS; SPSS; Unica

Recommended Reading: "Magic Quadrant for CRM Multichannel Campaign Management"

Mobile Consumer Application Platforms

Analysis By: William Clark; Nick Jones; Michael King

Definition: Mobile consumer application platforms (MCAPs) include a wide range of infrastructures, tools and distribution capabilities that enable consumer-facing enterprises to build, test, deploy and support mobile applications for a wide variety of devices. Application architectures supported include:

Messaging-Based — for example, Short Message Service (SMS) and Multimedia Messaging Service (MMS), and mobile e-mail outbound and return applications.

Browser-Based — this involves thin clients, ranging from rudimentary Wireless Application Protocol (WAP) to full mobile browsers (such as Safari, Pocket Internet Explorer [Pocket IE] and Opera), with scripting and access to on-device resources.

Thick Clients/Rich Clients — this includes native applications (e.g., Apple, Symbian, Windows Mobile, Palm and BlackBerry); high-end Java Platform, Micro Edition (Java ME); and Binary Runtime Environment for Wireless (BREW).

Streaming Audio/Video — examples include Adobe Flash and Microsoft Silverlight; these provide rich animation and interactivity on the client device.

Gartner has observed that more-sophisticated applications and services, which blend the first three types of architecture, have become more prevalent in the past two years. We expect this trend to accelerate during the next three years; hence, these disparate technology bases will be



drawn closer together to support more-sophisticated use cases. The streaming use case will continue to be initiated by one of the other three, but still requires special tools and thought concerning how those platforms will craft user experiences. Device- and OS-specific platforms (such as Apple's combination of tools, handsets and application stores) and device- and OS-independent platforms (such as broad SMS platforms and cross-compilers for multiple OS platforms) will thrive. Both will pose design challenges in sourcing consumer-facing applications on mobile devices.

Position and Adoption Speed Justification: The rapid growth of smartphones and the increased capabilities they offer will cause them to quickly become primary computing platforms for consumers in North America, Asia and Western Europe. In 2010, Gartner saw an increase in activity around cross-platform tools that includes mobile enterprise application platform (MEAP) vendors crossing over to support consumer applications and new venture-backed vendors. Based on this reality, coupled with the growing requirement for enterprises to reduce customer interaction costs, as well as the comfort level that most consumers younger than 30 have with SMS and mobile browsing, we expect increasing adoption of these technologies during the next two to five years. Most of these platforms support one or the other, but over the longer term (two to three years), a single infrastructure will support and integrate experiences across multiple channels. In three to five years, MCAP functionality will begin to overlap with MEAP functionality, requiring deeper application infrastructure integration, and HTML5 will bring this further together.

User Advice: Always think of user interactions in terms of their styles — thick, thin or messaging. Investigate native platform development tools for streaming and thick for most popular platforms, or for those that require higher performance. Devise a thin-client application strategy to service the remaining customer base. Recognize the immense installed customer base for SMS and the attractive segment of mobile e-mail users. Reconcile investments against current CRM and e-commerce investment profiles. Assess MCAP vendors' ability to provide analytics and integration with other platforms.

Business Impact: MCAPs are significant for consumer-facing companies, government agencies, telecom, financial services firms, and utilities with requirements for increased communication with customers' constituents and users — the impact can be measured by improved click-through, page views or messages delivered.




Sample Vendors: Appcelerator; mBlox; Microsoft; Motricity; Netbiscuits; Openwave; Sybase; Volantis

Recommended Reading: "Magic Quadrant for Mobile Consumer Application Platforms"

"Context-Aware Computing: The Importance of Mobile Consumer Application Platforms"

Loyalty Marketing


Definition: Loyalty marketing orchestrates value propositions, incentives and campaigns that encourage improved life cycle management — acquisition, maintenance, retention and cross-sell/upsell. It differs from loyalty programs in that loyalty programs are essentially operationally focused, automated incentive plans revolving around discounts and reaching purchasing thresholds.



Position and Adoption Speed Justification: Loyalty programs are being reinvented to focus on customer life cycle management and to move beyond "giveaways," credit card schemes, travel rewards and grocery store promotions. Future generations of loyalty programs will involve pricing and bundling, as well as co-marketing, within the broader demand network. Most companies separate their loyalty systems from their campaign management systems. Loyalty programs are often "siloed" from other business functions, such as customer service and sales.

Many companies do not have a complete view of a customer's loyalty or status. Therefore, interactions outside the loyalty programs often erode the value of the loyalty programs by providing unsatisfactory experiences for the customer. Although some vendors are offering loyalty/reward-points tracking and management, new vendors will incorporate loyalty management within the broader marketing suite.

Few vendors have an integrated vision for loyalty management and campaign management, much less a vision for how to manage loyalty across all customer interactions. Eventually, loyalty management will become part of a larger-scale CRM focus on managing the customer experience globally, rather than treating loyalty management as just another customer silo or division.

User Advice: Use marketing applications to develop, manage and measure loyalty. Integrate these capabilities with campaign management (B2B and B2C) and broader CRM initiatives that recognize customer loyalty across all customer interactions and communications. During the next five to 10 years, the differentiation of strategies and applied technologies will provide a competitive advantage for companies that focus on driving customer loyalty across the broader customer experience.

Business Impact: Loyalty marketing enables companies to increase customer loyalty to expand customers' relationships/portfolios, extend the relationships with profitable customers and increase customers' lifetime value.




Sample Vendors: Carlson Marketing; Loyalty Lab; Maritz; Oracle-Siebel; SAP

Web 3.0

Analysis By: Gene Phifer

Definition: As Web 2.0 becomes mainstream, the term "Web 3.0" is becoming a contender for labeling the next generation of the Web. The Web is a complex ecosystem, not a product that follows a well-defined road map. The X.0 label is ambiguous and unsuited for the evolution of the Web. The X.0 label is only meaningful when preceded by a well-defined entity, such as a product offering. Placed after a phenomenon such as the Web, it provides no descriptive value and must be further defined. This invariably leads to confusion, because different parties espouse different definitions in the hopes of achieving their own ends.

Many people, including vendors, technology proponents, analysts, bloggers and authors, are trying to use the term Web 3.0 to describe their needs and visions. At least five factions are competing to establish the Web 3.0 term for their own benefit, including Semantic Web proponents, virtual world advocates, ubiquitous-computing fans, mobility proponents and cloud-computing supporters. More are expected, which will lead to significant hype and confusion, followed by potential missteps for IT leaders.



The term "Web 2.0" term caught on, but it wasn't a planned generational release of the Web, or even a prediction. Web 2.0 was observed and labeled. This is a critical distinction between the genesis of the Web 2.0 designation and the beginnings of Web 3.0.

With its openness, community/participation model and new business opportunities, Web 2.0 was a step-function change from Web 1.0. The Web won't see a similar step-function change in the next few years. Therefore, Web 3.0 will not occur as many would like us to think it will.

Position and Adoption Speed Justification: Although Web 2.0 innovation experienced a relative spike, the Web will evolve steadily during the next five to seven years, making radical shifts more difficult to pinpoint, and minimizing the possibility of another step-function change such as Web 2.0.

The next generation of the Web will focus on the expansion of the social Web, the Semantic Web, the programmable Web, the mobile Web, and the real-time Web. It will also encompass "the Web of things," where there are direct connections between the online world and the physical world. These changes are long-term, multifaceted and infrastructural, and, therefore, will occur in a much longer time frame than the rapid explosion of innovation that occurred with Web 2.0. Additionally, the increasing fragmentation of devices used to interact with the Web will make Web 3.0 unlikely. With the addition of contextual-awareness, it is likely that many people will move from sharing the same Web to favoring their personalized views on specialized devices.

Jockeying for the Web 3.0 position will only increase confusion and hype, decreasing the odds of any one prediction emerging as the successor to Web 2.0. Despite being inappropriate and ineffectual, the Web 3.0 term may persist because of the popularity of the Web 2.0 term, because Web 2.0 technologies and approaches are seeing broad adoption in enterprises, and because vendors are always looking to sell "the next big thing."

User Advice: IT leaders should not adopt, promote or search for meaning in the term Web 3.0. The term will remain confusing and ineffectual. IT leaders must recognize the shortcomings of the term Web 3.0 and concentrate on extracting business value from existing and emerging Web technologies, practices, products and services. Look for Web 2.0 to develop along an evolutionary path — Web 2.1 and Web 2.2 would be more appropriate to use than Web 3.0.

Business Impact: Danger surrounding the hype of a catchy term, such as Web 3.0, arises from its tendency to consume "mind share." Business and IT leaders risk being distracted by "Web 3.0 mania" before realizing the potential benefits of current and emerging Web technologies.

Benefit Rating: Low


Maturity: Embryonic

Recommended Reading: "Key Issues for Web 2.0 and Beyond, 2010"

"Predicts 2010: Web Technologies Evolve in Multiple Dimensions: Mobile, Social and Real Time"

"Cool Vendors in Web Technologies, 2010"

"What Is Web 2.0" (http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-Web-20.html)

Cloud/Web Platforms

Analysis By: Gene Phifer; David Mitchell Smith

http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-Web-20.html

http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-Web-20.html



Definition: Cloud/Web platforms use Web technologies to provide programmatic access to functionality on the Web, including capabilities enabled not only by technology, but also by community and business aspects. This includes, but is not limited to, storage and computing power. We use the terms "Web platform" and "cloud platform" interchangeably, and sometimes use the term "Web/cloud platforms." They have ecosystems similar to traditional platforms, but Web platforms are emerging as a result of market and technology changes collectively known as "Web 2.0." These platforms will serve as broad, general-purpose platforms, but, more specifically, they will support business flexibility and speed requirements by exploiting new and enhanced forms of application development and delivery.

Web platforms reuse many of the capabilities and technologies that have been accessible on websites for more than a decade through browsers by adding programmatic access to the underlying global-class capabilities. Reuse is occurring via Web services, and is being delivered via Web-oriented architecture (WOA) interfaces, such as representational state transfer (REST), plain old XML (POX) and Really Simple Syndication (RSS). In addition to the capabilities of Web 2.0, these platforms provide programmatic access to cloud-computing capabilities. The public API phenomenon has taken WOA beyond consumer markets (e.g., Twitter) into enterprise B2B integration.

Position and Adoption Speed Justification: The use of Web/cloud platforms is happening in consumer markets. In addition, the concepts are apparent in enterprises' use of service-oriented business applications. Enterprise use of Web-based capabilities, such as Amazon Simple Storage Service (Amazon S3) and Amazon Elastic Compute Cloud (Amazon EC2), has begun as well. However, mainstream adoption of Web/cloud platforms hasn't begun yet. Additionally, early adopters have limited experience with Web/cloud platforms, and will inevitably run into challenges and issues.

User Advice: Web platforms and related phenomena have affected consumer markets first, but enterprises should evaluate the growing space as an appropriate extension to internal computing capabilities. Use of Web platforms will drive WOA, which enterprises should adopt where appropriate, along with simple interfaces, such as REST, POX and RSS (wherever possible), to exploit the interoperability, reach and real-time agility of the Internet.

Business Impact: Web platforms can be leveraged as part of business solutions, and will form much of the basis for the next generation of interest in the virtual enterprise. Web platforms can decrease barriers to entry, and can deliver substantial value for small and midsize businesses that could not afford to build and maintain capabilities and infrastructures. Examples include Amazon Web Services (including S3 and EC2), salesforce.com's Force.com, Google's App Engine and Microsoft Azure Services Platform. Note that the term "Web/cloud platform" is broader than and includes multiple layers in cloud-computing terminology (e.g., integration as a service [IaaS], platform as a service [PaaS] and software as a service [SaaS]) and the use of the term "platform" is different from the term "PaaS."




Sample Vendors: Amazon.com; Google; Microsoft; salesforce.com

Recommended Reading: "Web Platforms Are Coming to an Enterprise Near You"

"Predicts 2010: Application Platforms for Cloud Computing"

"NIST and Gartner Cloud Approaches Are More Similar Than Different"



Enterprise Feedback Management

Analysis By: Jim Davies

Definition: Enterprise feedback management (EFM) solutions provide enterprisewide, multichannel surveying tools suitable for diverse departmental needs. Their use ranges from one-off tactical surveys to ongoing strategic feedback that provides better understanding of customers, employees, products and processes.

Position and Adoption Speed Justification: We've seen incredible progress in the EFM market during the past 12 to 18 months. More than 60% of organizations have adopted some method of surveying their customers, and many of these organizations are deploying second- and third-generation EFM initiatives. Consolidation in the market, which was expected, has brought together the largest players and created some new vendors with stronger offerings. Further vendor consolidation is expected during the next few years, with interest from the mainstream CRM vendors growing. Functional enhancements will focus on analytics (to determine what to do with the data collected) and better alignment with social software. Listening to the customer is a key requirement for social CRM, and several EFM vendors are developing solutions to host communities and capture feedback from them. During the next two to three years, vendors will begin to align with specific industries to provide differentiated preconfigured solutions.

User Advice: As a result of mergers and acquisitions to extend channel support, many multichannel EFM solutions have multiple development tools and different code bases. These solutions are engineered to share data, but companies should conduct a deep architectural review. Designate a person or committee to be responsible for approving feedback events, and to prevent the overuse of any single group of customers. Implement panel management techniques and software to increase your response rates and to keep customers satisfied. Embrace feedback as a way to collect data for further analysis, not as the end result of the initiative. Follow proper best practices for survey creation to ensure good response rates and valid responses.

Business Impact: An EFM deployment will provide a holistic view of feedback data across customers, employees and partners. This simply isn't possible with multiple siloed departmental tools. The EFM deployment will ensure that the right individuals are surveyed at the right time, on the right channel and with the right questions, thus ensuring maximum response rates and business insights. This will improve customer satisfaction and customer management.




Sample Vendors: Allegiance; CDC Software; Clicktools; Confirmit; CustomerSat; Digium; Empathica; Fizzback; Globalpark; Interview SA; MarketTools; Medallia; Mindshare; Qualtrics; QuestBack; Quick Search; Ransys; ResponseTek; SPSS; Vovici

Multichannel Campaign Management


Definition: Multichannel campaign management processes enable companies to communicate offers to customer segments across a multichannel environment, such as direct mail, call centers, websites, e-mail and communities. This can include integrating marketing offers/leads with sales for execution. Basic campaign management includes segmentation, campaign execution and campaign workflow. Advanced analytic functionality includes predictive analytics and campaign optimization. Advanced execution functionality includes event triggering and real-time



recommendations (offer management) in inbound and outbound environments. E-marketing functionality includes Web analytics, community marketing and search marketing. The speed of adoption in these newer online functionality areas, many times with alternate deployment options (such as software as a service), will take time to mature.

Position and Adoption Speed Justification: The basic campaign management market is mature, but the requirements have changed. Marketers are shifting investments from mass-marketed, one-channel, one-way, company-driven campaigns to more-advanced multichannel, measurable, interactive, customer-driven campaigns, such as event-triggered campaigns' inbound marketing and offer management. Applications are combining basic campaign functionality (such as customer segmentation and dialogue management) with advanced capabilities (such as predictive analytics and e-marketing integration). Advanced functionality and greater e-marketing integration in campaign management are enabling campaign management vendors to reinvigorate their value propositions.

User Advice: Shift from purely push-oriented, outbound campaign management strategies to more inbound, multichannel capabilities. Marketers must create a centralized campaign management strategy and expand their projects to include growing customer-aware channels, such as the Web, which has the greatest propensity for campaign interaction. Although much of the business-to-consumer (B2C) market has been traditionally focused on B2C environments, B2B companies should use campaign management as a key source for a customer acquisition growth strategy. Major collaboration in the marketing and sales organizations can begin in online communication channels, such as a company's website, webinars and customer-driven message boards, where lead management tools are used for marketing, and sales for acquisition.

Business Impact: Multichannel campaign management is used to orchestrate the customer relationship. In many companies, it is the system of record for a conversation or interaction. Multichannel campaign management is used for directly targeting customers, acquisitions and growth more effectively. Benefits also include help for companies that rely on partners/distributors/indirect sales to reach, gain insight on or exercise influence over end customers.




Sample Vendors: Aprimo; Infor; Neolane; Oracle-Siebel; Responsys; SAS; Teradata; Unica

Recommended Reading: "World-Class Building Blocks for Multichannel Campaign Management"

"Magic Quadrant for CRM Multichannel Campaign Management"

Multicommerce MDM

Analysis By: Andrew White; Gene Alvarez

Definition: Multicommerce master data management (MDM) represents a technology convergence of separate MDM solutions that historically would support a "single view" of specific and separate domains for individual selling channels. Enterprises interact with their customers via many channels — for example, print, Web, direct, kiosk, service, fulfillment, returns, electronically — and customer service and business performance is maximized when important master data is unified across these channels. This is often addressed by individual technologies and solutions — MDM of customer data and MDM of product data, and content management systems; however,



users are increasingly asking their initial vendors (whichever one they start with) to master the other important master data.

Other master data is being included, such as location, and hierarchy for reporting. As a result, users are looking for a convergence in the technology to simplify the information infrastructure. Multicommerce MDM is likely to be a short-term convergence in MDM technologies, before MDM suites support all data domains (multidomain) and data types (including content).

Position and Adoption Speed Justification: Through 2009, IT departments had to contend with urgent needs to cut and optimize costs. Even customer-facing programs were often put on hold and only reinstated when the survival of the business had been reasonably ensured. Later in 2009 and early 2010, we began to see an increase for customer-facing programs, although product data is now facing the same cycling of slower growth. Interest and hype in many customer-facing technologies is increasing.

Vendors are continuing to expand their focus and capabilities to larger sets of users and use cases, such as multicommerce, that combine several previously separate segments of the overall MDM landscape. Organizations have multiple and differing MDM requirements, depending on their situations. This particular view of MDM focuses only on a subset of the scenarios in MDM (for other scenarios, see "Mastering Master Data Management"). MDM for multicommerce is emerging from the application of MDM to product data and customer data, including content management. Multicommerce MDM technologies will replace potentially separate MDM implementations for product, customer and/or site master data, and will be replaced by MDM suites, once they mature to support all requirements.

User Advice: Organizations selling and interacting with customers across multiple channels and via multiple interaction styles should simplify and govern master data via one discipline supported by multicommerce MDM technology. Address governance, organizational process and metrics issues for product, customer, location and other important information assets, in addition to creating a technical reference architecture for MDM. Align your MDM initiative with the objectives of the organization's enterprise information management (EIM) program.

