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SMAC: The Next Big Thing

Tyler Durden's picture




 

If you don't know SMAC, then you don't know jack. SMAC - Social, Mobile, Analytics, and Cloud - is the ubiquitous term that every startup pre-IPO entrepreneur must use (no matter how awkwardly) in order to garner triple digit P/E valuations. Clearly not as superfluous as Pets.com, Goldman describes the powerful theme in enterprise software, enabling businesses to realign go-to market models with faster and informed decision-making driving an enhanced user experience.

 

Via Goldman Sachs' Mohammad Moawalla,

Key factors driving the emergence of SMAC as the fifth wave in information technology are increasing internet and smartphone penetration, exponential growth in data and social media. Our US analysts estimate that 70% of the world’s population will be using smartphones by 2017. By 2020, corporates should be managing more than 50 times the data they do now. SMAC lets enterprises realign their go-to market model and expand their global reach with faster and informed decision making. Given SMAC stack’s high availability and ease of accessibility, companies are using them separately or as a whole to reach out to a greater consumer base and move into new business areas which should drive increased industry and competitive positioning among the peer group.

SOCIAL: With users spending 25% of their online time on social networking sites, these have become an effective medium for companies to engage customers and enhance brand value. Through social media, companies can target customers in a more informed way and gain real-time feedback from them in a costeffective manner. Starbucks’ management indicated an increase in revenues of US$180 mn in the first year of the launch of its “crowdsourcing” initiatives to understand customer preferences, which helped its product innovation capability. In our view, enterprise applications are becoming more “social” with an improved user interface and higher user interactions and the millennial generation is a key influencer in driving their growth.

MOBILE: Mobile devices such as smartphones and tablets have changed the way people access digital content. With the computing power of a laptop in a highly connected and portable smartphone, it is a powerful platform to deploy applications. Consumer use-cases of mobility applications can be seen in a wide range of verticals including retail (mobile commerce) and finance (mobile banking and payments). Enterprises use mobility applications for efficient customer relationship management (CRM), improved sales & marketing strategies , supply chain and product management. In the US, mobile commerce comprised 5.8% of total online retail commerce in 2013 and is expected to increase to 9% by 2018 (eMarketer). As businesses switch to enterprise mobility, mobile devices have increasingly become important to connect to customers and enhance user experience.

ANALYTICS: 90% of the data available today has been generated in the past 3-4 years. While the pace of data generation is only going to increase, organisations are looking to analytics to process this huge pool of data to give customers a personalized experience in a fast and cost-efficient manner. Amazon, for example, leverages its customers for product reviews and uses analytics for real-time recommendations to enhance sales and customer satisfaction. Analytics tools such as SAP’s HANA help businesses make intelligent and faster decisions by analysing large volumes of data to predict and identify change and new opportunities. Improved analytics capabilities are also driving changes in the front-end presentation and visualization layer, resulting in an improved user interface to facilitate better and faster decision-making.

CLOUD: Cloud computing is the delivery of computing services over the internet rather than a local server or a personal computer. Cloud services reduce cost and the complexity of owning and operating computers and networks. Cloud technologies are driving a major change in the IT landscape with disruptive applications enhancing user experience. We believe that increasing penetration of cloud technologies in enterprise software spending should decrease the mix of maintenance related spending to c.50% of the total from c.70% currently, thereby allowing re-allocation to spend in growth related areas.

Each of the components of SMAC has brought about a change in the way the markets and businesses operate, but their integration takes the impact to a whole new level. This drives consumer decisions: as a user searches for something on a mobile device, they are provided the most relevant results using analytics, their selection is then served to them via the cloud and the user would then recommend it on social media. According to a recent industry survey, global 2000, firms will spend c.15% of their IT services and outsourcing budget on SMAC. In the coming two years, the firms are expected to spend around 10% of their total IT budget on big data and analytics, about 9.5% on cloud services (including software as a service, and platform as a service), around 5.3% on mobile apps and devices, and 3.4% on social media.

The integration of SMAC is affecting businesses across industries as they move from material-based value chains to the virtual platform. Robust SMAC strategies must cover both - an optimal integrated online presence and the bricks-and-mortar side of the business. This wave of integration is a threat to conventional businesses unless they evolve and remodel parts of themselves in coherence with SMAC. With increased visibility on social media and ease of access owing to the cloud, the ripple effect is of a much greater magnitude than any other technological shift so far. At the same time, it is a boon for businesses that were either born into this phenomenon or are able to remodel their business platforms to merge with this evolution. Companies in our European coverage that are favourably exposed to the SMAC wave are SAP which operates across the stack , Monitise which is exposed to the mobile money market and Dassault Systemes, especially in the cloud.

*  *  *

So there u have it... just what all those totally ubiquitous buzzwords mean and why you are paying $18 bn for Uber...

Perhaps the factors should be re-ordered? Social, Cloud, Analytics, & Mobile...

