deal architect

IFS 2023 R2 Cloud Update

IFS provided analysts a well-paced session which covered new features available in the recently released cloud version.

I liked a few things in particular

• While everyone else is bragging about GenAI use cases it is nice to see continued investment and focus on transactional capabilities
• It was crisply done – about half an hour of features over 4 solution areas
• They plan to update every 6 months

Few things which I would have done differently

• Instead of focusing on features as released, I would prefer a highlighting of areas where IFS is differentiating in the market – particularly in asset intensive markets and in service management
• Bringing out more of unique vertical and geography specific features like they did with DNV certification for oil and gas and maritime sectors
• Reassess their ESG messaging. As I discussed with Brian Sommer in a recent ESG focused conversation here, to me it risks becoming a money pit and political hot potato. Brian pointed he is seeing environmental “doing” v merely “reporting”. Given its operational capabilities across industrial sectors, IFS would do better to highlight operational use cases rather than focusing like so many vendors on the emissions reporting part.

 

Burning Platform 108: New Frontiers for Enterprise Applications – Part 2

For the 107th and 108^th episode of Burning Platform we hosted Brian Sommer of Techventive.

In Episode 107 he presented on 3 recurring themes he is hearing from customers and vendors  - War for Talent, ESG and AI.  For my turn in this episode I provide a 25 year retrospective of cloud applications and describe massive untapped opportunities as we Re-globalize, as Industries morph dramatically and customer base migrations scream to be turbocharged

Re-Globalization

Starts around 1.52 in video below

I tackle lots of idle talk around de-globalization, de-dollarisation and de-industrialization of Germany. I discuss how MNCs are rapidly churning their country portfolios. How several vibrant new economies are the new “Tigers”. How static software vendor functionality and global presence increasingly shows them stuck in the “Old World”

Brian explains that global expansion is expensive in the traditional software sales model. The reality is hyperscalers continue to lead the way with massive global investments and  a new class of software vendors is more adept at digital channels and will support the changing globe far more effectively

New Industry Landscapes

Starts around 16.50

I discuss how the pace of industries converging and morphing has increased given all the economic shocks of the last few years. Lots of vertical edge applications have become viable and now a new wave of AI use cases is coming which will leverage industry specific operational data.

Brian believes SIs are better positioned for verticals with their account control and large investment mindsets. He says most applications vendors love to enhance their platforms with new waves of technologies. They actually find developing new applications boring; He could well be right.

I believe a new wave of vertical application vendors will emerge. And customers will increasingly build v buy such applications. The reality is one way or another there are major market chunks waiting to be won or lost. Well-designed vertical applications have shown themselves to be very sticky with revenue streams stretching decades.

Customer Base Migrations 

Starts around 30.50

I present the depressing graphic that customer bases have migrated at a very slow pace and we have ended up with a “reverse shark fin”

Brian explains that is fairly common tendency with laggards in most customer bell curves. I counter that many vendors have unusually large 50 to 80% of their customers on very old versions. Even the risks of not being in audit compliance or projecting a negative recruiting profile have not motivated them to migrate.

It’s time to leverage GenAI, RPA, accelerators, conversion factories and other automation to dramatically lower the time, cost and risk of such migrations  

Every one of the three opportunities I present is massive. However, it will take a fair amount of focus and investment. Who will step up? The next few years should see a lot of churn and chaos. Or if you see the glass as half full, lots of new opportunities

 

Burning Platform 107: New Frontiers for Enterprise Applications – Part 1

For the 107th and 108^th episode of Burning Platform we host Brian Sommer of Techventive.

Brian and I had co-hosted the first few episodes in this series over two years ago. I invited him to present on 3 recurring themes he is hearing from customers and vendors. He discussed the War for Talent, ESG and AI.  For my turn in the next episode I will provide a 25 year retrospective of cloud applications and massive untapped opportunities around globalization, verticalization and customer base migration.

1. War for Talent 

Starts around 2.26 in video below

Brian talks about the toxic employer employee environment- lots of quiet firing, quiet quitting, silent sabotage, unwillingness to explore new talent sources  etc. 