Look for reuse of product, location and party data across all your selling systems and processes, and align the governance of that data in one process. Avoid the hype about "multidomain MDM" or "MDM suites," because most are not yet mature enough to meet complex requirements across multiple channels.

Build an MDM road map, working with your business stakeholders and your enterprise architecture team to demonstrate how the facets of MDM will be addressed. This should include the need for rationalization of multiple MDM initiatives in your organization for the long term.

Business Impact: Multicommerce MDM, which aligns benefits from MDM of customer data, MDM of product data and other master data, supports:

Enhancing customer service through consistent product and customer information across all customer points of interaction

Reducing cycle times for processes such as new product introduction

Optimizing CRM initiatives that seek to understand customer behavior across multiple channels

Enhancing inventory assets through greater integration of supply chain and demand chain processes



Implementing an enterprise service-oriented architecture strategy within a broader MDM strategy

Single view of customer and product through customer-facing (CRM) and supplier-facing (supply chain management) end-to-end process




Sample Vendors: Enterworks; Heiler Software; Hybris; IBM; Stibo Systems

Recommended Reading: "Ten Best Practices for MDM of Product Data"

"Single View of Product Data Can Improve Supply Chain and Drive Product Performance Management"

"How to Determine the Generations of CRM E-Commerce Customer Experience"

"Mastering Master Data Management"

"10 Best Practices for Customer Data Integration"

Consumer Web Mashups

Analysis By: Jim Murphy

Definition: Consumer Web mashups are lightweight composite applications built using consumer Web-based mashup infrastructures, that consume publicly available consumer Web resources. Consumer Web mashup infrastructure providers claim to target average Web users, but most use is by amateur developers and hard-core hobbyists.

Position and Adoption Speed Justification: Although the term "mashup" originated in the music world, mashups in a technology context originated and gained their initial momentum on the consumer Web. They began as composite Web applications that leveraged Web-based content and functionality from consumer-oriented sites to deliver applications for external audiences using only a thin layer of JavaScript aggregation code on the client. There are thousands of consumer Web mashable components (or "mashables," often in the form of widgets and gadgets), and users of sites ranging from Google to Yahoo to Amazon leverage them to create consumer Web mashups. ProgrammableWeb.com and Mashable.com provide an overview of the range of consumer Web mashups available. Enterprises that are experimenting with consumer Web mashups for enterprise use have largely found that they provide limited production value without additional work to manage their use in a secure fashion under appropriate governance. The beginnings of a backlash against consumer Web mashups has started among some Web developers.

User Advice: Enterprises should look to consumer Web mashups to demonstrate the mashup concept to business leadership (see "A Process for Successfully Selling Mashups to Enterprise Leaders"). However, enterprises looking to leverage consumer Web mashups for enterprise needs should be wary about their limitations and risks. Few consumer Web mashup infrastructures provide security or governance functionality, and consumer Web mashups don't provide connectivity to on-premises applications and content repositories. However, companies that overcome these hurdles may find considerable benefit in employing consumer Web mashups.



Organizations should consider embedding Web mashups in business-to-employee portals, intranet pages and dashboards to provide easy access to information sources for users. But they should choose only safe and reliable sources, and they should not expect or attempt deep integration with enterprise resources. With the same cautions in mind, organizations should consider using consumer Web mashups to augment and enhance information they provide to customers on their websites. Companies looking to extend their Web presence beyond their own website should consider providing mashables (in the form of gadgets or widgets) or mashups for consumption on sites like iGoogle and myYahoo.

Business Impact: Consumer Web mashups can deliver business value in three areas:

First, consumer Web environments serve as excellent demonstration tools to expose business leaders to the mashup concept. Consumer Web mashups provide a ready catalog to demonstrate several different use cases for mashups.

Second, some consumer Web mashups can be used in enterprise settings with appropriate governance and security. Doing so eliminates the need to rely on traditional application development organizations to develop their own mashups for those use cases, or if a portal framework is deployed, to create some custom portlets.

Enterprises seeking to extend their services can attract and engage customers by making widgets and gadgets available to consumers using sites such as iGoogle and myYahoo.

Benefit Rating: Low



Sample Vendors: Google; Microsoft; Netvibes; Pageflakes; Yahoo

Predictive Campaign Analytics


Definition: Predictive campaign analytics involves the analysis of customer behavior in campaign management for the purpose of forecasting or projecting specific patterns, trends or outcomes.

Position and Adoption Speed Justification: Business-to-consumer marketing organizations are including more-advanced analytic techniques to increase response rates among targeted audiences. Multichannel campaign management vendors continue to add predictive analytics to their offerings to fill functionality gaps. Newer marketing techniques, such as inbound marketing, are taking advantage of predictive analytics, with offer management applications that put recommendations in front of marketing analysts and campaign managers.

B2B organizations and smaller companies in the midmarket are beginning to use predictive analytics for B2B campaign management, lead management, and churn and risk assessments. Predictive analytics must move from the statisticians and the IT organization to marketing business analysts, who have access to and can leverage business insight without building complex data models. The software-as-a-service delivery option is increasing the speed of adoption, with easier access and choice of in-line predictive tools (such as offer management) in campaign creation.

User Advice: Choose predictive analytic technology based on the internal skills of the marketing department, as well as the channels used for campaigns, such as an inbound call center or Web, and/or an outbound channel, such as direct mail. Invest in power users in the marketing function



to better extract value from this technology. Start with simpler, more-developed channels to gauge accrued benefits — for example, to determine correlations between the use of predictive analytics and increased lift realized, higher response rates or greater customer retention achieved.

Business Impact: Predictive analytics for campaign management can increase the capacity of an organization to understand and respond in its target markets and, potentially, in new markets. Segmenting customers and prospects — based on their propensity to churn, purchase, be upsold, etc. — can significantly increase response and conversation rates.




Sample Vendors: Infor; Kxen; Oracle; Portrait Software; SAS; Unica


Sliding Into the Trough

E-Commerce on Demand


Definition: E-commerce on demand is a suite of functionality to facilitate Internet selling functions (such as shopping carts, search, product catalogs, pricing, personalization, settlements, etc.) that are used to serve consumers and business partners, and foster long-term customer relationships via the Web. The application is owned, delivered and managed remotely by one or more providers. The provider delivers an application based on a single set of common code and data definitions that are consumed in a one-to-many model by all contracted customers anytime on a pay-for-use basis or as a subscription based on use metrics. The technology offered is primarily focused on retailing organizations; however, some branded manufacturers have adopted the technology. It offers a set of core e-commerce capabilities that are commodities, and these capabilities can meet the normal expectations of a Web store.

Position and Adoption Speed Justification: We believe that the limitations of software-as-a-service (SaaS) e-commerce, such as the overall maturity of the vendors (many vendors are still under $100 million in e-commerce SaaS service revenue), and concerns over the ability to provide a differentiated online experience have been a gating factor to SaaS e-commerce adoption. The latter has been the largest client concern, because they believe that competitors can sign up easily with the same SaaS e-commerce provider and deliver an equal online customer experience. The low barrier to entry has clients remaining focused on a hosted or on-premises ownership model that enables greater control and opportunities for differentiation. Issues concerning the flexibility of offerings in accommodating unique business practices and sophisticated integrations represent additional gating factors. Furthermore, some organizations have not developed overall SaaS strategies, and have not determined the effect of SaaS on their total IT portfolios.

User Advice: Retail industry users and organizations that have sales models similar to online retailing should determine whether a total cost of ownership (TCO) cost savings can be realized in the long and short terms before moving to an on-demand model. Users in other industries — especially those with complex ship-to-order, assemble-to-order or engineer-to-order configuration issues, or complex order fulfillment through downstream partners or other B2B-specific requirements — should avoid these offerings due to the complexity of these sales. E-commerce



on demand can be used to service customers in smaller or unique markets, without necessitating IT resources or software ownership. However, this type of e-commerce doesn't provide unique differentiating functions, because the on-demand solution is equally available to all users.

Business Impact: Organizations that are losing money online because their spending outpaces online sales can reduce the TCO for e-commerce and bring their online store spending in line with their online revenue. In addition, organizations that want to try new online businesses can bring an online store live in a shorter time frame. However, site differentiation via unique functionality isn't possible.



Maturity: Emerging

Sample Vendors: ATG; Demandware; Imano; Infopia; NetSuite; Venda; Volusion

Recommended Reading: "CRM Software-as-a-Service Guidelines for E-Commerce"

"SaaS Impact on E-Commerce"

Mobile Social Networks

Analysis By: Monica Basso

Definition: Mobile social-networking services enable individuals to connect to their social communities with a mobile device, through one or more available mobile channels. Members share experiences, interests, opinions, presence information and personal content through their mobile phones.

Position and Adoption Speed Justification: Many startup companies around the world have launched social-networking services for mobile users only. The business opportunity is to address today's four billion (and growing) mobile phone users worldwide with dedicated services that leverage location data. Mobile phones are also the predominant tool used by people to stay in touch with members of their real communities.

A range of pure-play providers that focus predominantly on mobile channels is emerging. Some providers partner with mobile carriers to give access to their mobile communities to the carrier's subscribers through a link on the default page of mobile phone browsers (for example, Jumbuck Entertainment and airG). Other providers work independently of carriers (for example, MocoSpace, Twitter and GyPSii). Most are federated with Web social networks, such as Facebook and MySpace. Beyond such examples, many companies offer some blend of services in this area (such as myGamma, Mobimii, Bluepulse, Funambol, mobikade, Crush or Flush).

Leading social networks, such as Facebook, MySpace and Bebo, as well as other community-oriented services, such as YouTube, Flickr, LinkedIn and Plaxo, are accessible through optimized clients for most mobile platforms. Finally, megaplayers in the Internet and mobile industry have launched different initiatives to enable social-networking experiences on mobile devices. For example, Google bought Jaiku, and has ongoing deals with Zingku (a pure mobile play) for acquisition, Yahoo offers oneConnect, Microsoft offers Windows Live Spaces and Nokia offers Ovi.

Such a crowded market will go through consolidation during the next 18 months. Startup companies will fight to gain brand recognition and grow subscribers (perhaps through partnerships with bigger players), mostly on a regional or local basis. Some will be acquired by larger companies, such as Internet portals, handset manufacturers and carriers. Through 2011,



the pure-play mobile social-networking market will consolidate around five players or less. Social-networking companies will target a multichannel audience with context-oriented services. Internet companies will consolidate multichannel social-networking services.

According to Gartner surveys, 15% of mobile phone users are currently accessing social-networking sites on the phone. Today's biggest social network, Facebook, claims that 25% of its over 400 million active users currently access services through their mobile devices. Adoption is expected to grow rapidly among mobile users. By 2014, mobile social-network users will reach one billion.

User Advice: Organizations should explore mobile social networks to find opportunities for innovating their communication styles with employees, clients, partners and markets (for example, to enable salespeople to collect and share geolocated information about customers in real time). However, organizations need to evaluate emerging risks in the areas of IT security threats, legal liabilities and reputation.

Business Impact: Mobile social networking is likely to have an impact across many vertical sectors, particularly where organizations deal with large client or user communities (such as education, healthcare and government sectors), or have larger distributed workforces in sales or other client-facing activities (such as the pharmaceutical, transportation and utility sectors).




Sample Vendors: bliin; Facebook; Funambol; GyPSii; MocoSpace; MySpace; Twitter; Yammer; Zyb

Recommended Reading: "The Emerging Market of Mobile Social Networks Offers New Business Opportunities"

"Social Trends Are Influencing the Adoption of Mobile and Web Technology"

"Gartner's Top Predictions for IT Organizations and Users, 2010 and Beyond: A New Balance"

Event-Triggered Marketing


Definition: Event-triggered marketing includes identifying, categorizing, monitoring, optimizing and executing of events (such as channel reconciliation). It can be applied in a multichannel relationship (such as direct mail, inbound call conversions, lead management and e-mail marketing). It's an approach to B2B and business-to-consumer marketing that addresses the appropriate timeliness of offers from the customer's perspective, rather than the company's perspective.

Position and Adoption Speed Justification: This technology is still immature. Fixed detection (such as for birthday events, new customers and renewals) can be automated because it is predictable. It also can be rule-based, which isn't difficult. Variable and more-behavioral event detection (such as a drop in spending or a customer shift in segment) is more difficult to detect and trigger. However, when significant events can be automated with a level of accuracy, it can significantly impact the effectiveness of campaigns. Speed of adoption is likely to increase during the next two years, as the fast-growing software-as-a-service (SaaS) lead management market highly leverages event-triggering techniques.



User Advice: Successful event triggering begins with an understanding of which events are significant to a customer and how to align an event with a business goal. In particular, there are two important aspects of variable events that clients must get right to be successful in event-triggered marketing:

Leading trigger and lagging trigger events — Leading triggers are indicators that an event is likely to happen in the near future for churn or cross-selling (for example, declining deposits, fewer transactions or atypical deposits). A lagging trigger typically indicates a missed opportunity (for example, a customer closing an account or stopping service means that he or she may have already "switched," and a win-back strategy should be used). Leading indicators are better sources of opportunities than lagging indicators.

Execution — Having the right information, you must use the right channel, skill set and follow-up plans to execute once a trigger has been identified.

Business Impact: Event-triggered marketing enables more-relevant offers to customers, based on segmented meaningful events, rather than nonsegmented mass campaigns, which can cause customer contact fatigue. Event-triggered marketing has seen five times the response rate of nontimed mass-marketing campaigns. Event-triggered marketing will have a significant impact on customer profitability and, ultimately, company revenue.




Sample Vendors: Eloqua; Eventricity; Marketo; SAS; Teradata; Unica


"Five Steps to Successful Event-Triggered Marketing"

Content Analytics

Analysis By: Rita E. Knox

Definition: Content analytics applications process content to derive answers to specific questions. Content types include photo captions, blogs, news sites, customer conversations (both audio and text), social network discussions, faces, maps, multimedia and documents. Applications include varieties of text analytics — sentiment analysis, reputation management, trend analysis, affinity, recommendations, face recognition, speech analytics, visualization, and industry-focused analytics such as "voice of the customer" to analyze call center data, fraud detection for insurance companies, crime detection to support law enforcement activities, competitive intelligence and understanding consumer reactions to a new product.

Multicomponent functions are constructed by serializing simpler functions. The output of one analysis is passed as input to the next. As virtually all content analytics applications use proprietary APIs to integrate functions, today there's no way to construct analyses from applications created by different vendors. In the future, the Unstructured Information Management Architecture (UIMA), governed by the Organization for the Advancement of Structured Information Standards (OASIS), may serve this purpose. Such a standard for unstructured data would serve a similar purpose to Structured Query Language (SQL) for structured data.



"Content analytics" is not a household term. But as "Band-Aid" is used as a category label for adhesive strips, application websites, such as Google and Twitter, are used as category labels (and even verbs) for social content.

Position and Adoption Speed Justification: In 2009, we "slowed" the adoption speed of content analytics due to increased analytic complexity. In 2010, we've advanced its position and adoption speed because of the explosion of social networking analyses. Use of both general- and special-purpose content analytics applications continues to grow as stand-alone applications and as extensions to search and content management applications. But the greatest growth comes from generally available resources.

Websites use different content analytics functions. Examples include:

Bookmarks to associate related content — http://delicious.com.

Affinity and recommendations to create community networks — www.facebook.com, www.linkedin.com.

Recommendations — www.amazon.com.

Tagging content to enable multimedia content sharing — www.youtube.com.

Analyzing trends — http://www.google.com/trends.

User Advice: Enterprises should employ content analytics to replace time-consuming and complex human analyses. Firms should identify the analytics most able to simplify and demystify complex business processes. Users should identify vendors with specific products that meet their requirements and they should review customer case studies to understand how others have exploited these technologies. An oversight committee can support application sharing, monitor requirements and understand new content analytics to identify where they can improve key performance indicators. Social networking applications should be used wherever possible to deliver information, gain access to customers, and understand public opinion that may be relevant.

Business Impact: Content analytics is used to support a broad range of functions. It can: identify high-priority clients, product problems, customer sentiment and service problems; analyze competitors' activities and consumers' responses to a new product; support security and law enforcement operations by analyzing photographs; and detect fraud by analyzing complex behavioral patterns. Increasingly, it replaces difficult and time-consuming human analyses with automation, often making previously impossible tasks tractable. Complex results are often represented as visualizations, making them easier for people to understand.



Maturity: Emerging

Sample Vendors: Attensity; Autonomy; BBN Technologies; CallMiner; Clarabridge; ClearForest; Facebook; IBM; IxReveal; MetaCarta; Nexidia; Nice Systems; Stratify; Trampoline Systems; Twitter; Utopy

Recommended Reading: "Exploiting Content Analytics"

"Content Analytics Category: Text Analytics"

"Definition of Content Analytics"

http://delicious.com/

http://www.facebook.com/

http://www.linkedin.com/

http://www.amazon.com/

http://www.youtube.com/

http://www.google.com/trends



Fraud Detection

Analysis By: Avivah Litan

Definition: Fraud detection and prevention are used to protect customer and enterprise information, assets, accounts and transactions through the real-time, near-real-time, or batch analysis of activities by users and other defined entities (such as kiosks) against accounts and records. Fraud detection uses background server-based processes — transparent to users — that examine user and other defined entities' access and behavior patterns. It typically then compares this information to a profile of what's expected and considered "normal." If tuned properly, fraud detection systems can be highly effective at keeping criminals out. They are not intrusive to legitimate users unless the user's activity is suspect.

Fraud detection is a mature technology; it has been used successfully in the credit card industry since the 1980s and in the e-commerce market since the late 1990s. In 2010, many financial institutions and other large companies are moving to enterprise fraud detection, where fraud is holistically managed across multiple products and channels. In contrast, fraud detection for mobile applications is just emerging, as mobile transactions are just starting to become more prevalent with the rollout of smartphones. (A separate Hype Cycle entry has therefore been created for mobile fraud detection.)

Enterprise applications are integrated with a fraud detection engine that assesses the fraud risk of a transaction, from user access to any type of activity, such as change of address or funds transfer. It can also profile other defined entities, such as ATM machines to similarly spot abnormal transaction behavior from that machine (for example, "too many" transactions in a given odd hour of the night). The severity of transaction risk is ascertained through various methods — for example, by "fingerprinting" the user's access device (if there is one) or by analyzing transaction behavior.