 

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Wed, 06/11/2014 - 22:04 | 4847139 Cognitive Dissonance
Cognitive Dissonance's picture

"SMAC.....as in SMAC the muppets in the wallet one more time just because we can." - from an internal GS memo.

Wed, 06/11/2014 - 22:07 | 4847150 A Lunatic
A Lunatic's picture

My consumer decisions are limited to A) get my broken leg fixed, or  B) buy groceries.........

Wed, 06/11/2014 - 22:29 | 4847221 HomemadeLasagna
HomemadeLasagna's picture

There's an app for that.

Thu, 06/12/2014 - 00:44 | 4847502 flacon
flacon's picture

That's a SIX SIGMA response. I can sense the SYNERGY. Time to THINK OUT OF THE BOX. We'll talk about it in our next SCRUM meeting in keeping with AGILE methology. Don't forget the TOWNHALL meeting tomorrow - we will be NETWORKING with other TEAMS. 

Thu, 06/12/2014 - 02:15 | 4847586 MrTouchdown
MrTouchdown's picture

TO YOUR POINT: we will need to LEVERAGE OUR ADVANTAGES GOING FORWARD so that we can PROACTIVELY ENGAGE OUR CLIENTS with offers that will RAISE their BOTTOM LINE AT THE END OF THE DAY.

 

People talk this way. I've seen it in action on many occaisions. Shit's real dog.

Thu, 06/12/2014 - 02:30 | 4847598 Zoomorph
Zoomorph's picture

Six sigma's outdated, get with the flow man,
Principles of product development ya know? Damn.
You living in the 2nd platform of computing foo,
My agile waterfall techniques 'bout to ace you.
Bitchez I took mah shit to the cloud,
I'm dah Kanban Masta, better say it loud.
IT as a service all up in yo face,
SMAC'in yo bitch wit sum OpenStack lace.

Thu, 06/12/2014 - 06:51 | 4847765 Incubus
Incubus's picture

what the fuck are you going on about with your dorito-breath ass?

Wed, 06/11/2014 - 22:09 | 4847156 ebworthen
ebworthen's picture

"Enhanced user experience."

I hate that term; is that like scanning my own groceries for no discount?

Wed, 06/11/2014 - 22:14 | 4847179 duo
duo's picture

don't forget VR.  We've removed the populace from economic reality, actual reality is next.  If they never leave the house, they are easier to round up.

Wed, 06/11/2014 - 22:21 | 4847198 trip kitchen
trip kitchen's picture

SCAM would be a better fit.

Wed, 06/11/2014 - 23:08 | 4847296 Milton Waddams
Milton Waddams's picture

Winner. No doubt that's what the majority of these "SMAC" companies are being referred to within Sach's conference rooms. Check out the Charlie Rose interview with Jim O,Neil. He rubs his index finger and thumb together, in the money-like motion, when talking about how he convinced Lloyd to go with BRIC instead of CRIB.

http://www.businessweek.com/videos/2012-01-20/1-20-jim-oneill-of-goldman...

Wed, 06/11/2014 - 22:24 | 4847209 Its Only Rock N Roll
Its Only Rock N Roll's picture

All of this bullshit in the execution of getting the money from your pocket to their pocket. 

 

Wed, 06/11/2014 - 22:27 | 4847215 logicalman
logicalman's picture

If this isn't the ultimate bullshit,using meaningless words to draw in useful idiots, it has to be real close.

WTF??

enabling businesses to realign go-to market models with faster and informed decision-making driving an enhanced user experience.

 

Wed, 06/11/2014 - 22:39 | 4847247 techstrategy
techstrategy's picture

It really is dot bomb 2.0. 

 

There is finite value to be captured.  Value will be competed away from competitive dynamics and one company's success is mutually exclusive with another competitors, yet everything is valued like an independent real option.  A joke.  

Wed, 06/11/2014 - 23:17 | 4847257 Dr. Engali
Dr. Engali's picture

Wow! Sounds cool exciting and hip. I'll take 1000 shares on the open! What's the company's name again?

Wed, 06/11/2014 - 22:49 | 4847274 navy62802
navy62802's picture

Cloud computing is for those freaks who want to have an audience when they fuck.

Thu, 06/12/2014 - 00:16 | 4847454 TheBigComic
TheBigComic's picture

Time to lay the SMAC down. Can you see the possibilites? http://www.youtube.com/watch?v=Z7dIHfnJS_Y

www.thebigcomic.com

Wed, 06/11/2014 - 22:59 | 4847298 KnuckleDragger-X
KnuckleDragger-X's picture

I've been doing computer engineering since the early 80's and this is just the latest round of bullshit bingo.

Thu, 06/12/2014 - 01:52 | 4847558 Urban Roman
Urban Roman's picture

We used to do cloud computing back then, but we didn't call it a 'cloud'. We called it a 'Vax'.