I add from my research on ‘super workers’ we have focused too much on improving employee ‘experience’ and not on productivity and outcomes. I also add we keep neglecting the aging worker talent pool and how much noise there is around when and where employees are expected to work 

2. ESG 

Starts around 11.15

Brian has recently released a book on ESG and presents several themes from that 

I have done a couple of major projects in the last year or so on the global energy market and EVs and present my perspectives on why I am concerned ESG will be another money pit ( I invoke this blog post “1 billion dollars per word’ from the Sarbanes-Oxley era twenty years ago) and a political hot potato

3. AI 

Starts around 25.02

Brian presents a pov that application vendors are not showcasing exciting use cases. He also says firms like Accenture are making significantly more investments in AI and may relegate application vendors to commodity use cases 

I summarize several nuggets from the many BP episodes on Gen and other AI I have recorded in the last few months 

In the next episode I will present on 25 years of cloud applications from 3 perspectives - globalization, verticalization and customer base migration

You may not agree with what we say but I can guarantee you will hear perspectives you have not heard before. And we show several big holes a few vendors will step up and build massive revenue sources and market capitalization around 

Educational and Entertaining! 

Analyst Cam: Transmute – Verifiable Data Platform for Global Trade

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Karyl Fowler, Co-Founder and CEO at Transmute. It offers a verifiable platform which “transforms data from every stage of digitization and paper into secure, interoperable, machine readable, and context rich data.”

I met her as part of SAP.iO Foundry’s Digital Supply Chain startup demo day.

While the platform can be used for other supply chain flows, she focused in her presentation on import and export data flows especially for that for trade into the US. It is a shockingly analog set of flows – “a single shipment on average involves about 50 documents exchanged by up to 30 different partners, and is generally costing companies on average up to 3% of their annual revenues just spent on paper alone.” And “less than 1% of trade. documents are fully digitized today and even there they rely on piecemeal solutions like PDF formats, EDI data formats and Excel. It's no wonder that effectively the same data silos that existed in the paper world are still in existence today in digital world” So, even digitized data is susceptible to fraud – hence the need for verifiable data – “a technology that solves for data provenance in a machine readable way that allows original data to be transmitted across the supply chain in real time.”

They offer “over 80, different supply chain credential templates for commercial invoices, bills of lading  etc. so you can use their API with your existing S/4HANA or other enterprise solution with ease". And with the digitized flows, “trade facilitation representatives can focus more on the violative goods or anomaly shipments”

We discuss how global trade continues to rapidly evolve with tariffs, sanctions, sustainability, anti-forced labor and other requirements. We also discuss how even between just two countries there are unique needs like those for goods produced in maquiladora factories

She goes through the product architecture, contributions to standards which are used by regulators and industries and a lot more in this crisp 20 minute presentation

Analyst Cam: The Exponential Power of Tiny Habits

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Sukumar Rajagopal, founder and CEO of Tiny Magiq, whose aim is “to help organizations, anywhere in the globe, achieve their most ambitious outcomes through digital transformation, all by themselves, frugally.” I had come to know Sukumar during his stint as Global CIO and Chief Innovation Officer at Cognizant during their hypergrowth phase.

You have read and heard me talk about using automation – AI, robotics, drones etc. - to create high performing “superworkers” in every industry. Here, Sukumar talks about humans turbocharging themselves. By changing our habits – through tiny but disciplined improvement and instrumentation - we can dramatically improve many aspects of our life, work and play.

He talks about internal “demons” which encourage procrastination and stop us from achieving our fullest potential and shows how he has won his battle against them. There is talk of neuroscience, consistency thresholds and other discipline he brings to bear in a large spectrum of physical, mental, spiritual, social and other activities.

One of my favorite segments is around 30.23 where he talks about how it has helped relationships with his family. He describes how they practice a “gratitude habit” every evening. He emphasizes this nuance “Instead of doing a general purpose, gratitude to God, you name specific human beings that helped you on that day.”

I guarantee you will improve in one or more area if you apply his methodologies. Especially after the feasting this week for Thanksgiving, I know of at least one aspect of life which will benefit😊

Best place to connect with Sukumar is via LinkedIn. Here's his LI page.

Unit4 X4U – Elegant Simplicity

I was part of the Gartner team which popularized the ERP concept in the late 90s. Nearly three decades later, I am impatient and always asking vendors about vertical extensions, localization for a long list of countries, automation in implementations and support and increasingly about their AI applications.

The reality, of course, is many customers only want core ERP functionality at low effort and cost. They have "ring fenced" core ERP with other applications, they have custom developed other applications, many are not particularly global, others do not want multiple hyperscaler clouds. I hear from many of them – thank you, but we want our ERP to follow the KISS motto – Keep it Simple, Stupid! Insulate our customizations, make upgrades as easy as I am used to on my mobile device, don’t require us to hire school buses of consultants.