In addition to comparing information at the transaction, account or customer level — for example, to a profile of what's expected — fraud detection also includes other techniques, such as peer group analysis, which compares an individual entity or group of individual entities to their peers to spot suspect deviations. Fraud detection also uses methods such as collective network analysis (akin to entity link analysis) to detect, for example, criminal rings or linked individuals engaged in fraudulent behavior.

Fraud detection vendors use one of two basic methodologies for catching fraud — rule-based (based on what humans know) or mathematically predictive (artificially intelligent) scoring techniques (see "Magic Quadrant for Web Fraud Detection"). Most enterprise users want both rules they can easily update, as well as a mathematically predictive scoring system that runs in parallel with the rules. The general goal is for enterprise users to be able to improve upon a predictive model's results with their own rules, until such time that the model learns the new scenarios controlled by the rules. This way, for example, enterprises can quickly respond to new types of attacks they are subjected to that may not yet be known by the predictive model. Once the model learns the new attack method, the rule can be retired from the system.

Position and Adoption Speed Justification: This technology profile covers fraud detection technology that is already productized and working across the globe. Some of this technology is quite mature — for example, credit card fraud detection — and some is less mature — for example, enterprise fraud detection that prevents fraud across channels and products. Together, however, the blended position of fraud detection — excluding mobile fraud detection — is about 45% post-Peak of Inflated Expectations. In contrast, attacks in the mobile computing channel are still rare, since mobile environments are harder to crack and still originate a small fraction of e-commerce transactions, which is in part why we have a separate technology profile for mobile fraud detection.



In particular, fraud detection is already prevalent in the credit card market, where, since the 1990s, most card issuers use neural networks to analyze the behavior of card transactions and compare them to what's expected of the cardholder. In other markets and channels, fraud detection is less mature, although it has been quickly driven by increasing fraud attacks in the non-face-to-face channels (online and telephone) across the world.

Banking regulators in the U.S. further drove adoption of online fraud detection in the U.S. in 2006, with the introduction of rules and guidance that stipulated stronger security controls for online banking. Further, strong authentication systems rolled out across the world have been circumvented and beaten by hackers, strengthening the need for background fraud detection systems that can spot transaction anomalies even after a user has been strongly authenticated. Therefore, adoption of fraud detection is quickly increasing in countries that previously relied primarily on strong user authentication to control access to sensitive applications and functions.

User Advice: Assume the criminals will compromise credentials used by your employees, contractors or customers by stealing them from systems and applications often outside your enterprise's control. Use a layered security approach, which includes using fraud detection to flag suspect activity within your monitored applications. Fraud detection should work across multiple channels, functions and other customer touchpoints, and that often means integrating multiple best-of-breed products. Priority should be given to analytics, alerts and case management, so that fraud analysts can effectively manage and stop fraudulent activities. Apply lessons learned from past fraud to legacy systems that touch customers and sensitive data.

Gartner clients often look for one vendor that can help them manage several fraud-related use cases. The fraud management market is fragmented and characterized by many niche vendors that support one or two functions. However, a handful of software vendors provide enterprise-level fraud management applications focused on managing fraud across enterprise silos and systems. Many organizations don't see a compelling need for enterprise-level fraud management. This suboptimal approach will prove damaging to enterprises when it comes to managing fraud risk. Until an enterprise fraud management system is implemented, enterprises must maintain separate profiles, rule sets or models, whose results are tracked and acted upon in separate case management systems or transaction verification systems.

Fraud detection systems must be properly tuned, or else they will generate too many false positives, causing unnecessary and wasteful work for fraud investigators and analysts. In environments such as wire money transfers, where real-time execution is imperative, a high false-positive rate is clearly unacceptable because it stops too many time-sensitive legitimate transactions.

Business Impact: Fraud detection watches for suspect user and other defined-entity (for example, kiosks and beneficiary accounts) activity in an application within a given access channel (for example, Web, phone or in person) or across applications, access channels or even organizations (where, for example, "blacklists" of bad IP addresses are shared across organizations). This can range from detecting abnormal access (for example, simultaneous access by one device from two disparate geographic locations) to a suspect transaction sequence (for example, a change in address followed by a high-value money transfer). By default, it can also spot unauthorized employee activities if done in an application that is monitored by the fraud detection application.

Since fraud detection operates in the context of an application, it cannot detect rogue and potentially fraudulent processes that are external to the application. Fraud detection also cannot detect suspect behavior that is not defined to its engine because the rules are not aware of the activity pattern, the model has not learned enough to single it out, or the application integration is not providing enough relevant data to the fraud risk assessment engine.






Sample Vendors: 41st Parameter; Accertify; Actimize; ACI Worldwide; Arcot; Detica; Entrust; FICO; Guardian Analytics; Intellinx; Memento; Norkom Technologies; RSA; SAS Institute; The Security Division of EMC

Recommended Reading: "Where Strong Authentication Fails and What You Can Do About It"

"Pattern Discovery With Security Monitoring and Fraud Detection Technologies"

"Location Technologies"

"Magic Quadrant for Web Fraud Detection"

"Case Study: Bank Defeats Attempted Zeus Malware Raids of Business Accounts"

MDM of Product Data

Analysis By: Andrew White

Definition: Master data management (MDM) of product data (formerly known as product information management [PIM]) is a discipline that seeks to achieve a "single version of the truth" for product data enterprisewide. The discipline is technology-enabled as a workflow-driven or transaction-oriented process to cleanse, identify, link, harmonize, publish and protect common product information assets. The technologies create and manage a physical, database-based system of record, often called a "central product master," and enable the delivery of a single product view across channels, systems and lines of business, usually, but not only, in the operational environment. This can greatly aid an organization's ability to increase revenue, optimize cost, increase agility and meet compliance requirements.

MDM of product data systems is relevant to all industries and government, but the projects take different forms. This depends on whether the product is a physical product or a service, on the complexity of the product structure and consuming business processes, and on whether the focus is on the sell or buy side of the business.

An MDM of product data strategy is part of a wider, multidomain MDM strategy (potentially encompassing customer, product, supplier, employee, location, asset and financial master data). An MDM program is a key part of a commitment to enterprise information management (EIM) and helps organizations and business partners break down operational barriers, enabling greater enterprise agility and simplifying integration activities.

Position and Adoption Speed Justification: During the past 18 months, growth in the MDM of product data solutions market has slowed because of changes in MDM business drivers, with a greater focus on cost optimization and asset utilization. In 2010, we see a slow return to business growth and customer service drivers. Related hype in the past 12 months had slowed, but is showing signs of responding to or leading spending trends.

MDM of product data is increasingly defined by complex requirements (see "Magic Quadrant for Master Data Management of Product Data"), which have converged around different user-oriented focal points. Adoption and maturity of this technology varies by industry, technology adoption criteria and vendor strategy:



Industry adoption varies where enterprises with physical products (not services) focus on this technology longer than other enterprises, due to the need to share such data among organizations in B2B relationships.

Innovators (Type A organizations) have adopted this technology and are deploying the second master data domain (e.g., customer). Fast followers (Type B organizations) are active with the technology and are implementing it. Mass-market (Type C) organizations are showing signs of interest, as the global economy seems to be improving. This suggests the start of a significant upswing in demand and hype.

Large megavendors (IBM, Oracle, Microsoft and SAP) have acquired and/or developed their MDM of product data capability, and this is at the heart of their information architecture strategy.

Small, niche or custom-made solution vendors in this market — like Data Foundations, Kalido, Orchestra Networks and DataFlux — continue to survive by offering differentiated capabilities. Open-source MDM technology made a splash in 2009 with Talend, an open-source vendor of data integration and data quality technology.

This market has spawned other MDM segments, MDM of asset data and MDM of purchased parts, two other "things" of differentiation across industry, use case, drivers, implementation styles, etc. Some vendors have specialized across these data domains. 2011 will be a key year for MDM of product data vendors as they race against MDM of customer data vendors to claim the lead in mastering multiple domains. By 2012, product MDM will introduce ways to manage generic master data domains and another wave of vendor consolidation.

User Advice: Make MDM of product data part of your overall MDM strategy, and determine when, not whether, to adopt MDM. Seek business benefits across all IT programs, and business intelligence and application programs, that can be addressed with one information management approach, rather than a piecemeal approach. Review the organization's capabilities and challenges in governance, process and organizational change, toward uniformly managing product data, as well as its ability and political willingness to use one product view. Educate the organization about the challenges and their effects on the business.

Create a vision (how sustaining a single view of product/thing data supports preferred business outcomes like reduced time to market) for what can be achieved. Consider creating a central MDM for a product data repository that integrates with established source systems and becomes the system of record for master product data in a synchronized, heterogeneous environment. Focus on key business problems, and build a business case based on benefits.

Analyze likely short- and long-term scenarios where the enterprise wants to use an MDM system. This will guide your choice of a vendor, because products have different sweet spots that differ by industry and implementation style. MDM of product data systems must have rich, tight-knit facilities, including a comprehensive data model, information quality tools, workflow engine and integration infrastructure. Evaluate MDM products, including those embedded within business applications, based on objective, balanced criteria, including industry experience. Start small, "think big," and deliver early and often.

Business Impact: Large, complex and heterogeneous enterprises and many midsize enterprises spread product data across many systems. It is fragmented and often inconsistent. This makes it hard for organizations to streamline business processes and operations efficiently, and to develop new, agile business processes. Without a single view of a product, organizations can't effectively deliver better effectiveness across the supply chain or a sustained and effective customer experience, leverage operational benefits from merger and acquisition activity, identify



efficiencies on the buy side with deep insights on spending data analysis, or a competitive new-product introduction process.

There will be upsell and cross-sell inhibitors if organizations don't have a good handle on the products and services customers have acquired. Thus, the single-product view is key for managing the value chain. The impact on business applications and intelligence can be significant, as organizations grapple with the complex workflow of this initiative. MDM and, specifically, MDM of product data, impact all business applications and intelligence data stores, in that it becomes the centralized governance framework across all data stores.




Sample Vendors: DataFlux; IBM; Kalido; Oracle; Riversand; SAP; Stibo Systems; Teradata; Tibco Software

Recommended Reading: "Mastering Master Data Management"

"Ten Best Practices for MDM of Product Data"

"How MDM Can Help Enterprises Achieve a Single View of Product"

"Toolkit Best Practices: Strategies for Successful MDM Implementation"

MDM of Customer Data

Analysis By: John Radcliffe

Definition: Master data management (MDM) of customer data technology enables the business and the IT organization to collaborate in a workflow-driven or transaction-oriented process to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the enterprise's official, shared customer master data assets. An MDM of customer data solution creates and manages a physical, database-based system of record, often referred to as a "central customer profile," and enables the delivery of a single customer view across channels, systems and lines of business, usually in the operational environment. This can greatly assist an organization's ability to cross-sell, cross-market and retain customers, and to provide a consistent, appropriate customer experience. MDM of customer data systems fulfill a different purpose to data warehouses and data marts, which may also create a "single view of the customer," but which are more specifically designed for analytical purposes in terms of specialized schemas, as well as storing detailed data and aggregated summary data.

MDM of customer data technology is relevant to all industries and government. However, projects will take a different form, depending on whether the customer is an individual consumer or a hierarchy of business entities, and what the focus is of the single view in that industry or part of government — for example, citizen, taxpayer or patient. An MDM of customer data program should form part of a wider, multidomain MDM program (potentially encompassing customer, product, supplier, employee, location, asset and financial master data). It is a key part of a commitment to enterprise information management (EIM), which helps organizations and business partners break down operational barriers, enabling greater enterprise agility and simplifying integration activities.

Position and Adoption Speed Justification: The market for packaged (as opposed to homegrown) MDM of customer data systems has grown rapidly since customer data integration (CDI) emerged in 2003. This technology continues to mature, with leading vendors particularly



focusing on fleshing out facilities for data stewardship and data governance. Early adopters (Type A organizations) have achieved business value and created best practices. The early majority (Type B organizations) are now building business cases and investing in MDM. Organizations are now recognizing that MDM is not just about technology, but that issues such as governance can make or break initiatives.

The market is maturing in terms of the degree of market consolidation, and the fact that megavendors (such as IBM, Oracle and SAP) are focusing on this area, seeing MDM of customer data as key to their overall visions for service-oriented-architecture (SOA) application infrastructures. These megavendors are successfully selling into their extensive customer bases, and they own approximately 50% of the MDM of customer data market.

In early 2010, the leading best-of-breed specialists, Initiate Systems and Siperian, were acquired by IBM and Informatica, respectively. However, several small MDM specialists, such as Ataccama, Data Foundations, Kalido, Orchestra Networks and Visionware, remain in the market and are doing well. Microsoft and the commercial open-source vendor, Talend, entered the market in 2010. Finally, large vendors, such as Information Builders and Teradata, that have been successful in other markets are playing for a share of the MDM of customer data market.

User Advice: Large and midsize organizations with heterogeneous IT portfolios containing customer data fragmented across many systems should think in terms of buying or building a central MDM of customer data system that integrates with established source systems and becomes the system of record for master customer data.

Evaluate MDM of customer data products based on a set of objective, balanced criteria, including facilities for data modeling, data quality, integration, business services and workflow, measurement and manageability. Vendors' products vary in terms of maturity and capability, and there's likely to be further vendor consolidation in the market.

Success in an MDM program is not just about having the right technology. Create a holistic, business-driven MDM of customer data vision and strategy that focuses on key business problems. Build a business case based on the ability to improve key business process metrics and ensure that you address governance, organizational and process issues. Keep the long-term MDM vision in mind, and approach the individual steps of an MDM of customer data project based on business priorities.

Business Impact: Organizations with fragmented and inconsistent customer data have problems managing customer relationships. The ability to identify customers correctly and to leverage a trusted, accurate and comprehensive single customer view in customer-centric processes and interactions is valuable to marketing, sales and service, and other functions that interact with customers. It can help them deliver the appropriate customer experience, and execute end-to-end processes in an efficient and effective manner.

An increasing number of Type A organizations can point to quantifiable business benefits. However, a number of projects have failed or stalled. Type B organizations are now starting to invest in MDM of customer data programs.




Sample Vendors: DataFlux; D&B Purisma; IBM; Informatica; Information Builders; Initiate Systems; Oracle; Oracle Siebel; SAP; Tibco Software; VisionWare



Recommended Reading: "Magic Quadrant for Master Data Management of Customer Data"

"The Seven Building Blocks of MDM: A Framework for Success"

"Use the Gartner MDM Maturity Model to Create Your MDM Road Map"

"Creating an MDM Vision, Strategy and Road Map"

Microblogging

Analysis By: Jeffrey Mann

Definition: "Microblogging" is the term given to a narrow-scope mode of social communication pioneered by the social network site Twitter.com and followed by similar services from Plurk, Yammer, Socialcast and Identi.ca. The concept is surprisingly simple: users publish a one-line status message to their contacts, who have decided to follow their activities on the service. Users can see the collected statuses of the people they choose to follow. Even those who do not want to follow many people can search through the microblogging stream for topics or tags they are interested in. Trending topics provide a condensed view of what everyone on the service is talking about. The content of status messages (called "tweets" on Twitter) ranges from the mundanely trivial ("I am eating eggs") to a random insight ("I think blogging is our online biography in prose, and Twitter is the punctuation") to a reaction to an event ("A passenger plane just landed on the Hudson River!").

Twitter's dominance has led to the practice being called "twittering" but it is also referred to as microblogging to broaden the focus from a single vendor, as well as to point out how this style of communication has augmented and partially replaced blogging. Even though it superficially resembles instant messaging (IM), tweets are published to a group of interested people, making it more similar to blogging than the person-to-person nature of IM.

The trendsetting Twitter system intentionally constrains messages to 140 characters, which is what can be sent via a Short Message Service text message on a mobile phone. This simple constraint enhances the user experience of those who consume this information. Tweets are small tidbits of information, easily digested and just as easily ignored, as the moment dictates. Other intentional constraints are designed to provide a high-impact user experience through minimalist design: no categories, no attachments, no scheduled postings. These constraints are a matter of some debate among users, leading Twitter to add more functionality in the last year (groups or lists, trending topics and retweets).

Competitors offer more full-featured alternatives (Plurk, FriendFeed) or open-source approaches (such as Identi.ca based on Status.Net), but have not been able to challenge the dominance of Twitter in the consumer market. One key factor behind Twitter's success over its competitors has been its early offering of an application programming interface to third-party developers. This has led to dozens of packages that enable users to access the Twitter service and post content, either through a mobile device or a more full-featured desktop client. Examples include Seesmic, TweetDeck, Twitterific and TwitterBerry. These third-party packages can provide offline capability, as well as features that fill in the gaps of Twitter's online offering. Twitter recently offered its own BlackBerry client as well.

Twitter's open nature makes it largely unsuitable for internal use within enterprises or for confidential communications with partners, leaving an opportunity for new offerings. Services including salesforce.com's Chatter, Yammer, Socialcast and Present.ly provide microblogging services aimed at individual companies, with more control and security than the public services like Twitter provide. Microblogging is also quickly becoming a standard feature in enterprise social software platforms, such as Socialtext, Microsoft SharePoint 2010, IBM Lotus Connections and



Jive SBS. By 2011, some form of enterprise microblogging will be a standard feature in 80% of the social software platforms on the market.

Position and Adoption Speed Justification: Microblogging in general, and Twitter in particular, continue to gain in popularity, becoming a widely-recognized part of popular culture. A planned maintenance shutdown for Twitter became an international political issue when scheduled during an election crisis in Iran. The volume of Twitter traffic makes it valuable as a real-time news feed. Major events are almost always signaled first on Twitter before the traditional media can respond. This high profile has led many organizations to question whether they should be using Twitter or other microblogging platforms for communication between employees or to communicate with customers and the public. Many companies have expanded their Web participation guidelines for employees to include microblogging alongside the more traditional blogging and community participation. With wide adoption comes the inevitable backlash. Microblogging's superficiality and potential for time-wasting have led many to dismiss it as a passing fad, which is typical of a post-peak Hype Cycle position.

Twitter has worked to stabilize its technology and reduced many (but by no means all) of the service interruptions that previously plagued the system. Twitter problems are announced by the appearance of the "fail whale" graphic on Twitter's home page, a term that has received wide public adoption. Twitter's dominance has made it difficult for competitors to gain a foothold, although enterprise suppliers such as Yammer and salesforce.com's Chatter have had some success. Several companies in the young microblogging space have already disappeared, including Quotably, Swurl and Pownce. Summize was acquired by Twitter, FriendFeed by Facebook and Ping.fm by Seesmic.