 

Thu, 06/12/2014 - 02:49 | 4847620 Zoomorph
Zoomorph's picture

We notice it more in technology because it's rapidly growing, but this jargon exists in every area of life (some of it more accepted, common, or popular than other).

It's only bullshit for those who are sick and tired of it. Sick and tired as in... unhealthy?

Wed, 06/11/2014 - 23:35 | 4847383 Dre4dwolf
Dre4dwolf's picture

The flaw in the model is that it assumes that advertisements and app clicks and downloads will translate into revenue that is used to produce and buy products. (aka the real world economy where people need to eat to survive and keep clicking apps and adds).

 

Thu, 06/12/2014 - 03:23 | 4847644 trebuchet
trebuchet's picture

data analytics firms selling the story that clicks, blogs, twweets and facebook likes matter, have seen some real bullshit going out to FMCG companies that aggregate this data using very ropey analytics and even ropier correlations to the real world to say what happens in cycberspace is an insight into consumer purchasing.

 

There is good stuff out there though and it is f*ing scary what some whizz kids can extract and relate 

Thu, 06/12/2014 - 00:12 | 4847447 TheReplacement
TheReplacement's picture

I read it as, 'We need this new technology so we can make and sell new technology'.  Technology has become the means to its own self and the people are rioting ride along.

Gimme an S

Gimme a K

Gimme a Y

Gimme a N

Gim-BOOM!

Thu, 06/12/2014 - 00:24 | 4847476 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

Is there an app for paying less at the supermarket for my groceries? no? 

Thu, 06/12/2014 - 00:59 | 4847519 Quantum Nucleonics
Quantum Nucleonics's picture

SMAC sounds a lot like smack. It'll leave you broke, strung out, and jonesing for more.

Thu, 06/12/2014 - 02:41 | 4847613 q99x2
q99x2's picture

Arrest Loyd Blankfein. Hint: Putin and Xi.

Thu, 06/12/2014 - 03:11 | 4847638 trebuchet
trebuchet's picture

Glad you put this out, Tyler, was going to send in something.... 

In this SMAC Space, watch Hawkeye out of Dallas, recently acquired by Publicis, manages P & G campaigns, a little bird told me  someone in there hacked g _o_ o_ g_ l e  via 50 distributed servers, Mr G aint that smart to work it out, heeard they? store Location + media cookies in Eastern European Zone, BEFORE regulatory requirement to delete. 

Offshoring money?  Why not info as well, its equally valuable, before filling in the requisite regulatory returns that you've wiped the stuff.

Also heard a rumour someone, somewhere, has stored EVERY tweet ever made to analyse the content... for marketing purposes of course 

Ever wondered why the big mobile operators in Europe channel all data useage via eastern european servers?  I do...

 

Thu, 06/12/2014 - 03:17 | 4847640 trebuchet
trebuchet's picture

Also watch Rocketfuel, more PhDs than a Quant House...

 

PE falling all over themselves in this space to get a piece of action my guess its most non-realestate deals done, beating biomed hands down

Thu, 06/12/2014 - 05:34 | 4847704 Sokhmate
Sokhmate's picture

SMAC leads TO DERP

Thu, 06/12/2014 - 08:37 | 4847931 d edwards
d edwards's picture

SMAC-the current market's version of pets.com? :-D

 

BTW at one time "smack" was street jargon for herion.

Thu, 06/12/2014 - 05:59 | 4847716 sohailelder
sohailelder's picture

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Thu, 06/12/2014 - 08:48 | 4847958 theprofromdover
theprofromdover's picture

The Cloud .............. worst thing ever.

and what happens when you are eventually refused membership of that club?

Thu, 06/12/2014 - 10:32 | 4848332 adr
adr's picture

Not to mention whe  some fuckup in your company accesses your file and screws up two weeks of work.

Or somebody plugs in a ten year old computer and drops the network bandwidth to compensate for the older card.

Or the Netgear rack dies for the 30th time and you can't access your files.

The insane load times transferring 2GB files through the cloud.

Whoops can't do any work at the airport because the software requires a cloud connection.

For every benefit of the Cloud there are 100 things that piss me off more. Oh but it's just because I'm not forward thinking.

 

Thu, 06/12/2014 - 10:25 | 4848304 adr
adr's picture

I have friends that make a good living doing nothing but talking to companies about content strategy and analytics.

The problem is that none of them know anything about the actual business of selling products. They spout bullshit for an hour that has no real world application, and if actually implemented would decimate sales. Like academic economists, their theories fall flat at the smallest level of common sense.

I sat in one of the content strategy meetings my friend set up. I couldn't believe the level of circular reasoning bullshit. I could tell he had never developed or sold any real product in his life.

But, the know nothing CEOs see these kind of things as something important. Because like the speaker most CEOs know nothing about the actual business of selling products.

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