We have a challenge in our industry – vendors glibly call it "technical debt" and blame customers for not keeping up with their latest offerings. If it was a handful of customers, you could buy that argument. Tens of thousands of customers point to a big problem in the industry. I will explain that further in another post, but I thought Unit4 in its recent X4U customer event started to tackle the challenge in their customer base. You can watch the 2 hour session replay here. 

In fairness, Unit4 is focused on a handful of service industries (especially project-centric ones), only in key global markets and mostly on mid-sized enterprises so the customer and related product complexity is somewhat easier to manage. There was the mandatory talk of verticals and Generative AI and a slick gaming metaphor of "power-up" but I was more impressed with how much focus went into convincing customers the move to the cloud need not be a high-risk surgery.

My favorite section was that by Jean de Villiers, CCO on Success4U starting around 1.17.50 – “one point of access to everything in the service portfolio. Whether those services are partner capabilities that we bring to bear through our Success Catalog, whether they are white glove cloud operations services that enhance your usage of your SaaS platform, whether they are an extended support SLA that helps you to be properly supported in your time zone, and enhanced professional services that can assist you with driving organizational and cultural change across your organization.” Its not a new idea but I like how it is packaged – indeed they describe it as a “wrapper” with various “success packages”, milestones and service levels.   

I liked that they gave half an hour to Rachel Jordan, VP of Product starting around 46.15. She had plenty of time to go through multiple demos across 3 pillars focusing on decision velocity, automation, and integration across the financials, hcm and projects components of the suite. The demos covered Open Banking, expense reports, revenue recognition and other use cases.

Couple of things to me highlighted how grounded the event was

• I was impressed how few slides CEO, Mike Ettling used in his opening monologue and in the exec Q&A at end. The customer exec he had on stage, Michel Etienne of Foyer Health, used more slides than he did.
• Good friend, Ray Wang who is usually a wild man on stage was tethered to a desk as he presented virtually.

More on the industry challenge I pointed above in a future note. In the meantime, I look forward to Unit4’s execution on the sensible stuff they presented.

Burning Platform 106: The economics of Enterprise AI

For the 106th episode of Burning Platform we host Larry Dignan, Editor in Chief at Constellation Insights, part of Constellation Research. He covers a wide swath of the tech sector and we discussed the whole spectrum of the tech world which is part of the Generative AI, and broader AI wave we are witnessing. The angle was about their economics and business models

We start off talking about NVIDIA and the GPU market. He talks about alternative silicon he expects to see from AMD and others which are expected to be announced at Amazon’s Reinvent conference later this month. Later in the episode we also discuss the potential for distributed compute workloads.

Around 6.30 we switch to the world of LLMs – OpenAI with ChatGPT, Anthropic with Claude, open source and other foundational models, CoPilots and upcoming vertical and other specialized smaller learning models. We also talk about the value of data and why not every use case may deserve premium pricing.

Around 14.00 we talk about the role of hyperscalers – and how for most of them the killer app from GenAI is productivity of DevOps. We also talk about the co-opetition between hyperscaler platforms and tools and those of enterprise application vendors. We talk about impact on internal IT developers and those of outsourcers

At 20.00 we talk about Enterprise Application Vendors and the AI use cases we are seeing from them. We discuss how even after decades of cloud applications 75% of most data is still in on-prem, often in custom applications.

Around 25,00 we discuss how corporations are starting to monetize unique data streams. If Data is the new Oil, they will either sell their crude to refiners or refine it themselves and sell it in the form of gasoline, diesel, feedstock for chemicals etc.

Around 30,00, we discuss what’s coming next. Larry says 2024  “is going to be the year of (tying up plenty of ) loose ends” He is so right - so many legacy systems to modernize, so many use cases to evaluate, so much new compute capacity to procure.

We end up talking about quantum computing and NVIDIA again is well positioned. Finally, we end admiring innovators who have come up with new applications in the last few years navigating the chaos that COVID, Ukraine and other shocks have created.

Rapid fire 40 minutes, Really invigorating!

