Mary Meeker has long been one of the tech industry’s sharpest observers and most influential voices. Her annual Internet Trends report is one of the most anticipated and widely discussed documents in the tech industry: And the just-issued 2019 version is once again insightful and audacious in both scale and topical diversity, informed by mountains of research data.
Meeker, a long time partner at Silicon Valley venture capital firm Kleiner Perkins Caufield and & Byers, who has now founded Bond Capital, focuses this year on topics such as the growth of internet usage, the rise of images, online advertising spend, fintech, healthcare, and China. But a careful reading of the report’s 334 (334!) slides—embedded below—also reveals useful insights into enterprise cloud computing, digital transformation and digital customer experience, and DevOps efforts that are especially relevant to helping enterprises understand, prioritize, and address their most urgent business technology challenges.
We recommend reading the entire report, but we take a closer look at three topics of special interest to enterprise technology leaders:
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Digital customer experience: A battle for all the marbles
The trends: Meeker points out an inconvenient truth for some high-flying e-commerce brands: Paying more to acquire new customers than you’ll get back in revenue isn’t a sustainable business model. She pairs this observation with evidence of a long-term increase in customer acquisition costs—particularly in highly competitive and/or capitalized industries (slide 28).
Meeker also illustrates the value of customers who turn into brand advocates (slides 34 – 35). “Recommendations from others” is the most frequently-cited reason (23%) for subscribing to an e-commerce service, she notes, topping even financial incentives (tied for second place at 22%).
Meeker also addresses the question of what qualifies as a great digital customer experience when she looks at the role of personalized offers and recommendations for online retailers. She cites research that 91% of consumers prefer brands that offer recommendations—and 74% say they will actively share personal data in exchange for this capability.
Our take: We already know that when businesses provide inconsistent or low-quality digital customer experiences, they are more likely to struggle with high churn rates. As acquisition costs continue to climb, however, enterprises are discovering just how big a problem a flawed or inferior digital experience can be.
Meanwhile, firms that elevate and invest in first-rate digital experiences aren’t just setting the table to attract loyal and profitable customers; they’re also building a high-quality, low-cost customer-acquisition channel
These trends show why DCX could, for many businesses, turn into the fight of their lives. Winning the customer experience competition doesn’t just require cutting-edge digital capabilities; it also requires a consistent focus on performance, reliability, and non-stop innovation, enabled via end-to-end monitoring across applications and infrastructure.
Cloud native: The time is now
The trends: It shouldn’t come as a shock to discover that, as Meeker points out in this year’s report, 22% of all enterprise application workloads now take place in the cloud, more than twice as many as five years ago (slide 117). Meanwhile cloud deployment revenue is up 58% year over year (slide 116). She also notes usage increases for cloud-based Platform-as-a-Service (PaaS) offerings: 37% of enterprises now report usage vs. 27 last year. Infrastructure-as-a-Service (IaaS) usage is also up: 49% this year vs. 39% last year (slide 118).
Meeker looks also at investment in technology companies as a driver of innovation—an indicator that more ideas are making it into the enterprise IT market and impacting how firms use cloud and supporting technologies. She cites nearly $200 billion in tech-industry venture capital funding and IPOs last year, and the amount invested so far during 2019 is on track to approach that level (slide 45).
Our take: More and more enterprises—perhaps even most of them—are looking to build and innovate via cloud technology, not simply pull out the credit card and buy an AWS subscription. And there’s still an unprecedented amount of cutting-edge technology entering the enterprise marketplace via startups and pre-IPO vendors.
For firms looking to leverage the cloud to win a competitive advantage, the goal line keeps getting pushed farther away. Winning, or even keeping up, means embracing cloud-native technologies—distributed applications, microservices, serverless, etc.—and the agile/DevOps organization, culture, and processes required to use it effectively.
DevOps, data, and agile methodologies: Tools for success at scale.
The trends: When Meeker looks at the technology landscape, she sees an incredibly complex and fast-moving environment: “Humans’ ability to adapt to technological change is increasing, but it is not keeping pace with the speed of scientific & technological innovation,” she quotes Astro Teller (slide 156).
Complexity is one challenge; another involves scalability. Data volume, for example, is growing by 32% per year and approaching 200ZB —that’s 200 zettabytes, or 200 billion terabytes (slide 152).
Our take: As Meeker quotes Teller: “To overcome the resulting friction, humans can adapt by developing skills that enable faster learning & quicker iteration & experimentation.” Sound familiar? That’s what DevOps and agile development methods and culture are all about.
At the same time, these huge numbers make it clear that enterprises need to look at every technology problem as a potential scalability challenge—one that cloud native applications are designed from the ground up to tackle. In particular, Meeker notes that “data plumbing tools” are helping businesses in a variety of ways, from collecting data and improving business processes to—most critically—helping to “respond to customer events at scale” (slide 145). When you think about it, that’s what New Relic does: We help our customers instrument their applications and infrastructure to collect, analyze, and apply data to drive their business and create more powerful software—and a more perfect internet.