User Advice:

Adopt social media sooner rather than later, because the greatest risk lies in failure to engage and being left mute in a debate in which your voice must be heard.

Before using social media to communicate, listen to the channel, learn the language and become familiar with the social norms. Only then should you begin speaking. As with any other language, good results are achieved with regular, consistent practice, rather than with spotty participation.

Remind employees that the policies already in place (for example, public blogging policies, protection of intellectual property and confidentiality) apply to microblogging as well. It is not always necessary to issue new guidelines.

As Twitter is a public forum, employees should understand the limits of what is acceptable and desirable.

Business Impact: Despite its popularity, microblogging will have moderate impact overall on how people in organizations communicate and collaborate. It has earned its place alongside other channels (for example, e-mail, blogging and wikis), enabling new kinds of fast, witty, easy-to-assimilate exchanges. But it remains only one of many channels available. Microblogging has greater potential to provide enterprise value than these other channels by coordinating large numbers of people and providing close to real-time insights into group activities. These mass-coordination and mass-awareness possibilities are being explored by some early adopters, but have not achieved wide adoption.






Sample Vendors: Blogtronix; Identi.ca; Jaiku; salesforce.com; Seesmic; Socialcast; Socialtext; Tweet Scan; Twitter; Yammer

Recommended Reading: "Four Ways in Which Enterprises Are Using Twitter"

"Twitter for Business: Activity Streams Are the Future of Enterprise Microblogging"

"Case Study: Social Filtering of Real-Time Business Events at Stratus With Salesforce.com's Chatter"

"Should Retailers Use Twitter?"

Mobile Advertising


Definition: Mobile advertising is advertising or other paid placement on mobile device screens. This category was formerly limited to handset-based screens; however, with the introduction of media tablets, such as Apple's iPad, the category has expanded to include these screens as well, although larger display formats have somewhat blurred the distinction with Web display advertising.

Examples of mobile-specific formats include text links sent via Short Message Service (SMS); Multimedia Messaging Service (MMS); mobile Internet and Wireless Application Protocol (WAP) ad banners; paid mobile search listings; and ad insertion into SMS, mobile TV, radio, especially applications, and mobile couponing. The rise in popularity of mobile apps, in particular on smartphones, driven by the popularity of iPhone and Android devices, along with Apple's much heralded launch of its iAds platform for mobile-app-based ads has focused attention in 2010 on the app channel.

Position and Adoption Speed Justification: The mobile advertising category has evolved considerably in the past year with the rapid rise in smartphone adoption, which has spurred significant competitive investments in the category from Apple and Google. Google has acquired the leader in the category of independent mobile ad networks, AdMob, while Apple acquired AdMob's competitor Quattro and built a new mobile app-based ad platform, iAds, on top of its technology. Both companies have also sought to patent and otherwise control various aspects of mobile advertising, signaling not only more competition ahead, but also a potentially complex landscape for advertisers, carriers, developers and publishers in the coming years. Internet media companies, in particular, see mobile advertising as a top initiative for the next two years. For advertisers and retailers, the promise of location-based advertising is enticing and has achieved some positive results, but remains hampered by privacy concerns and questions regarding the limits of consumer acceptance.

Advertisers have largely moved beyond experimentation with the medium and are likely to allocate a small but growing portion of media budgets to mobile channels, although there remains an overall lack of accord as to the best use of the medium and whether these allocations should remain separate from the overall category of "digital." In any case, these allocations are expected to grow as Apple, Google and other entities, such as Yahoo in alliance with Nokia, along with newer ad networks and ad exchanges, continue to invest in marketing and innovation for their mobile advertising platforms.

Along with smartphone-specific formats, a number of mixed-media concepts have emerged that involve the use of handset-based cameras to capture a bar code or image from print or out-of-home media to receive information or a promotion for a product or service. These have attracted strong interest from print media hoping to deliver performance advertising and return on investment through enhanced measurability to slow or reverse declines in ad revenue. Such



platforms show strong promise for retail and other direct-response advertisers already committed to print channels for promotion.

Despite these positive signs, significant questions and impediments stand between the current situation and the emergence of a stable and scalable marketplace that can support the significant growth Gartner believes is inevitable. For example:

Lack of a stable marketplace. The relationships among manufacturers, mobile application platform providers, telecommunications service providers, Internet and mobile ad networks, and content providers remain volatile as each group competes for control on a region-by-region basis. This fragments the mobile audience and creates confusion and complexity for advertisers.

Formats and standards. Existing ad standards from organizations such as the Mobile Marketing Association (MMA) and the Interactive Advertising Bureau (IAB) are widely considered to be too limited to execute creative branding campaigns (already constrained by screen size) and are trailing the capabilities of more-advanced smartphones and tablets by a considerable margin, leading to the emergence of nonstandard device-specific platforms, such as Apple iAds, that have high creative potential but are limited in terms of reach and the supply of expertise in the labor market, as well as being expensive and unproven. In particular, Apple's highly publicized rejection of Adobe Flash on its platform has created a difficult choice among content providers and creative agencies for whom Flash is embedded in their video and interactive production practices.

Metrics and measurement. The mobile metrics picture, considered by many advertisers and agencies to be a baseline requirement for any major media investment, remains undeveloped and hampered by technical difficulties.

Privacy and targeting. The issue of privacy norms and regulations, especially for potentially attractive but controversial location-based concepts, has also created uncertainty and reluctance, particularly on the part of communications service providers (CSPs), to use customer data for ad targeting.

In summary, although growth is likely to accelerate in the coming years, it will remain constrained on the high end until fundamental issues are resolved. In the near term, growth will be divided between high-end application-oriented brand advertising in developed markets, and more high-volume, low-cost text- and banner-oriented SMS/MMS campaigns in fast-growing emerging markets where mobile advertising may be well on its way to becoming the primary channel for reaching mass consumers.

User Advice: Brands and agencies must develop methods of evaluating the effectiveness of mobile campaigns across various mobile channels to optimize the use of mobile media in the marketing mix. This is likely to vary considerably by product category, audience profile and region. In particular, brands and agencies must consider ways to use mobile channels as a response mechanism in concert with other noninteractive formats, such as print and TV.

Local advertisers, in particular, must understand how to leverage the medium's ability to deliver nearby traffic to their offline stores and venues.

Content providers, developers and publishers need to understand how to incorporate elements like social features, maps and video into applications that will attract both users and advertisers.

CSPs and manufacturers need to be decisive about their intended roles in mobile advertising and acknowledge that, with few exceptions, success will require both strong partnerships and



strategic acquisitions to quickly establish key roles in end-to-end solutions that can deliver efficiency and scale to advertisers.

CSPs must also determine their posture on data privacy, according to regional regulations and consumer research.

CSPs and advertisers should not overlook handset telephony capabilities for contextual click-to-call and save-contact features in ads.

For developing markets, SMS will remain a good way to distribute marketing messages to mass audiences, and may provide enough economic value to subsidize the expansion of access to more-advanced low-cost handsets and service plans.

Business Impact: Mobile advertising will grow to more than $13.5 billion worldwide by 2013.

This amount will be small compared with the $400 billion to $500 billion in overall advertising spending worldwide.

Mobile advertising will be a key driver for mobile content and applications during the next five years and beyond.




Sample Vendors: AOL; Apple; Celltick; Google; Greystripe; Jumptap; Microsoft; Millennial Media; Nokia; SinglePoint; Yahoo

Recommended Reading: "Mobile Advertising Quietly Grows"

"An Introduction to the Mobile Search Market"

"Dataquest Insight: Mobile Advertising Bucks Ad Spending Trend"

Customer Profitability Management

Analysis By: Gareth Herschel

Definition: Customer profitability analysis enables the organization to understand the financial contribution each customer makes to the enterprise, using detailed transaction data. This task is sometimes performed by, or with the assistance of, the finance organization (especially cost allocation decisions to move from revenue to profitability assessments of customer value), but the resulting analysis is usually consumed by customer-facing elements of the marketing, sales and service organizations.

Position and Adoption Speed Justification: Most enterprises estimate a customer's contribution to enterprise profitability, but few have established the rigorous, repeatable processes that are required for an analysis of this strategic importance. Although there is interest in improving the quality of this analysis, most tools on the market come from a finance background, and lack the customer-centric perspective necessary for a solution to be of help to the marketing, sales or customer service functions. For example, the ability of vendors with a background in activity-based costing (ABC) to allocate overhead costs to each customer is not as useful when making customer treatment decisions as the ability to compare current and lifetime value. Analysis to support more-strategic decision making (such as the ability to run what-if analysis to understand how the imposition of a fee for different types of behavior would change the profitability of customers) is lacking. The unique industry characteristics of cost allocation



(particularly for service-based industries) make developing prepackaged solutions a significant challenge.

User Advice: To be successful, the finance and CRM teams must work jointly on initiatives. Although solutions in this space are emerging, all have functionality gaps, so integrating apparent competitors may be required for a best-of-breed solution. The correct depth of analysis to pursue should be based on the nature of the decision the analysis will feed (more-important or personalized decisions require deeper analysis). Detailed transactional data and overhead cost allocation may not be necessary for most customer-value-related decisions, and should be considered for later phases of a project, rather than be included in the initial assessment. Instead of expending effort getting "deeper" into an analysis of customer profitability (e.g., by allocating overhead costs), enterprises may be better-served by doing a faster and simpler analysis of customer profitability, and then balancing this perspective with other views of customer value, such as wallet share, advocacy or lifetime value.

Business Impact: The ability to understand customers' value to the enterprise is fundamental to developing a mutually profitable relationship. Understanding customers' profitability enables enterprises to make intelligent decisions about the level of marketing, sales and service investment they should give to customers (for example, lowering service levels to ensure profitable interactions). Understanding what variables have the most-significant effect on customers' profitability enables enterprises to make intelligent decisions about re-engineering business processes or strategic decisions, such as which customer segments are worth targeting.

However, the business effect of better understanding profitability is constrained in many companies by poor understanding of how to apply this knowledge to the customer experience. For example, airlines have priority lanes for high-value customers, but retailers do not; airplane manufacturers set prices factoring in the ongoing maintenance revenue, but car dealerships do not. Deciding whether the enterprise is ready to trust assessments of profitability enough to disrupt existing "everyone is equal" processes is the acid test for adoption of this technology.



Maturity: Emerging

Sample Vendors: Acorn Systems; Business Objects; SAS; Teradata

Recommended Reading: "Marketing and Finance Must Collaborate to Define Customer Profitability"

"How to Assess Whether Activity-Based Costing Is Needed for Customer Value Analysis"

Distributed Order Management


Definition: Distributed order management (DOM) enables an organization using e-commerce to capture a multiline order containing items such as products and services, and DOM can be used for multichannel order capture. However, after the order is captured, DOM can manage the order across partner systems (for example, distributors, wholesalers and resellers) outside the firewall, or multiple internal back-office systems inside the firewall as one single order.

Position and Adoption Speed Justification: The adoption of this technology has been slow, because few early adopters have been able to deploy DOM, and downstream partners have been resistant. This is due to process challenges, such as how to sell and bundle a product that the



enterprise sells with services that are delivered by a partner. There are also technical issues, such as managing technology inside and outside the firewall, and integrating multiple systems inside and outside the enterprise, which can be complex and expensive to implement. However, some industries, such as automotive and high technology, have been using DOM, and retail and communications have also begun to adopt the technology.

User Advice: Focus on communicating the value of this technology to downstream partners and, in B2B cases, with end customers to gain acceptance. Organizations that intend to sell bundled offerings that can be fulfilled from multiple distribution points or partners should evaluate DOM. This is necessary to avoid fulfillment issues, which can arise from disconnections between sales orders and the fulfillment systems and partners.

Business Impact: DOM can significantly reduce costs, such as the interoperation costs for coordinating a sale with a partner, eliminate manual intervention during a sale by enabling the organization to work with partner systems information and eliminate manual intervention required to follow through or correct partner orders. DOM can also enable an organization to sell products and services it doesn't own or stock — selling a product or service that is fulfilled by a channel partner or distributors. DOM can create partner loyalty by reducing the number of errors a partner needs to resolve after a sale and decreasing the amount of support during a sale. Additionally, organizations are beginning to use DOM solutions for their multichannel and cross-channel order management where orders now go into a single DOM queue from multiple customer channels.




Sample Vendors: CommerceHub; Jagged Peak; Manhattan Associates; Oracle; OrderMotion; SAP; Sterling Commerce

Virtual Environments for Consumer Sales


Definition: Virtual environments (aka "worlds") — such as Activeworlds, Entropia Universe, Eve Online, Second Life, The Sims, There.com, Club Penguin and others — enable consumers to create avatar personalities online that can interact with other avatars in the virtual world. These environments enable interactions that can include the purchase of goods virtually and physically by the avatar and its owner.

Position and Adoption Speed Justification: Even during the down economy, there is a growing number of online users in these virtual worlds, and many enterprises are looking for new ways for employees to interact with customers. Enterprises can use this interaction capability to generate sales or customer interest that leads to offline sales. Although most of the activity is external and within brand-marketing range, commerce occurs with virtual items and is being extended into the physical world with physical goods. However, enterprises will need time to determine how to communicate and interact with customers in these new worlds, and to teach employees how to directly interact with those customers. Moreover, conducting sales in a virtual world won't be as easy as real-world sales, and concerns about privacy and security can present major road blocks, such as:

Understanding how virtual worlds work, such as the simple navigation of avatars or building virtual corporate locations



Learning how to use the virtual world of avatars to create sales in the online world or the offline real world

Determining which worlds the organization should join or create, because users fit the demographics to which the organization wishes to sell

However, the real challenge is understanding how to derive value from investments of time, money, human resources, and organizational and personnel learning curves. The technology can transform how an organization sells, because the organization can interact directly with customers. Therefore, new sales methods, such as guided sales in a virtual world, can develop.

User Advice: Brand-conscious enterprises, such as branded manufacturers, retailers and high-technology vendors, should at least explore virtual worlds to understand them, and to look for ways to reach customers. Organizations should leverage "out of hours" pockets of expertise and experience among employees to keep initial investment costs low. Organizations may create a virtual storefront or company headquarters online for brand marketing to begin interacting with online avatars and their owners, and to investigate and evaluate — not necessarily to build — brand value or add value. When this is complete, organizations should look for opportunities to link to avatars' interests and sell goods to them in the virtual and physical worlds, and for ways to make these connections happen.

Business Impact: Virtualization of the enterprise will enable organizations to interact with individuals and communities online. These interactions can contribute to branding, product design and marketing, and can generate sales.

This technology can transform how an organization sells, because the organization can interact directly with customers. Therefore, new sales methods, such as guided sales in a virtual world, can develop. Imagine a sales associate helping an avatar choose virtual outfits that also can be purchased online in the real world.



Maturity: Emerging

Sample Vendors: Activeworlds; Entropia Universe; Eve Online; Second Life; The Sims; There.com

Recommended Reading: "Campaign Management: Extending Relationships Through the Gaming Console"

"Social Shopping Will Shape the Future of E-Commerce"

"Five Best Practices for Establishing an Online Community for Marketing Benefits"

"Improving the Online Customer Experience"

"How 'Generation V' Will Change Your Business"

Online Video

Analysis By: Andrew Frank; Michael McGuire

Definition: Online video describes the delivery of video on online portals over broadband connections to PCs, consumer smartphones and Internet-connected TVs. While short-form clips (one to five minutes) drove the initial popularity of online video, by the end of 2009 and carrying over to 2010, long-form professional and semiprofessional content — TV episodes and movies —



are growing in popularity. Since professional content — TV shows, movies and sports programming — has its own market dynamics, Gartner addresses those in the "Internet TV" Hype Cycle entry. Online video content ranges from trailers and clips deployed by incumbent media companies and music videos from the music labels, to consumer uploads of many types of video, including TV clips or full episodes captured by computers with TV tuner cards or ripped from fixed media, as well as pure user-generated video (created and uploaded by consumers).

To date, advertising is frequently mentioned as the primary monetization option, but it appears that broadcasters and content creators tend to see online video's primary value as a promotional tool for content. However, by mid-2010, Hulu, an ad-supported online video site featuring TV shows and movies, decided to start charging a subscription fee to access content.

Position and Adoption Speed Justification: The popularity of online video continues in 2010, with many consumers enjoying scanning mainstream content — clips of TV shows uploaded by consumers, complete TV shows, sports clips and news shows, as well as consumer-created video content — on their PCs and connected devices. These sites represent a significant opportunity for incumbent media companies looking to leverage the vast reach of portals such as YouTube, MySpace and the like.

The disruptive nature of online video, and in particular how it is affecting the strategies of media companies, was underscored by Viacom's decision in March 2010 to pull "The Daily Show" and "The Colbert Report" from Hulu, which is a joint venture of News Corp., NBC Universal and The Walt Disney Company. The online versions of those shows are available on their respective websites.

By the end of 2009, consumer fatigue with the glut of unfiltered user-generated video, along with the challenges of copyright enforcement and a persistent reluctance on the part of brand advertisers to fully embrace the medium, led to a clear sense of disillusionment about the economic potential of online video. This has been reinforced by the admission of major players, such as Google with YouTube and News Corp. with MySpace, that monetization of online video is a bigger challenge than they anticipated.

User Advice: For media companies and rights holders, short-form online video represents a powerful promotion tool for existing and future content properties. Handled properly, incumbent media companies can use online video as a useful vehicle for new types of market research — a tool for establishing and nurturing online communities focused on multiple media company properties. This opportunity is best approached assertively but carefully. What short-form online video delivers in the form of large audiences, it can take away quickly with one snide or dismissive comment that spreads as quickly as, perhaps even more quickly than, the promotional video or show segment a content company puts into the system.

Advertisers can also potentially reach massive audiences, but they need to feel comfortable that the ads they've placed in and around a video will not be juxtaposed with something objectionable. We expect larger portals to need pressure to provide more control over content and placement and to deliver better metrics.

Enterprises can use the low-cost infrastructure of online video for corporate communications, training or other networked video-intensive applications that may once have been cost-prohibitive.