Analyst Cam: Salesforce Industries & Revenue Excellence – a Post-Dreamforce Update

As we’ve moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

I attended Dreamforce last month fully expecting to be inundated with AI messaging–and I was, with Salesforce taking a sensible “trust-first” approach. I also wanted to get an in-person perspective on progress within Salesforce Industries and its Revenue Lifecycle Management offerings. While there, I watched several Industry Cloud presentations (Salesforce is now up to 13-plus Industry Clouds and solutions) and also spent time with many  industry-focused customers and partners, in addition to walking the show floor which offered plenty of industry-specific product demos.

Jujhar Singh, EVP and GM, Industries & Revenue Lifecycle Management for Salesforce, generously followed up with me in a post-Dreamforce video interview to share the latest on Salesforce’s Industry Strategy. See below for links to each of the eight segments, including an annotated description of each.

For more information about Salesforce Industry Clouds, click here; watch on-demand Dreamforce Industries sessions on Salesforce+ here.

Segment One: Introduction (3:46 minutes)

Jujhar sets the stage and explains the meaning of its five Product Pillars. He also emphasizes the importance of Salesforce bringing together all its core clouds based on one common metadata, stating “that’s our special sauce.” Finally, he stresses the company’s focus on AI, saying “the AI revolution is a data revolution more than anything else.”

Segment Two: AI Strategy (2:31 minutes)

Jujhar says the goal is to make sure that AI is a continuum from predictive to generative, not segmented in different boxes. The key to that is a solid data foundation. Salesforce was one of the first enterprise vendors to bring predictive AI to customers. Via Einstein, it claims to have made a trillion predictions. Now around vertical scenarios, it is packaging 31 industry AI applications out-of-the-box and looking at industry-focused LLMs and other verticalization. This segment includes examples of AI use cases.

Segment Three: Deep AI + Data Cloud Applications (5:46 minutes)

Jujhar highlights four vertical AI and Data investments announced at Dreamforce across a wide range of sectors:

• Connected Twins for Auto and other industrial markets (in a partnership with Qualcomm)
• Personalized Finance for Banking and Financial Services
• Trade Promotion Optimization & Effectiveness for Consumer Goods
• Unified Health Score for Healthcare – both at an individual and population level

He also emphasizes the “trust” factor which was repeated early and often at Dreamforce. “We don’t own the data. Customers do.”

Segment Four: Generative AI Scenarios (1:37 minutes)

Here, Jujhar highlights 10 industry-specific GenAI use cases. He also drills into Education Cloud, which is being built to support lifelong learning. Jujhar explains that as an institution designs courses, GenAI can recommend skills needed as a baseline for each course. As individuals complete different courses, they can see the aggregation of skills they’re building.

Segment Five: Revenue Management Foundations (1:44 minutes)

Jujhar discusses three solutions: Enterprise Product Catalog, Pricing, and Contracts. This segment includes Generative AI to generate contract language and collaborative redlining among other features.

Segment Six: Strengthen Scale Clouds: Financial Services and Health Cloud (5:07 minutes)

Here, we talk about two of Salesforce’s most successful verticals: Financial Services Cloud and Health Cloud, with the latter being complemented by the company’s latest industry offering: Life Sciences Cloud. He explains that Life Sciences Cloud isn’t just about the Pharma sector, but also includes MedTech. Jujhar also shares what’s going up-market with Group Insurance, expanding into compliance with more Know Your Customer (KYC) integrations for banks, and other new functionality for the Financial sector.

Segment Seven: Impact Portfolio: ESG, Nonprofit, Education, and Public Sector (6:00 minutes)

Jujhar covers four pillars in what the company calls its “Impact Portfolio.” For ESG, he talks about how the “E” is covered by the company’s Net Zero Cloud. He shares that Nonprofit Cloud provides a lifecycle approach, from fundraising, to program execution, and to a scorecard on outcomes. For Education Cloud, he says the company is starting to focus on lifelong learning, emphasizing that “You cannot be in a model of ‘one and done.’” And for Public Sector, he says “It’s one of our fastest-growing Industry Clouds. We’re getting traction across the board, really, whether it’s state and local, or the whole domain of federal, and across functions from benefits management to social, as well as licensing permits and inspections.”

Segment Eight: Maturing & Emerging Portfolio: Manufacturing, Connected Cars, Loyalty by Industry, Referral Marketing by Industry, Clean Energy (1:35 minutes)

Here, Jujhar talks about other recent investments, and they span across sectors. He says “the next set of innovation is going to come through the focus on clean energy.” For industrial sectors, he talks about a focus on assets and their maintenance, warranty management, and the concept of connected costs. He also explains how the company is investing in loyalty programs by vertical, and a referral marketing module for Education, Nonprofit, and Financial Services.