Business Impact: Online video will impact all promotional activities of media companies and advertisers, especially in political and cause-related domains. Online video has a global impact on market research, corporate communications, and copyright protection and licensing.






Sample Vendors: Dailymotion; Hulu; MySpace; Veoh; YouTube

Virtual Assistants


Definition: A virtual assistant (VA) is a conversational, computer-generated character that simulates a conversation to deliver voice- or text-based information to a user via a Web, kiosk or mobile interface. A VA incorporates natural-language understanding, dialogue control, domain knowledge (for example, about a company's products on a website) and a visual appearance (such as photos or animation) that changes according to the content of the dialogue. The primary interaction methods are text-to-text, text-to-speech, speech-to-text and speech-to-speech.

Position and Adoption Speed Justification: Computer-generated characters have a limited ability to maintain an interesting dialogue with users; they need a well-structured and extensive knowledge management engine to become efficient self-service productivity tools. As organizational knowledge engines become increasingly better-structured and intelligent, self-service deployments relying on this source for knowledge are increasing. The adoption of VAs in service, sales and education is starting to see deployment from some Fortune 1000 companies.

End-user acceptance of VAs, driven mostly by their larger presence, is becoming less of a challenge than it was a few years ago. The growth in the art of image rendering has also seen increasingly sophisticated human-like forms taking over from the cartoon-type characters associated with Generation 1 and Generation 2 VAs. Fourth-generation VAs are more easily accepted by many users as opposed to the first-generation VA depictions as cartoon-based characters. The organizations that successfully deploy VAs often support the implementation through the use of artificial-intelligence engines that assist natural-language dialogues.

First-generation VAs were stationary, with little visual appeal. Second-generation VAs brought animation and generated customer interest. Third-generation VAs look like humans and have excellent visual appeal, with responses to questions becoming increasingly accurate. Fourth-generation VAs not only look human, but also are embedded with speech and text interactions. The new fifth-generation VAs that are just emerging have excellent human-like image qualities, are able to understand multiple questions and have highly developed natural-language support. The first through third generations are very mature, but the technologies for fourth generations and, especially, for the fifth generation, are emergent.

User Advice: To use VAs successfully in customer service you need to focus the VA on one specific area, and not apply the VA to all areas of the organization's products and services. Use VAs to differentiate your website and increase the number of self-service channels available to your target market. Support VAs with a strong knowledge management engine for self-service to create meaningful and productive interaction, and focus on delivering a similar experience in this and other self-service channels. Also, support VAs through invisible Web chat agents once the knowledge delivery of the VAs drops below an 85% relevance-of-response rate.

Business Impact: Effective use of a VA can divert customer interactions away from an expensive phone channel to a less-expensive, self-service channel. The use of a VA that is voice-enabled in a kiosk or an ATM can alleviate the need for typed interventions and can assist in creating an interesting interaction for a nontraditional audience.





Maturity: Emerging

Sample Vendors: Alicebot; Anboto; Artificial Solutions; Bangle Group; Cantoche; Creative Virtual; eGain; Icogno; Umanify

Recommended Reading: "Self-Service and Live Agents Work Together"

Consumer-Generated Media

Analysis By: Michael McGuire

Definition: Consumer-generated media (CGM) refers to any written, audio or video content created by end users, using basic or semiprofessional tools. CGM can include one-consumer-to-many applications such as photo sharing, publishing via blogs, podcasting, videoblogging and the like, as well as "auteurs" looking to get their content to an audience.

Position and Adoption Speed Justification: CGM is filling content pipelines with material that competes with established media for consumer time share. While many types are fairly generic consumer content such as photos and digital videos, recent events are showing such consumer-generated media in the form of videos and still images captured by mobile phones and uploaded to online sites. The potential of CGM is clearly understood by companies such as Yahoo as evidenced by its recent acquisition of Associated Content. This acquisition, in fact, was evidence of the rapid evolution of this Hype Cycle entry and the difficulty of tracking technologies in the overall media space.

One could see the proliferation of CGM sites in the past year or two, and the evolution of early market leaders such as YouTube to include more premium content offerings, as evidence that CGM passed through the Trough of Disillusionment in late 2009. As we noted in 2009's Hype Cycle, "the companies that emerge (from the trough) will be those that are able to generate meaningful revenue streams from the large audiences they can attract." Additional evidence for the impact of CGM can be seen in how news organizations are leveraging crowdsourcing of information in the form of video and still images captured by consumers with camera-equipped mobile phones or low-cost HD cameras.

User Advice: Elements of CGM must be embraced by traditional media companies and used to their advantage, but with the caveat that vigilance is required. The proper mix of premium content and CGM that supports many premium titles provides a 360-degree offering to consumers and provides cross-marketing and multichannel advertising opportunities. While media companies should be diligent about tracking CGM publishing sites for potential copyright violations, they should also look to create relationships that enable consumers to legally share and embed snippets of copyrighted work in their own creations.

Business Impact: Because of the relatively low barrier to entry enjoyed by individual consumer creators, media incumbents could find it difficult to gain and maintain the attention of a meaningful audience in the short term if their primary motivation is to drive significant new revenue streams. However, Gartner believes that over the long term — three to five years — CGM creators and distribution sites will provide marketing and promotional opportunities for media incumbents, as well as a source for breaking news and information for news organizations.




Sample Vendors: Demand Media (Pluck); Flickr; Twitter; YouTube



Campaign Segmentation


Definition: Campaign segmentation is the grouping of customers along multiple dimensions. Functionality includes the ability to group customers based on different attributes. For example, traditional attributes have focused on products owned/not owned and on demographics, while segmentation regarding customer value and life stages (needs) and the growing area of anonymous persona management are newer. Modeling, clustering algorithms, visualization and data mining can help companies determine key attributes to improve campaign segmentation.

Position and Adoption Speed Justification: Many enterprises perform segmentation at a basic level, regarding product use and demographics. However, most enterprises do not use value-based or need-based segmentation — such as lifestyle or life stage, or psychographic persona segmentation (Generation V) — in an online environment. Value-based segmentation in the form of profitability analysis and long-term approaches to customer needs, as well as the emerging data visualization techniques and data mining in the hands of a marketer, rather than a statistician, are moving campaign segmentation into the mainstream.

User Advice: Move beyond simplistic one- or two-dimensional analyses. Use segmentation techniques based on a combination of needs, wants and actions to build a more complete view of the relationship than schemas, which are based on only one or two dimensions. Create eight to 12 formal customer segments around which overarching customer strategies can be developed. These should be descriptive in nature and easily communicated to the rest of the organization. Then, use tactical segmentation based on multiple attributes/modeling that help target each formal segment with actual offers and campaigns.

Business Impact: Campaign segmentation helps refine and better align the value propositions of companies and products with customers. Life cycle types of segmentation strategies are particularly relevant in the financial industry, where reconciliation of multiple services occurs around a time dimension.




Sample Vendors: Alterian; smartFOCUS; SAS; SPSS; Teradata; Unica

Recommended Reading: "Magic Quadrant for Multichannel Campaign Management"

E-Mail Marketing


Definition: E-mail marketing is the use of the e-mail channel as a method for delivering marketing messages.

Position and Adoption Speed Justification: E-mail marketing continues to have high visibility. Many companies have experimented with it or are sending e-mail marketing messages on a consistent basis. However, many use e-mail as a stand-alone mass-advertising bulk tool, rather than for targeted communication. As a result, a backlash has developed, and the average response rate for mass-marketing messages has dropped to below 3%. The "intrusion factor" for e-mail marketing makes it a poor technique for customer acquisition, with privacy laws forcing opt-in policies that mandate asking each customer's permission before sending any type of marketing message via e-mail.



Marketers have discovered that the pressure to achieve cost benefits has outweighed the consideration of e-mail's usefulness to customers. Techniques for marketing are slowly improving, with event-triggered marketing and lead management processes that seek to add relevance, such as right time and right customer to the medium. Using contextual/relevant techniques will raise the value of the e-mail for the customer, rather than using the tool as just another way to push out material to customers.

User Advice: Most e-mail marketing technology is used for execution and delivery of e-mail marketing campaigns. However, it is more important to focus on what will go into a marketing message. Companies need an understanding of to whom the e-mail will be sent and how it ties back to the organization's goals. Do not create another stand-alone, siloed channel for customer messages, or your organization will risk excessive contact and duplication with other messaging channels. Integrate e-mail marketing in campaign management applications that coordinate customer preferences, segmentation, predictive analytics and more. This will create relevant, targeted messages that improve e-mail conversion rates and overall campaign management effectiveness.

Business Impact: As part of an overall campaign management strategy, e-mail marketing can serve as an effective marketing communication tool between marketers and customers. A well-crafted, targeted e-mail (i.e., one that is better-targeted, and sent in smaller lots to specific segments) can receive a 10% to 15% response rate, which is higher than nontargeted, stand-alone mass mailings. In addition, your company can collect real-time information about customers and use this data as part of an overall marketing strategy.


Market Penetration: More than 50% of target audience

Maturity: Mature mainstream

Sample Vendors: Axicom; e-Dialog; ExactTarget; Experian; Harte-Hanks; Silverpop; StrongMail Systems


Preference-Driven Personalization


Definition: Preference-driven personalization involves the detection and collection of explicit preferences, and the determination of actions, treatments or types of interactions. Functionality includes online user profiling, rule-based triggers (automated business logic), collaborative filtering (using similarities among customers for recommendations), configuration techniques (having the user configure a product or service to his or her specific needs), and online tagging and/or voting capabilities.

Position and Adoption Speed Justification: The term "personalization" has been hyped by the market and is not clearly defined or understood. Personalization is a strategy of relevancy and has been geared toward implicit inferences based on past customer behaviors using data-mining techniques, such as predictive analytics, clustering and behavioral scoring. However, factors such as privacy and trust concerns will shift the market from hidden, implicit techniques to visible, explicit ones, where customers are choosing services and marketing content, and defining and maintaining customer contact rules, rather than the company deciding them.

Preference management techniques are geared toward "opt in" techniques, where the customer explicitly gains more control over what information is being shared and why. It also enables



companies to get a permission-based view of customers' wants and needs. Preference management techniques are being added to campaign management, particularly as e-marketing automation becomes integrated with traditional campaign management solutions. Web 2.0, which centers on customer control and the ability to share preferences (for example, social CRM) is accelerating preference personalization techniques within marketing automation. More than 80% of campaign management vendors will have more options for this by year-end 2010.

User Advice: Take advantage of the high interactivity of the Web channel (including customers' willingness to engage companies with their input). Create opportunities for customers to contribute to their user preferences to add, change and refine what, where and how they want to receive tailored marketing interactions. Shift from push-type communications to pull-oriented communications that use explicit customer preferences as the context for the communication.

Business Impact: By taking advantage of customer preference techniques, organizations can gather and reconcile behavior and customer events that take place online with offline interactions, such as the call center, branch or store, for a more-consistent (and better targeted) campaign strategy. Using a preference profile will promote engagement and explicit suggestions on what customers actually want from you.




Sample Vendors: ATG; e-Dialog; ExactTarget; Oracle-Siebel; Unica

Recommended Reading: "Marketing Framework: Essential Building Blocks for Multichannel Campaign Management Functionality"

"Magic Quadrant for CRM Multichannel Campaign Management"

Climbing the Slope

Consumer Digital Rights Management


Definition: Consumer digital rights management (DRM) technologies control how consumers can use copyrighted material that is distributed in digital form, such as music or video files, or text in e-books.

Position and Adoption Speed Justification: For one media industry sector — music — encrypted DRM solutions are deployed only on online music subscription services, with all a la carte retail downloads being open (unprotected) MP3s (Amazon, Rhapsody download store, others) or AAC files (Apple's iTunes). Legitimate online music distribution continued its very strong overall growth in 2009, with Apple's iTunes dominating the market.

In January 2009, the company announced it succeeded in convincing all the major labels, and most independent labels, to sell unprotected files. While the sale of unprotected digital files is now the norm for the a la carte segment of the online music market, Gartner believes music labels, TV networks and movie studios will, at varying times, adapt their content protection strategies to embrace the ability to use combinations of watermarking and tracking technologies that allow consumers to sample and virally share content.

In late 2009 and early 2010, a number of online music services started leveraging a newly flexible licensing posture by the major labels and started testing cloud-based music services in which



consumers can stream large catalogs of major- and independent-label content to their PCs and smartphones, with the additional capability of allowing the consumer to cache collections of songs (limited only by the available storage of a smartphone), thus allowing consumers to listen to the content when their devices are not connected to the Internet. It must be noted that DRM technology, from entities such as Microsoft, is used to protect the cached music on the device. However, for consumers, this does make the DRM virtually unnoticeable when compared with previous incarnations of online music subscription services.

For other types of content, such as movies, TV shows and e-books, the levels of user flexibility will vary by content, determined by such factors as production cost (feature-length movies cost far more to produce than individual song tracks), usage mode (music tends toward repeat usage, while most video content is single use), business model (ad-supported versus end-user-paid) and media format considerations (music CDs and free-to-air TV are less protectable than Blu-ray DVDs and e-books).

Previously, we had written about industry efforts at creating interoperable DRM solutions, but a new consortium of Hollywood and technology companies — the Digital Entertainment Content Ecosystem (DECE) — is slightly lowering its aim from interoperability to compatibility. Gartner remains skeptical of this consortium because of what we believe will continue to be hassles over IP and licensing, given DECE's membership. It includes technology and consumer electronics vendors such as Microsoft, Sony, and Toshiba; DRM providers such as Widevine and Verimatrix; content companies such as NBC Universal and Warner Bros. Entertainment; and cable network providers such as Comcast. Conspicuously absent is Apple.

In the e-book space, there is a potentially troublesome fragmentation in the marketplace, as Amazon's Kindle device/service combination is utilizing both a proprietary file format and DRM scheme that locks consumers into the Kindle ecosystem. Other competitors and book publishers are standardizing on the Epub file format and usage of Adobe's DRM technology. Yet, even within this, there is some fragmentation. While both Barnes & Noble and Sony utilize Epub and Adobe's DRM technology, they do not both utilize Adobe's Digital Editions software, meaning that Sony e-bookstore clients cannot purchase from Barnes & Noble's store, or vice versa. Given that the e-book market is still very young, this situation is likely to change in the next one to two years as the marketplace — consumers — vote with their wallets.

User Advice: Content companies and rights holders should never expect to achieve perfect content protection. Instead, they should invest their energies into creating business models that assume consumers will continue to share content. Any type of consumer DRM must enable these links to form.

Rights holders must partner with DRM providers and others to create solutions that protect content but enable it to be used in social networks and encourage viral sharing. Viral sharing (a form of viral marketing) is becoming a cornerstone of promotion and marketing of content in the age of digital natives.

Rights holders intent on using DRM to restrict unauthorized copying must ensure that usage rules and denial-of-access scenarios for users do not create sufficient frustration that ordinary users rebel against these technologies and bring manufacturers and retailers with them, as has occurred with music. Apple's FairPlay DRM would appear to be the standard here.

Business Impact: The technology protects copyrighted intellectual property and prevents redistribution. There is a risk for vendors that emphasize the lockdown aspect of DRM and that are not able to refocus their technologies to enable rights holders to use DRM as primarily a tracking, accounting and marketing tool. By shifting the emphasis from locks to accounting and tracking, media and technology companies can look to increase the reach of their content without giving up the ability to monetize it via highly targeted advertising, for example, or subscription



models. Once the focus is on tracking and accounting, media companies can craft new business models based on existing consumer behavior, as opposed to trying to curtail or eliminate the behavior by technology approaches that, by and large, have not worked.

While we have listed the technology's benefit as limited, and we fully acknowledge its limitations, the reality of "network effects" and the potential for unfettered social sharing of copyrighted content — without compensation for the content creator — could be far worse.




Sample Vendors: Adobe; Apple; Microsoft; Widevine

Recommended Reading: "Foundations for Digital Experience Management Are in Place"

"Charting the Shift of DRM to Digital Experience Management"

Content Delivery Networks

Analysis By: Lydia Leong; Michael McGuire

Definition: Content delivery networks (CDNs) are a type of distributed computing infrastructure, where devices (servers or appliances) reside in multiple points of presence on multihop packet-routing networks, such as the Internet, or on private WANs. These devices are used to deliver a variety of application-fluent network services. If peer-assisted delivery is used, clients may also be used to augment delivery via a peer-to-peer protocol.

A CDN offloads origin servers via edge caching and offers improved latency via closer proximity to the user, as well as intelligent optimization techniques. CDN delivery of static objects — HTML files, image files, JavaScript libraries and the like — is called content offload. A CDN can be used to distribute rich media — such as audio and video — as downloads or streams, including live streams. It can also be used to deliver software packages and updates, as part of an electronic software delivery solution.

Finally, a CDN may also provide services such as global load balancing, Secure Sockets Layer acceleration and dynamic application acceleration via WAN optimization techniques. Within the media industry, all of these uses are common and rich-media delivery via progressive downloading is the most frequently used service. Use of all of these services is also common within the e-commerce industry and content offload is the most frequently used service.

Position and Adoption Speed Justification: Two irresistible forces are driving increased demand for bandwidth:

Media companies are seeking competitive advantages by moving more content to online distribution points.

Consumer-generated digital media in the form of podcasts or videoblogs are being published on social networking sites.

The resulting demand for bandwidth to support the efficient uploading and downloading of digital media files (and related business opportunities for creating sites and services to accommodate these forces) has created the need for CDNs. In the media industry context, the CDN market will mature rapidly, as media companies scramble to develop multiple distribution options to deal with the fragmentation of their core audiences and reassert control points lost in the move from



physical to digital media. Importantly, CDNs can be the foundation for enhanced services, such as license management, copyright control, spam filtering and virus scanning.

In the context of the e-commerce industry, a rapid fall in CDN prices over a three-year period has led to a dramatic improvement in the return on investment for using a public CDN to augment e-commerce website performance and to provide resiliency and continuous availability. The rise of "cloud" CDNs with no contractual commitments allows even the smallest e-commerce sites to reap its benefits.

Using a CDN is often less expensive than buying servers and bandwidth. While deploying a CDN for a well-structured e-commerce site is simple and straightforward, sites that have been badly structured and implemented can lead to difficult CDN deployments and vendor lock-in.

User Advice: Media companies, content providers and emerging media titans must carefully assess the opportunities for partnering with CDNs. As more consumers look to online service options for searching and acquiring content, an efficient and seamless experience will mean the difference between success and failure. CDNs can assist in improving end-user performance, such as streaming of cached assets, as well as helping to reduce bandwidth costs for high-volume and content-heavy sites.

Companies that are engaged in e-commerce should also assess CDN services, even for small sites. Not only can a CDN reduce direct costs, but site performance improvements can help drive increased page views, longer site visits, higher conversion rates and higher "shopping cart" value. CDN assessments should always include real-world testing, which compares the technical performance and business metrics for the site with and without a CDN, for each CDN under evaluation.

Business Impact: Content providers and media companies have the most to gain, in terms of creating strong partnerships with CDN providers. New entrants to the CDN market, as well as the increasing demands of delivering online videos to multiple distribution channels, have placed strong pricing pressure on the commodity CDN services, especially no-frills progressive downloading of video.

We believe CDNs will explore all avenues for improving efficiencies and driving demand for value-added services, such as large-library content management or direct-to-consumer distribution models for individual media companies. Network service providers are increasingly entering the CDN market, in their race to build out value-added services that can provide differentiation and defy the bandwidth commoditization trend. However, broadband service providers are wary of the impact of the net neutrality debate; if net neutrality regulations or equivalent market forces prevail, they may be unable to offer CDN services of their own, since these offer a differentiated quality of service for Internet delivery.

E-commerce companies also have much to gain from a relationship with a CDN. Such companies often use many of a CDN's value-added services, not just its basic content delivery capabilities, and make use of dynamic delivery capabilities. This leads to greater vendor lock-in and a less commoditized market. Because e-commerce traffic is much lower than rich-media traffic, e-commerce companies pay much higher prices, per byte, than media companies do; they do not receive large-volume discounts and they are likely to buy value-added services for which there is less competition and therefore greater pricing power for the CDNs that offer them.

We believe that CDNs will continue to increase the breadth and scope of these additional services, expanding the range of application-fluent network services and facilitating relationships between e-commerce partners, including advertisers.






Sample Vendors: Akamai; AT&T; CDNetworks; ChinaCache; Internap; Level 3 Communications; Limelight Networks

E-Commerce Web 2.0 Sales Tools


Definition: E-commerce Web 2.0 sales tools are based on three anchor points for Web 2.0:

Technology and architecture: Web 2.0 implies the development of Web-oriented architecture (WOA), which is a subset of service-oriented architecture (SOA). WOA provides a globally linked, decentralized model that is network-centric (as opposed to device-centric) and extensible. Relevant technologies include Really Simple Syndication (RSS), Ajax, Web services, plain old XML (POX) and representational state transfer (REST).

Community and social: Technologies such as blogs, wikis, folksonomies and others clearly are changing the way citizens and consumers relate to their suppliers and each other.

Business and process: There is a new business dimension, such as new advertisements, and pricing models have appeared thanks to the emergence of Web services and mashups — the ability to mix content from more than one source on the Web in the same application, assuming that government policies are conducive to this.

Web 2.0 techniques like Ajax, mashups and user-defined content (e.g., blogs, wikis and product reviews), are used with an e-commerce solution to improve Internet sales through an enterprise's Web channel.

Position and Adoption Speed Justification: Organizations' desire to increase Internet sales continues to push websites forward and drive site upgrades. As a result, the market is reacting in two ways:

Software solution providers are adding new Web 2.0 functions to their solutions, such as product reviews or other user-generated content, like wikis or blogs and RSS feeds, and rich Internet application (RIA) capabilities, like mouse-over information previews.

User organizations are leveraging Web 2.0 techniques to enable ease-of-use improvements, and to provide new capabilities that "spice up" and differentiate the Internet selling experience by using RIAs to help customers locate products and improve customer experiences online.

However, Type A organizations in industries like retail have been leading the way with their use of Web 2.0 sales tools, and many fast-follower Type B organizations have also adopted RIAs. Other industries, such as industrial manufacturing, are beginning to adopt these tools, and some B2B organizations, such as distributors, are benefiting from the use of RIAs, because the products demonstrate characteristics similar to those sold to consumers — for example, using the same RIAs, protective welding gloves can be sold as skiing gloves.

User Advice: Enterprises should begin to enable these technologies to create rich Internet customer experiences. Technologies like Ajax can provide visible site experience improvements. For example, Ajax can be used to create applications that can enable improved product



visualizations, provide prepopulated fields and improve guided selling. Enterprises should begin by conducting site audits to identify processes that require multipage interactions with customers and target these for redesign using Ajax.

Another option is the use of mashups that can combine various functions into a more meaningful user experience:

For business-to-consumer (B2C) sales product inventory, information can be mashed together with store location/mapping applications to enable in-store pickup of Web-initiated, e-commerce transactions.

In B2B sales, sample product configurations can be combined with product reviews of individual components to highlight popular or highly rated configurations.

However, enterprises must be disciplined in creating mashups. These should enable task or business process improvement. Therefore, enterprises must always ask, "What does this improve?" Users should look for ways to integrate multiple Web 2.0 technologies to provide a consistent customer experience. Evaluate Web 2.0 technologies with a view toward providing a clearly defined ROI or business benefit and an improved site experience.

Furthermore, user-defined content can help customers with product evaluations and with an understanding of the products' use and performance. It can also provide an enjoyable, easy-to-use user experience. Organizations should enable user-defined content, starting with product reviews that provide product comparisons and leverage noteworthy issues to guide the creation of RSS feeds that increase sites' appeal.

Users should not think of these three Web 2.0 technologies (Ajax, mashups and user-defined content) as distinct. Instead, they should view them as promoting a new, overall customer experience for buying. Moreover, other Web 2.0 technologies may not have a clearly defined ROI, and may have legal issues associated with them (for example, user-defined product reviews). Therefore, users should focus on those Web 2.0 technologies that provide site experience improvements and useful sales tools.

Business Impact:

Due to the influence of Web 2.0, the online shopping experience for B2B and B2C will change dramatically.

Ajax, RSS and user-contributed content will deliver the most value to the customer, and will drive customer conversion rates higher than ever before.

Ajax, RSS and user-contributed content can be directly linked to the online selling process and can directly influence sales.

Web 2.0 sales tools will drive standards on intuitive, browser access to applications for B2B constituencies within inside sales, field sales and partner networks, also driving improved usability and sales adoption of specific sales automation systems.




Sample Vendors: Adobe; Allurent; Amazon; Bazaarvoice; eBay; Google; IBM; Microsoft; Oracle; PowerReviews; SAP



Recommended Reading: "Nine Web 2.0 Tools Can Boost E-Commerce Sales"

Mobile Search

Analysis By: Sandy Shen

Definition: Mobile search enables people to search for information on a mobile phone.

Position and Adoption Speed Justification: There are five types of mobile search service:

SMS-based: The user sends a text query via Short Message Service (SMS) to a service provider and receives a reply from an automated or human-assisted system. Examples are Google SMS and ChaCha.

Browser-based: This is similar to online searching, but uses a mobile phone's Wireless Application Protocol or full browser facility. The experience is less user-friendly than on a PC, and the results tend to be less satisfactory. Examples are Google and Yahoo Search for mobile.

Location-based: This can use location technology, or not. When used with location technology, search is a feature of a location application. When used without location technology, it can be a stand-alone local search service in which, for example, the user enters a zip code to access local directories and weather forecasts.

Image-based: The user takes a picture, sends it to a server and receives the results back — alternatively, a client application on the phone may fetch the results from the server. Examples include Mobot and SnapTell (now part of Amazon), which allow users to send pictures to find out more information or receive coupons.

Voice-based: This can be achieved using a phone with voice recognition capabilities, or

provided by an operator using a client/server architecture. Examples include Nuance's Voice Search.

SMS-based searching remains relatively niche. It needs to gain scale if it is to be sustainable.

Browser-based searching has been adopted by the mass market, following the pattern of online search. Performance has improved since the early releases, thanks to the availability of more mobile content and optimized search engines and indexing for mobile sites.

Location-based searching is increasing fast due to the proliferation of location-related services and applications. This is the second most popular form of searching after browser-based search. The ease of searching using location applications — as opposed to having to open a separate browser — makes for a smoother experience.

Image-based searching is available, but the quality varies considerably by provider. Some specialize in product or point-of-interest searches; others in human faces, which requires more advanced algorithms.

There are other application-specific search services, such as for music, video and social-networking feeds. These are provided as embedded features of the application.

The future of mobile search will involve a mix of technologies and service providers catering to different use cases and user preferences. In local markets, a single technology or a couple of providers will not dominate mobile search as is currently the case with online search. On a global level, a few worldwide players with huge cloud-based data infrastructures are likely to dominate.



User Advice: Companies should optimize mobile Web designs and indexing to achieve better results. They should also explore the potential of advertising through mobile search, especially location-based searching — provided the results are relevant to users.

Business Impact: Site owners can use mobile search to increase site traffic from mobile users. Mobile operators can expect higher network traffic and more content purchases as a result, and may also share advertising revenue with search providers.

Organizations in some lines of business are more suited than others to exploit search-based advertising: the former include restaurants, hotels, car rental firms, parking lot companies, gas stations, hospitals and cash point providers.




Sample Vendors: Baidu; ChaCha; GeoVector; Google; Jumptap; Medio Systems; Microsoft; Nuance; V-Enable; Yahoo

Recommended Reading: "Dataquest Insight: The Top 10 Consumer Mobile Applications in 2012"

"Dataquest Insight: Impact Ranking of Consumer Mobile Applications, 2009"

Social Search

Analysis By: Whit Andrews

Definition: Social search uses elements of user behavior, implicit and explicit, to improve the results of searches inside and outside enterprises. Such elements are typically stored as metadata, making social search a sort of metadata mining. It also enables users to disambiguate results from their queries more effectively. Examples include such steps as: saving searches to shared folders; tagging searches or documents to express what they are about for other users; and the use of implicit indicators of value, such as saving documents as shared bookmarks or printing documents for later use.

Position and Adoption Speed Justification: Social search is an element of Internet search behavior and provides significant value to Web users. Consumer expectations have driven it into the enterprise, where it augments search capabilities and allows for "people," instead of "document," finding. Microsoft's inclusion of social search elements in its current edition of SharePoint will serve as a major factor in its increased adoption.

User Advice: Include elements of social search in your projects, but do not expect it to dramatically improve results. Disambiguation will benefit from social search use as users scrutinize colleagues' and fellow searchers' results to establish meanings and relationships.

Business Impact: Enterprise workers and customers will get better results faster through the use of social search.




Sample Vendors: Autonomy; Digg; Endeca; Furl; Microsoft; Vivisimo; Yahoo



Recommended Reading: "What Social Search Means to Your Enterprise"

"Injecting Web 2.0 Innovation Into Enterprise Search"

Web-to-Print Applications

Analysis By: Pete Basiliere

Definition: Web-to-print (W2P) applications (which technology providers sometimes refer to as "print e-procurement") are a specialized class of e-commerce solutions that support the unique and complex specification development and RFP process associated with buying printed materials and services. W2P technology is used by printing companies involved with B2B and retail consumer sales.

Position and Adoption Speed Justification: The limitations inherent in many general e-procurement solutions have opened the door to a wide variety of niche solutions for complex categories of spending. The most popular categories for these specialized e-procurement tools include printing, contingent labor, travel, facilities and telecommunications. While generic e-procurement solutions can be used for print procurement, they often need adaptations, such as e-forms or built-in RFQ functionality, to accommodate the exact specifications and other characteristics inherent in print buying.

The amount of printing sourced through specialized W2P tools is growing as buyers gravitate toward solutions that are well-grounded in print and procurement workflows. Many tools have demonstrated the ability to streamline the print-buying process, reduce production errors and cut costs. These successes have caused numerous small companies to enter the market, offering W2P applications in addition to the other print workflow tools they have developed.

User Advice: Print spending sourced through general-purchasing and e-procurement solutions without print-specific features inhibit those solutions' ability to handle the many nuances of print buying. As a result:

Sourcing and procurement professionals must either force the generic solution to handle the unique elements of the print market or use a W2P procurement application for the purchase of printed materials and related services.

End users must also look to category-specific e-procurement tools to drive efficiencies and on-contract spending for complex purchases. A general rule for considering a category-specific solution is a minimum of $1 million in spending for that category. However, print spending in the range of $250,000 to $500,000 often warrants a W2P tool since savings of more than 10% (and frequently as much as 25%) are not uncommon, offering a quick and permanent ROI.

Business Impact: Enterprises with a significant level of print spending will certainly benefit from a W2P solution's specialized functionality and full-process support. Given that many organizations do not have people with in-depth print- and paper-buying expertise, a W2P solution will produce savings by streamlining the order processing workflow, reducing print errors, and rationalizing and reducing the variety of printed materials.




Sample Vendors: Bitstream; Cirqit; Claritum; e-Lynxx; Emptoris; Mtivity; NewlineNoosh; NowDocs; P3Software; Printellect; Standard Register



Recommended Reading: "The Print Sourcing and E-Procurement Market "

Integration as a Service

Analysis By: Benoit Lheureux; Paolo Malinverno

Definition: Integration as a service (IaaS) is integration functionality — i.e., secure B2B communications, data and message translation, and adapters for applications, data and cloud APIs — delivered as a service. IaaS is always scalable, sometimes elastic, but is almost always deployed with enough multitenancy capabilities (see "Reference Architecture for Multitenancy: Enterprise Computing 'in the Cloud'") such that one instance of a provider's IaaS functionality can support multiple B2B integration projects across multiple B2B communities.

There are two categories of IaaS:

IaaS for traditional e-commerce projects

IaaS for cloud service integration

The first category has existed for over 20 years and is associated with traditional e-commerce (supply chain integration) projects, and the second category has emerged in the last four years in conjunction with the emergence of cloud services. While these two forms of IaaS share much in terms of their definitions and functionality, they differ substantially in terms of their approach to implementation, usage scenario, vendor landscape and user ecosystem.

IaaS for Traditional E-Commerce

Twenty years ago, providers of IaaS were generally called value-added networks (VANs), trading networks, Internet VANs, etc. However, in recent years, traditional EDI vendors have evolved, and new vendors have introduced new types of IaaS to address various forms of e-commerce. IT providers have labeled their various IaaS offerings as VANs, transaction delivery networks, Web services networks, business process networks, business integration networks, business process hubs, integration service providers, marketplaces, EDI SaaS, integration SaaS and so on. Regardless of what vendors have named their B2B services, we have considered and rated them as integration service providers for the purposes of the "Magic Quadrant for Integration Service Providers." Nearly 100 IT service providers worldwide offer some form of IaaS, but other than that point of commonality they are exceptionally diverse in their overall portfolios of IT services and industries served. Such providers include:

Evolving EDI VANs — for example, GXS, Inovis and Sterling Commerce

Emerging Internet VANs — for example, EasyLink Services International, Hubspan and SPS Commerce

Providers from a particular industry (but now serving multiple industries) — for example, Compuware (Covisint), Elemica, Liaison Technologies, Quadrem and Railinc

E-commerce-focused providers offering SaaS and IaaS — for example, E2open, eZCom Software, RedTail Solutions and SPS Commerce

SIs offering IaaS — for example, Atos Origin, Bluewolf, HP Enterprise Services and IBM

IaaS for Cloud Service Integration/SaaS Integration

As SaaS and other forms of cloud services proliferate, there has been a corresponding increase in the need to integrate cloud service functionality with on-premises business applications and data, or to link cloud services directly among various cloud service providers. While integration



software is one approach to solving this requirement, many IT users choose IaaS for cloud services, in part because that is consistent with their desire to shift the cost of IT infrastructure from a capital to an operational expense.

From the basic functionality point of view, IaaS for cloud service integration is much like IaaS for traditional e-commerce — it includes secure communications, data translation and adapters. But beyond these functional similarities, IaaS implementations for cloud service integration differ substantially. Most providers of IaaS for cloud service integration (see "Who's Who in Cloud-Computing/SaaS Integration, Volume 1"and "Who's Who in Cloud-Computing/SaaS Integration, Volume 2") leveraged the intellectual property they originally developed for traditional e-commerce integration projects and enhanced it — e.g., by adding or improving multitenancy, provisioning capabilities and direct cloud API support — prior to launching new IaaS offerings for cloud service integration projects.

Many IaaS for cloud service integration offerings — e.g., from Bluewolf, Boomi, Cast Iron Systems and Informatica —include cloud-based integration development environments (IDEs) that can be executed from a standard Web browser. IaaS solutions for cloud service integration are often distinguished by their emphasis on packaged integration specifically for cloud service integration problem scenarios, such as synchronizing customers and orders between salesforce.com and Intuit (QuickBooks).

Position and Adoption Speed Justification:

IaaS Adoption for Traditional E-Commerce

Companies worldwide heavily leverage IaaS for traditional e-commerce projects (such as supply chain integration in retail and manufacturing) and for various other industry-specific requirements (such as track-and-trace in logistics or claims adjudication in healthcare). IaaS for such uses is quite mature, and providers of IaaS have invested in their IT operations to enhance functionality (e.g., adding business activity monitoring and improved community management), and to drive increasing scale and efficiencies (e.g., switching to more-modern, scalable IaaS architectures). Those IT modernizations, combined with increasing adoption and the prevailing perception that IaaS is increasingly a commodity, have been driving down IaaS prices for nearly a decade.

Nevertheless, IaaS for traditional e-commerce is still a valuable IT service for companies doing B2B integration; therefore, adoption continues to increase, as indicated by the increasing numbers of companies and transactions handled by the providers of IaaS each year (generally ranging from a 10% to 100% increase in the number of companies served and transactions exchanged per year, depending on the size of the provider). This trend has been consistent worldwide year to year — even during the current worldwide recession — as more companies seek outsourcing (subscription) alternatives to the significant (capital) cost of expanding B2B infrastructure and staffing when it is necessary to scale up their B2B projects.

IaaS Adoption for Cloud Service Integration

Cloud service integration is a relatively new B2B integration project scenario, yet the buyers of IaaS for cloud service integration range from line-of-business IT buyers — primarily only focused on the cloud service to on-premises integration problem — to more-traditional IT buyers — focused on cloud service integration and on traditional e-commerce integration. Providers of IaaS for cloud service integration often sell directly to IT end-users; they also sell a substantial proportion of their IaaS services (we estimate 50%) through IT channel partners such as SaaS providers, system integrators, value-added resellers and megavendors, such as Amazon and Google. This is because many IT service providers — particularly SaaS providers — must address cloud service integration, yet would prefer to invest their limited R&D capabilities on differentiated functionality that builds a barrier to entry in their target markets, rather than making



substantial investments to solve a technically complicated integration problem. Four years ago, there was basically no market for IaaS for cloud service integration. Today, we estimate that companies spend $50 million on IaaS for cloud service integration, and that this IT market segment will grow at 25% CAGR for the next five years.

IaaS Position Justification

The widespread use of IaaS for traditional e-commerce projects has been pulling IaaS steadily up the slope toward the Plateau of Productivity, and the fast-growing adoption of IaaS for multienterprise SOA projects and cloud-computing/SaaS integration projects is helping to drive IaaS' momentum up the slope and ultimately into the Plateau of Productivity during the next few years. IaaS is being offered by a wide range of providers, from vendors that are primarily focused on traditional e-commerce projects (such as GXS) and those focused primarily on cloud-computing/SaaS integration projects (such as Boomi).

Although the Trough of Disillusionment is several years past, IaaS is slowly traveling up the slope to the Plateau of Productivity. Vendors continue to expand and refine their IaaS offerings to incorporate new capabilities, including programmatic APIs (such as from Loren Data) to provision and access IaaS services. Vendors are also implementing Web-based IaaS development in support of IT end-user and independent software vendor (ISV) self-provisioning of IaaS functionality; adding better Web services and governance to support multienterprise service-oriented architecture (SOA) projects; expanding operations, including multisite regional data centers to more effectively support international B2B projects; and improving community management tools to enable self-service IaaS and drive down costs for hubs managing large multienterprise communities.

User Advice:

Consider IaaS for traditional e-commerce when you need to electronically exchange transactions, documents and messages with external business partners, and you do not wish to deploy your own B2B-enabled integration middleware and directly connect to the members of your B2B community directly.

Consider IaaS for cloud service integration when you must integrate cloud services among cloud providers or with on-premises applications or data, and you prefer to consume this capability as a service, rather than purchase and deploy integration software.

Multinational IaaS capabilities are maturing, but prospects should always verify whether a potential IaaS provider can meet their particular country-by-country requirements, including local-language support, e-invoice formats and regulations, and in-country IaaS network points of presence.

When negotiating an agreement with providers, look for transparent and predictable pricing. Customers are increasingly signing deals with "bundled" B2B integration features, such as a tiered number of external business partners and volume, fixed-price in-line translation, and process visibility that associates relevant B2B documents (for example, purchase orders, advanced shipment notices and invoices for order to cash).

Refer to the "Magic Quadrant for Integration Service Providers," "Who's Who in Cloud-Computing/SaaS Integration, Volume 1" and "Who's Who in Cloud-Computing/SaaS Integration, Volume 2" to gain an understanding of the highly diversified IaaS vendor landscape.

Integration projects can be deceptively complex, and, by itself, IaaS doesn't always sufficiently address customer requirements. Determine whether your IaaS provider also offers such services



as B2B integration outsourcing (see "Taxonomy and Definitions for the Multienterprise/B2B Infrastructure Market").

Business Impact: IaaS has been widely deployed worldwide for more than a decade. In 2009, IaaS generated more than $1 billion in IT revenue worldwide for traditional e-commerce projects and more than $50 million in IT revenue for cloud service integration. This makes IaaS one of the most widely adopted and well-established forms of application infrastructure delivered as SaaS (see "Application Infrastructure for Cloud Computing: An Emerging Market"). Although many companies still implement B2B projects themselves, leveraging a combination of in-house integration middleware and B2B standards or Web APIs, companies of all sizes in all industries and in most well-developed regions have the option to outsource their B2B infrastructures, rather than licensing and deploying some form of in-house B2B integration software.

Multienterprise projects are typically mission-critical, but the increased modernization, reliability and scale provided by most providers of IaaS mean that companies have a viable alternative to B2B software and in-house B2B infrastructure projects. Hence, from a sourcing point of view, they should treat B2B infrastructure investments like any other IT investment when choosing between implementing an in-house B2B infrastructure or relying on IaaS.

Even the simplest in-house, single-server B2B infrastructure project may require off-site hosting, high-availability server configurations, disaster recovery capabilities, monitoring tools, archival of business documents and a well-trained staff. Service providers with well-established, multitenant infrastructures can generally achieve economies of scale to deliver such capabilities. For common integration scenarios, they often provide some form of configurable or customizable prepackaged integration solutions. This means they have the opportunity to save companies 10% to 30% on the cost of implementing B2B infrastructure themselves in-house, by leveraging their packaged integration, as well as fault-tolerant and disaster recovery capabilities across multiple B2B communities.




Sample Vendors: Bluewolf; Boomi; BT Group; Cast Iron Systems; Comarch; Crossgate; DiCentral; E2open; EasyLink Services International; Elemica; GXS; Hubspan; Informatica; Inovis; Kewill; Liaison Technologies; Mincom; nuBridges; OmPrompt; Perfect Commerce; Pervasive Software; Railinc; RedTail Solutions; Seeburger; SPS Commerce; Sterling Commerce; T-Systems; Tieto; True Commerce

Recommended Reading: "Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud Services"

"Who's Who in Cloud-Computing/SaaS Integration, Volume 1"

"Who's Who in Cloud-Computing/SaaS Integration, Volume 2"

"Cool Vendors in Multienterprise B2B, 2010"

"Magic Quadrant for Integration Service Providers"

"SaaS Integration: How to Choose the Best Approach"

"Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed"



Knowledge Management for Customer Self-Service


Definition: Knowledge management for self-service includes corporate knowledge, agent knowledge, social knowledge, hosted community knowledge, partner knowledge and search knowledge, and is the accumulation and management of a knowledge repository and the delivery of that knowledge through a self-service interface. It involves a process of maintaining and expanding the collection and categorization of knowledge to enable faster retrieval through a Web-based interface of the appropriate data elements at the proper time to reduce dependence on a human operator.

Position and Adoption Speed Justification: Knowledge management, as an enterprise initiative, has been available for years. What is new is the rapid expansion into the areas of social Web communities. Within Web customer service (WCS), the knowledge database needs to be well-structured to allow at least an 85% relevance of responses to searches and questions asked. Organizations that successfully exploit this self-service option have their knowledge databases supported by dedicated knowledge workers who constantly update and fine-tune the knowledge engine to allow an increasingly accurate level of response.

The increased focus on social and community knowledge and authoring from external sources directly into the corporate knowledge repository has placed renewed focus on knowledge management for self-service, resulting in a slow move across the Slope of Enlightenment. Organizations will use knowledge collection tools to harvest information that is being written about a company's products and services. These collection tools will bring the information in-house, where it is reviewed and analyzed. If the information is valuable, then the knowledge base is updated with the information. If the information is not usable, then it is discarded; and if the information is inflammatory or a complaint, then a decision is needed on how best to respond.

User Advice: A knowledge repository takes six to eight months to structure well and to mature enough to allow an 85% resolution on first request. Appoint a dedicated team of knowledge workers to continuously evolve and expand the knowledge engine and provide feedback, or an "unresolved" facility on the self-service website, so that the user can notify the knowledge team when a user query is not resolved. Also, implement a service-level agreement (SLA) of 24 hours for the knowledge team to capture a resolution to all unresolved items. Make sure that all the channels (i.e., Web self-service) and agents in the contact center and Web chat use the same knowledge repository to ensure a consistent and accurate response, irrespective of which channel the question is asked.

Business Impact: This technology affects creating, acquiring, storing and maintaining corporate knowledge, information and data in a format that a Web-based, self-service application can easily access, and the collection of knowledge from websites and hosted communities.




Sample Vendors: Consona; Convergys; InQuira; Kaidara Software; Neocase Software; Parature

Wikis

Analysis By: Nikos Drakos



Definition: A "wiki" is a collaborative authoring system for creating and maintaining linked collections of Web pages. A wiki enables users to add or change pages in a Web browser without having to worry about where and how the content is stored. A wiki simplifies the modification and reorganization of information and encourages what is often referred to as "wiki gardening." This is the process of incrementally editing a wiki to preserve continuity, make additional connections and links, and generally clean it up.

Key functions are:

User-friendly "click to edit" features that make it easy to create, link, edit and reorganize the information users see on the screen, without having to understand the underlying file organization.

The abilities to track changes, compare different versions and revert to a previous version, which make it easier to insert changes in the knowledge that any mistakes can be reversed easily.

Static Web addresses for any wiki page, and even for any component of a wiki page (such as a paragraph), which makes it easy to link or refer to wiki content from other Web pages or Web-enabled systems and to integrate, search and access wiki content from elsewhere.

The widespread use of wikis is influencing the way individuals and organizations think about creating and sharing information beyond simple text. "Wiki-style" is becoming synonymous with a collaborative way of working in which multiple participants directly modify a common resource (text, table, report, photo, video, model, form and so on) in the same environment in which it is consumed.

Position and Adoption Speed Justification: Wiki products are available from many vendors, including established enterprise vendors. There are also open-source products.

Wikipedia is the best-known publicly available wiki. It has raised awareness to the point where users often demand wiki-style collaboration support from their IT departments.

Although wiki functionality is at the core of many social software products, it is beginning to resist simple categorization as it becomes part of larger social software suites that also support blogs, discussions, user profiles and tagging.

Wikis are increasingly being offered by content management and portal vendors.

User Advice: Understand that there are advantages to using a wiki, rather than a conventional repository-style collaboration system. Be receptive to users who argue that a wiki will improve team collaboration. Now is the time to broaden systematic deployments, as appropriate, and to evaluate the suitability of wikis in different collaboration scenarios (if this has not been done already).

Caution is required when setting up stand-alone wikis, as although these may help to solve short-term problems, they could also create additional content silos. Other potential problems with wikis include the need to deal with the variability of content quality, especially when once-thriving wiki page collections fall into disrepair when abandoned by their main contributors. Also, where wikis are used to create or maintain formal content (for example, client communications, product descriptions and technical documentation), it may be necessary to introduce additional policies and management controls to ensure appropriate quality and governance.

Business Impact: Wiki-style information creation and sharing has significant advantages over traditional collaboration environments in terms of improved transparency, usability and



information reuse. It encourages the creation of a "Web of interrelated information," where it is just as easy to create internal cross-references as it is to reference external resources. Within businesses, wikis are used as informal repositories for maintaining technical documentation, client communication, issue tracking, e-learning and training, general information sharing and knowledge management. They are also used to support communities of practice or interest, product development and idea exploration.




Sample Vendors: Atlassian; CustomerVision; IBM; Jive Software; MediaWiki; Microsoft; MindTouch; Socialtext; TWiki; XWiki

Recommended Reading: "Magic Quadrant for Social Software"

"Moving Social Software Deployments Beyond Experimentation Project Overview 2009"

Web Analytics

Analysis By: Bill Gassman

Definition: Web analytics are specialized analytic applications used to understand and improve online channel user experience, visitor acquisition and actions, and optimize digital marketing campaigns. Commercial products offer reporting, analytical and performance management, historical storage and integration with other data sources and processes. The tools are used by marketing professionals, content developers and the website's operations team, and increasingly provide input to automated tools that target improved customer experience.

Position and Adoption Speed Justification: More than 90% of the addressable market is using some form of Web analytics tools, although while millions use the free Google Analytics product, less than 50% of the addressable market is using advanced functions, such as customer-based segmentation, data warehousing and to export user activity events into remarketing products and content management engines. New challenges in analysis are video usage, mobile users, native mobile applications and social media.

The market has consolidated to the point where eight vendors represent more than 90% of market revenue. However, there is a trend for content management vendors to add limited analytics functionality to their products. Although market growth slowed down in 2009, online channels are recovering faster than the economy overall, driving increased interest in optimizing Web activity. The free Google Analytics offering, continues to disrupt the market with ever increasing functionality, although still with significant limitations. The leaders in market revenue have responded with a suite of marketing optimization tools to complement their analytics products, high-performance ad hoc query tools for warehoused data, strong technology partner programs and consulting services. Leading vendors are building an "ecosystem" of Internet-based marketing products and partners tied together with its analytics platform. Partner integration includes data and process, and, in some cases, analytics are tied, in real time, with Web content management systems.

Since the 2009 Hype Cycle, has seen Omniture acquired by Adobe, to ease the integration of analytics into Flash applications. However, the market is still without open standards for instrumentation or well-adopted metrics, and each vendor's approach is unique. Delivery of Web analytics solutions continues to be largely software as a service (SaaS) rather than in-house products. More than 80% of total revenue comes from a SaaS subscription model. The biggest



challenges the market faces as it moves into the Plateau of Productivity are user maturity, smart mobile devices, context aware computing, social networking, support of portals and packaged applications, and the lack of instrumentation standards. Some of these problems will be addressed in the next two years, but there are big gaps between those who stretch the products ability and those who struggle to use them.

User Advice: Most enterprises with a website have a reporting package, but there is a gap between basic reporting and the potential value that analysis features in the tools offer. Use the strategic value of an enterprise's website as a guide to how much investment in analytics skill and process is warranted. Business users should be the primary users of the tools, with support from the IT organization in the areas of instrumentation, data integration, process management and complex report generation. A business executive champion is important to drive the analytic culture. Ensure there are sufficient skills, create a training program that teaches employees within roles how to use the products in their job, promote success and use consultants (external or from a vendor) to overcome technology hurdles in using the tools.

If still using log files rather than JavaScript tags for instrumentation, explore the value of tagging. If not already doing so, start using the tools for multivariate testing. Analyze users by segments, including those using mobile devices and social channels. Find opportunities to try integrating cross-channel data, such as online data with the call center or point of sale. For advanced enterprises, start building a user-experience management ecosystem that blends analytics with search, social networking, content management, and automated outbound marketing.

Business Impact: Using Web analytics has significant implications for marketing-oriented enterprises, or where the Web channel is strategic. The core process is to collect, analyze and monitor customers' behavioral activities on websites. A view into what is working and what is not helps to optimize the online channel. The impact of search engine advertising, e-mail campaigns, cross-sell or upsell targeting and social media activity can be measured and refined through Web analytics. Customer data can be gathered and incorporated into personalized and context rich content for marketing campaign decisions (such as profitability analysis and segmentation), and leveraged for every interaction channel in a campaign management strategy. It is not uncommon for business metrics of Web channels to double over baseline benchmarks within six months of starting a Web analytics program. It takes as long as three years to achieve advanced skills, at which point a continuous improvement process should be in place.




Sample Vendors: AT Internet; Coremetrics; Google; Nedstat; Omniture; SAS; Unica; Webtrends; Yahoo

Recommended Reading: "Predicts 2010: Customer-Centric Web Strategies"

"Incorporating the Web Into Cross-Channel Customer Analysis"

"Customer Experiences With Omniture's Test&Target Website Product"

"Is Google Analytics Right for You?"

"Five Best Practices for Web Analytics Initiatives"

"Key Challenges in Web Analytics, 2009"



Web and Application Hosting

Analysis By: Ted Chamberlin

Definition: Web hosting, which includes custom and packaged application hosting, is the outsourcing of some or all the infrastructure and management associated with Web-based content and applications. Customers are provided with Internet data center facilities, bandwidth, computing capacity, security and storage, as well as associated managed services. This infrastructure may be shared, dedicated, virtualized or provisioned on a utility basis. Typical ly, the Web hoster is responsible for the day-to-day operation of the infrastructure. In application hosting, the provider will provide day-to-day application management tasks, in addition to infrastructure management. The transfer of technical and staff assets is relatively rare, with customers tending to provide their own software licenses and hardware.

Position and Adoption Speed Justification: Web and application hosters have mastered the basics of network, infrastructure and operational support in dedicated environments, and now must look to extend this level of competence to virtualized and cloud-centric environments. Although hosting providers have improved customer support processes, this area still continues to be problematic for some. This movement toward "hybrid" hosting environments, where applications are hosted on a combination of dedicated and virtualized platforms, will start to separate the leading providers from those that offer only partial solutions.

The increased interest in cloud-computing and software-as-a-service (SaaS) models continues to push hosting providers to develop additional complimentary service stacks where compute, storage and network are provisioned in an elastic manner, and billing is based on consumption of resources. These usage-based services, commonly referred to as "utility or infrastructure as a service," focus heavily on server, storage and file-sharing capabilities; commercial enterprise application hosting continues to thrive on dedicated enterprise server platforms, but is starting to incorporate virtualization and utility compute for nonproduction architectures.

As hybrid hosting offerings become more user-friendly, enterprises will start to divide applications and workloads between both dedicated and multitenant-based hosting services. This drive toward more-hybrid hosting will have financial implications for the hosters, in terms of capital investments needed to fund virtualized compute and storage estates, and in terms of advanced automation for fabric control and for metering/billing systems.

User Advice: Most enterprises should consider external hosting in their tactical and strategic sourcing decisions, because the services and products have become standardized and mature. Not every service provider can deliver all levels of support (especially enterprise application management and utility/cloud services), so we recommend engaging in a competitive bid situation to ensure that the provider has the requisite processes, facilities, networks and service levels.

Business Impact: Web and application hosting provides a greater reliability, scalability and technology expertise than in-house hosting for all but a few enterprises that have complex application integration needs, or whose IT operations are large enough to match the scale of a Web hoster. Web hosters typically also have higher-quality facilities, diverse carrier networks and deeper system support personnel than enterprises. However, the customer is restricted to the technologies supported by the Web hoster, and, as with all outsourcing, there may be some loss of control.






Sample Vendors: AT&T; CSC; HP/EDS; IBM; Interoute; Macquarie Telecom; NaviSite; Orange Business Services; Quality Technology Services; Rackspace; Savvis; Secure-24; SingTel; SunGard Availability Services; Terremark Worldwide; The Planet; Verizon Business

Sales Order Management


Definition: The primary focus of sales order management is capturing and managing orders via multiple channels (such as the Web, field sales and the call center), and coordination with ERP back-office applications. Sales order management systems provide technology and functionality for:

Automating order entry and capture

Capturing and coordinating with fulfillment systems and processes at the point of sales

Increasing sales productivity when closing sales

Documenting accurate deal terms and enforcing terms/ensuring order accuracy

Coordinating fulfillment postorder capture

Integration with other systems, such as sales configurators, proposal generators and quoting tools, e-commerce sites and other key sales systems

Position and Adoption Speed Justification: Many organizations are extending their ERP systems to support multiple sales channels such as e-commerce sites and call centers — all of which are spurring the heavy adoption of sales order management. However, sales order management is a technology segment that has fallen 'between the cracks" of many CRM and ERP systems, with some companies managing sales order management processes through ERP or financial management systems, and others through their CRM systems. As a result, there are several third-party vendors that specialize in providing distributed order management capability that bridges ERP, CRM and financial management (see Distributed Order Management).

User Advice: Because e-commerce user adoption is high, and due to the sale of bundled products and services, enterprises should ensure that their order management capabilities — specifically, order capture accuracy and integration with fulfillment systems — provide high fulfillment levels (that is, more than 95%) to achieve increases in customer satisfaction. If not, users should evaluate distributed order management solutions, since these are the next generation of order management, which enables more order coordination across many systems.

Business Impact: Improvements to order management increase order accuracy, enabling higher revenue by reducing the hidden, aftersale costs of correcting improper orders. Moreover, order management capabilities should reduce the cycle time required to complete orders and get product deliveries to customers on schedule, which reduces returns and markdowns. This should also impact the customer experience with the organization, since there will be fewer orders with issues that end up creating returns and markdowns. Increasing order accuracy enables field sales/inside salespeople to focus on selling activities.






Sample Vendors: Amdocs; CommerceHub; Jagged Peak; Oracle; OrderMotion; SAP; Sterling Commerce

Entering the Plateau

Enterprise Portals

Analysis By: Jim Murphy

Definition: An enterprise portal is a comprehensive website providing access to and interaction with relevant information assets (such as information/content, applications and business processes), knowledge assets and human assets by select targeted audiences, delivered in a highly personalized manner. Enterprise portals may face various audiences, including employees, customers, business partners, citizens and community members. Enterprise portals provide users with a cohesive experience across many systems, processes and interactions, and they provide IT organizations with unified platform for access and delivery of Web applications. Enterprise portals are used widely to improve corporate communication, knowledge management, employee productivity, customer engagement and service, and process efficiency with partners, among numerous other purposes. Enterprise portals may be delivered via on-premises deployment of horizontal portal products, custom solutions requiring significant integration, traditional hosting models or cloud-based service offerings.

Position and Adoption Speed Justification: Most Fortune 2000 enterprises have adopted one or several portal platforms, and smaller organizations are actively adopting portal technologies as packaged portal products become more readily consumable. Most enterprise portal implementations were once geared toward B2E scenarios, often replacing first-generation intranets, but newer portal investments often address a broader range of scenarios, including business-to-customer, business-to-citizen and B2B initiatives.

Unfortunately, too many enterprise portal initiatives have failed to deliver value. The reasons are not entirely attributable to technology, and include poor governance, misalignment with business objectives, difficulty in integration and adaptability, and a failure to appeal to users. Nevertheless, newer-generation portal products must incorporate technologies to help companies address these problems, increasing the portal's value and refining the user experience, and enterprises must employ user-centered design and usability testing methodologies as part of a comprehensive governance strategy. Evolved portal products invoke Web 2.0 capabilities, social computing and rich Internet application (RIA) technology to offer more-engaging and more-adaptable experiences for business users. They offer simpler means of integration, including widgets and mashups, to improve interoperability and customization. New portal products employ analytics and optimization to help measure value and determine needed refinements. With its promise of unifying user access, aggregating information and personalizing the experience for users, the portal is often used as a foundation for mobile strategies and context-aware computing.

While the market for portal products will continue well into the future, portal frameworks will soon become part of a broader user experience platform (UXP). The UXP will provide integration of the technologies used to deliver portals, mashups, RIAs, Ajax-enabled websites, Web content management and mobile applications. Integrated UXPs, whether provided as suites or single products, will facilitate the development of portals and other rich Web and mobile applications.

User Advice: Organizations should continue to consider enterprise portals as foundational elements of their architectures, both as a means to extend IT's ability to deliver innovation to more people, and as a means for the business to improve processes, exploit knowledge and engage customers, partners and employees.



Many enterprises that have deployed portals face multiple, siloed deployments using different portal frameworks. These enterprises should investigate appropriate portal containment and rationalization initiatives.

Enterprises should leverage the portal framework as a foundation for a broader UXP strategy.

Business Impact: The benefits of enterprise portals include controlling "info flood," providing single sign-on, enhancing customer support and enabling tighter alignment with partners. The benefits of internally facing portals include cost avoidance via employee self-service, facilitating collaboration and supporting content publishing. However, the most compelling business impact can be improved business agility, velocity and throughput. Externally facing portals can provide increased revenue and profitability. The enterprise portal's biggest business impact is in reducing cycle times and improving the quality of process execution.

Enterprise portals have been using Ajax to improve the quality of the user experiences they deliver. Other RIA approaches can augment enterprise portal delivery. Portal products positioned to provide enterprise portals are also being used as deployment environments for enterprise mashups; in some cases, these include mashup assembly features.




Sample Vendors: BroadVision; Covisint; DotNetNuke; Drupal; Fujitsu; IBM; Liferay; Microsoft; Oracle; Red Hat JBoss; SAP; Tibco Software; Vignette/Open Text

Recommended Reading: "Magic Quadrant for Horizontal Portal Products"

"Get Ready for the 'Portal-Less' Portal"

Podcasting

Analysis By: Allen Weiner

Definition: Podcasting started out as radiolike broadcasts of spoken word content, ranging from either individual recorded essays or free-form rants to more conventional multihost talk-show-like formats across a varied set of content themes. Podcasts — video or audio — are delivered via Really Simple Syndication (RSS). Since 2007, podcasts have evolved from these radiolike "everyman" creators, to an important alternative channel for established media companies — TV and radio alike — such as National Public Radio in the U.S. — which has a podcast version of virtually every show. Podcasts are primarily consumed on portable media players such as the iPod, with iTunes software (or Zune software for Zune devices), and on the growing class of consumer smartphones such as Apple's iPhone.

Position and Adoption Speed Justification: Podcasting established itself as a user-generated content channel starting with voice-based podcasts, but it has subsequently evolved into video with the emergence of videoblogs and has become an expected offering on any top-tier media portal. In fact, podcast aggregators such as Mevio (formerly known as PodShow) are increasingly focused on video as opposed to spoken word. Podcasts are increasingly used to augment content offerings from print (newspapers and magazines), TV, and even conventional radio broadcast networks. Revenue generation will come from advertisements (sponsorships and inserted audio ads), but virtually all podcasts are primarily viewed as audience development tools.

User Advice: Advertising technology companies and agencies must continue to enhance their offerings with podcast ad insertion capabilities (developed or licensed) and creative work that



delivers campaigns and ads designed to work in the time-shifted context of podcasts. Media companies are viewing podcasting as a cost-effective way to extend the value of content tanks by providing a new channel for promotional efforts for movies, concerts, TV programs and the like. Newspapers are using podcasts judiciously to augment their online offerings with items such as complete interviews with the subjects of news stories or as an outlet for columnists.

Business Impact: Podcasting has achieved its objective as a tool to let radio, TV and newspaper outlets supplement and promote their mainstream offerings. As important is that it has given consumer-creators of broad- and niche-topic content a powerful communication tool. Additionally, it has found a niche as a useful enterprise communication tool.




Sample Vendors: Apple; Mevio

Sales Configuration


Definition: Sales configuration systems represent a class of software applications that helps organizations represent product information, underlying components and options in a buying process, as well as enforces specific standards or policies. Sales configurators reduce complexity and improve productivity by helping salespeople or customers in self-serve environments match customer needs to unique products and service offerings. Sales configuration systems are used to configure ship-to-order, assemble-to-order and engineer-to-order products, and to configure nonproduct information, such as pricing, discounts and customized financing plans.

Position and Adoption Speed Justification: The technology is offered by large, established software suite vendors, and is readily available for mainstream organizations with moderately complex requirements. The vendor community is moving the market forward in several ways. The community is now offering new deployment options, such as software as a service (SaaS), and is increasing its capabilities to support the configure price and quote/proposal business process. Additionally, mobile access to the Web is beginning to reduce the requirement for local (laptop) configuration tools that work on a synchronization model.

Best-of-breed sales configuration vendors are taking the lead in developing cohesive configure, price, quote suites based on their flagship offerings, to help companies realize greater efficiencies, effectiveness and competitive advantages with sale processes around needs assessment, pricing, quoting and proposal generation. ERP vendors, such as Oracle and SAP, will continue to expand functionality and tighten integration for sales configuration systems, making it difficult for best-of-breed vendors to maintain market share. Other than for small vertical niches or new deployment models, such as SaaS, some vendors will continue to struggle. Expect ERP vendors to continue to disproportionately own market share. However, interesting things are happening in specific vertical markets, and for vendors interested in SaaS.

User Advice: Strike a balance between acquiring differentiating functionality and managing the risk of working with smaller vendors. Evaluate best-of-breed vendors, because there are still functionality gaps in larger suite vendors' offerings, especially where a heterogeneous ERP or CRM environment may exist, or where heavy, industry-specific capabilities are important.



Evaluate all vendors for support of the configure, price and quote/proposal process, as more organizations are moving toward the approach of dynamic in-line pricing during the configuration process and passing on a priced configuration to a quoting or proposal tool.

Make sure that the sales configuration supports both rules and constraints, and offers an easy-to-use user interface that business users, not IT, can use in the sale process and model support.

Business Impact: Sales configuration systems reduce costs by mitigating expenses associated with misconfigured orders and noncompliance by salespeople. In addition, sales configuration systems increase revenue by facilitating greater flexibility at the point of sale regarding aligning a company's products and services with customers' needs. A reduction in customer confusion in configuring products/services through the Web channel can occur, and can increase the use of self-service sales environments. This also can reduce the need for human guidance in dealing with customer confusion. Sales configurators help salespeople save time in preparing for a client call, and in postcall work, thus clearing more time to schedule other sales activities.




Sample Vendors: BigMachines; Cameleon Software; Cincom; Click Commerce; FPX; Infor-SSA Global; Oracle-Siebel; Oracle E-Business Suite; Oracle JD Edwards EnterpriseOne; SAP; Sterling Commerce; Tacton; TDCI; Webcom

Recommended Reading: "Top Six CRM Sales Processes to Improve in a Cost-Constrained Economy"

Blogs


Definition: A blog, which derives from the term "weblog," is a website designed to make it easy for users to create entries in chronological order. The entries are then displayed in reverse chronological order (most recent entry first) and are generally archived on a periodic basis. Blogs are mostly used to express opinions on topical events such as sports, music, fashion or politics, but in the past two years, they have emerged as established communication channels for businesses as well as individuals. "Microblogging" has emerged via a platform such as Twitter, which not only allows users to write 140-character posts and share them with humanity, but also serves as an impressive news- and taste-sharing too, because a blog author or journalist can use it to drive awareness of new posts, articles and so on.

Position and Adoption Speed Justification: Blogs are pervasive. Google, Yahoo, Six Apart and MSN, among others, have blogging platforms, and publishers have begun to monetize blogs. New users are coming onto the Internet every day, more than a few of whom are or will be utilizing blogs. Enterprise- and CEO-authored blogs are commonplace, with some company executives regularly posting. Companies such as Yahoo or Google frequently announce new-product betas on their blogs. Those who promulgate the "blogs have peaked" position also ignore the real trend toward extending the blogging phenomenon to mobile devices, with companies such as Nokia spearheading this effort. Twitter's emergence as a very popular mobile phone application is a great example of how the blog platform has continued to evolve.

Gartner believes this will be blogs' last year on the Hype Cycle, as they have become a permanent part of the communication ecosystem for individuals, media companies and enterprises. In business, blogs from executives or prominent employees are often the primary



form of communications with customers, investors, partners and the public. (Gartner believes that, at some point, financial regulators may examine how blogs can, or cannot, be viewed as "official" communications for publicly traded companies. If company blogs for publicly traded companies do come under some form of regulation, such as how press releases on significant news must be reviewed by the SEC prior to release, Gartner does not believe it will curtail or hinder their continued use.)

User Advice: As a mainstream platform for content distribution, blogs are forcing the alignment of IT and business forces, resulting in things such as blogging policies for public-facing divisions of companies, not to mention the use of internal blogs to keep teams apprised of developments and more. It's generally a best practice to involve the company's public relations group in the review of an enterprise's blog and, if it is a public company, to involve investor relations. Companies should fully disclose the provenance of their blogs and eschew temptations to create false or deceptive "fan" blogs, often called "flogs," which almost invariably backfire into public relations disasters.

Business Impact: Print content companies — from magazines to newspapers — have added blogs to the list of established content streams. Public-facing media companies and enterprises have or are establishing blogging strategies and policies, including Gartner. A need for better blogging tools will continue to drive developer and hosting business opportunities.

By lowering the barrier to online publishing, blogs have also increased the business pressure on mainstream media outlets. For example, in June 2008, The Associated Press (AP) let it be known that it would be cracking down on bloggers who engaged in very liberal citation and quotation of AP content. This disagreement hinges on the copyright principle known as "fair use" — as do many things in a media market where consumers exert tremendous control over content distribution. How bloggers use copyrighted material and the blogger's role in the dissemination of information are challenges to incumbent media companies and underscore the disruptive nature of blogging technology. As a result, media companies and brand marketers have to invest in monitoring tools in order to protect syndication policies in the case of media companies, and brand integrity in the case of marketers. Several tools support the monitoring of brand mentions in blogs, and at least one tool — Attributor — can identify specific instances of copyrighted text in blogs.




Sample Vendors: Blogger; Six Apart; Traction Software; WordPress

Consumer Content Creation Tools


Definition: Consumer content creation tools are used to capture, organize, convert, edit, embellish and publish consumer-created content on the Web. Within this class of tools, there are dedicated PC-based applications and application suites, such as Adobe's CS5 or Apple's iLife, as well as an increasing number of Web-based tools, such as Livestream and Ustream.

Position and Adoption Speed Justification: Much application-based functionality is migrating to browser-based capabilities. Consumer adoption of these tools, especially among "digital natives," is significant. As these tools evolve further, these hybrid systems — browser-based tools and online storage and publishing platforms — will enable new business opportunities beyond software sales, such as premium subscriptions, various advertising forms and



promotional services for content creators. Mainstream media companies have adopted many of these technologies — publishing consumer-captured photos and videos, for example — to establish and maintain a link with their consumers. In 2008 and early 2009, users started leveraging their social-network pages as outlets for the content they developed using these tools. Given the spread of these tools, we believe this technology will move to "off the Hype Cycle" status by the middle of next year.

User Advice: Software platform providers targeting the consumer market need to extend programs from pure management of photos, videos and the like to providing simple (as few button clicks as possible) file conversion and publishing options for content. Consumer content creation tools represent an important channel for media companies to promote new properties. Content companies must continue to work with technology companies to enable these channels and ecosystems where consumer content creators can reuse copyrighted material for their own noncommercial uses. In addition, consumer content creators want to be able to add effects and publish via social-networking sites, blogs and so on.

Business Impact: Increasingly, easy-to-use digital editing tools for consumers, combined with multiple publishing options, will have an effect on everything from service-related businesses to software development. Media entertainment businesses will see major shifts in how and what they monetize. Libraries of older content could become very valuable as source material.




Sample Vendors: Adobe; Apple; Avid; Livestream; Microsoft; Sonic Solutions

Recommended Reading: "Predicts 2010: Ecosystems for Content Experiences"

"Key Issues for the Media Industry, 1H10"



Appendixes

Figure 3. Hype Cycle for E-Commerce, 2009



Source: Gartner (September 2009)



Hype Cycle Phases, Benefit Ratings and Maturity Levels

Table 1. Hype Cycle Phases

Phase Definition

Technology Trigger A breakthrough, public demonstration, product launch or other event generates significant press and industry interest.

Peak of Inflated Expectations During this phase of overenthusiasm and unrealistic projections, a flurry of well-publicized activity by technology leaders results in some successes, but more failures, as the technology is pushed to its limits. The only enterprises making money are

conference organizers and magazine publishers.

Trough of Disillusionment Because the technology does not live up to its overinflated expectations, it rapidly becomes unfashionable. Media interest wanes, except for a few cautionary tales.

Slope of Enlightenment Focused experimentation and solid hard work by an increasingly diverse range of organizations lead to a true understanding of the technology's applicability, risks and benefits. Commercial off-the-shelf methodologies and tools ease the development

process.

Plateau of Productivity The real-world benefits of the technology are demonstrated and accepted. Tools and methodologies are increasingly stable as they enter their second and third generations. Growing numbers of organizations feel comfortable with the reduced level of risk; the rapid growth phase of adoption begins. Approximately 20% of the technology's target audience has adopted or is

adopting the technology as it enters this phase.

Years to Mainstream Adoption The time required for the technology to reach the

Plateau of Productivity.


Table 2. Benefit Ratings

Benefit Rating Definition

Transformational Enables new ways of doing business across industries that will result in major shifts in industry

dynamics

High Enables new ways of performing horizontal or vertical processes that will result in significantly increased revenue or cost savings for an enterprise

Moderate Provides incremental improvements to established processes that will result in increased revenue or

cost savings for an enterprise



Benefit Rating Definition

Low Slightly improves processes (for example, improved user experience) that will be difficult to translate into

increased revenue or cost savings


Table 3. Maturity Levels

Maturity Level Status Products/Vendors

Embryonic In labs None

Emerging Commercialization by vendors Pilots and deployments by

industry leaders

First generation High price

Much customization

Adolescent Maturing technology capabilities and process understanding

Uptake beyond early adopters

Second generation Less customization

Early mainstream Proven technology Vendors, technology and adoption

rapidly evolving

Third generation More out of box

Methodologies

Mature mainstream Robust technology Not much evolution in vendors or

technology

Several dominant vendors

Legacy Not appropriate for new developments Cost of migration constrains

replacement

Maintenance revenue focus

Obsolete Rarely used Used/resale market only


RECOMMENDED READING

"Understanding Gartner's Hype Cycles, 2010"

"Magic Quadrant for E-Commerce"

"Context-Aware Computing and E-Commerce"

"Magic Quadrant for Social CRM"

"Emerging Technology Analysis: E-Commerce On-Demand"

"Findings: CEOs Are Placing New Bets on E-Commerce as Part of Their Return-to-Growth Strategy"

This research is part of a set of related research pieces. See "Gartner's Hype Cycle Special Report for 2010" for an overview.



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