Burning Platform: Raise the bar for AI – aim at COGS, not just SG&A

For the 105th episode of Burning Platform we host Malcolm Frank, who is now CEO of TalentGenius and is active on several boards. I got to know Malcolm in strategy and marketing leadership roles and as President of Digital Business at Cognizant. He was part of the executive team that grew the company from 10,000 to over 300,000 employees. He is definitely one of the “Big Thinkers” of our industry and here we discuss his new AI startup and the massive changes he sees coming to IT Services providers, Digital Agencies and many other sectors.

We start with TalentGenius which he calls a “virtual talent agent”. “If you show us your resume, we can show you your entire future.” They promise to catalog your skills and show you exposure to likely AI impact on those skills. Their deliverables – What are the best jobs for you? What AI tools could help you in your journey? Who are peers who can help you in your journey? “There are hundreds, if not thousands, of doppelgangers who look a lot like you that are on the same path as you are”

Starting around 9.30 we discuss our respective perspectives on how AI is reshaping enterprise technology. He says the F500 are figuring out how to create their “AI core” and we will start to see “killer apps” from them in the next year or so. He has a fascinating observation – he thinks vendors are too focused on SG&A use cases when we should be looking at the much bigger COGS landscape. “The F500 collectively spends about $2 trillion on IT. But they spend $22 trillion in cost of goods sold.” He makes the points I have been making but much more eloquently - the AI value is less in the back office and exponentially greater in vertical operational areas and in unique data monetization.    

Around 22.00, we discuss the IT services sector and how it has fundamentally not evolved over the decades but now faces massive disruption. He uses historical analogies – how the development of refrigeration affected ice breaker traffic, how farming got so automated that from employing 40% of the US workforce it went down to 1% in a century, how trucking has done similar to horse-driven transport. In each case, we ended up with societal changes but a new generation of opportunities and jobs. He thinks IT services are similarly poised to see repetitive, low-level tasks get automated and commoditized and clients will spend the savings on a new set of projects. He expresses admiration for Accenture which continues to thrive as what he calls a “curve jumper” . There are plenty of “one-trick ponies” that do not navigate transitions well. He expects a new generation of AI-savvy firms like we saw with firms like Sapient, Cambridge Technology Partners, EPAM, Globant and others in previous tech transitions.

Around 29.00, we switch gears to discuss impact on the marketing function and on digital agencies. He talks about the recent screenwriter strike in Hollywood and the impact of AI on creative talent. He says a lot of basic stuff that drives CMOs nuts today and takes time and money with agencies will get optimized.

Finally around 33.00 we touch on the “future of work” and globalization. Hyperscalers have standardized DevOps around much of the world. He says he saw a trend which started during COVID, but has accelerated. Teams are becoming like recombinant DNA – being formed and dissolved all the time, many across borders. He also talks about the on-going impact on commercial real estate and traditional ways of working in offices.

He summarizes “It is going to be a really fun time. This is a Renaissance and, mid to long term, I think it's going to create entirely new markets. I think it's going to be a huge driver of productivity, which is going to be good for the economy. But where I get a little bit pessimistic is the impact on labor. Those who are able to think abstractly and think systemically will be rewarded. But those who don't have those abilities may be locked out of this new economy. So the faster that we can get out of our own way in terms of education, policy and funding the better. Because this is really taking off, and we're just at its dawn.”

You may not agree with everything Malcolm or I say, but there is plenty to chew on in this 40 minute episode.  

Thoughts from SAP TechEd, Bangalore

SAP did a very nice job bringing TechEd in Bangalore, India to analysts and other registered users around the world. They had a preview for analysts on Monday and had keynotes on Thursday and Friday conveniently timed for viewers who were several time zones away.

There were a slew of announcements, especially around GenAI and other AI , growing BTP product functionality and growing customer base for the development tools.

I was particularly fascinated by the Vector Engine, Datasphere and the Build Code discussions.

Juergen Mueller, the CTO simplified vector talk – which honestly, I mostly associate with pilot communications with air traffic controllers. We live in a 3-dimensional world and vectors allow for representation of many more – hundreds and thousands of - dimensions. As Juergen explained “The embedding function maps semantically similar text to vectors close to each other in a high dimensional space. Running a semantic search, then simply becomes a nearest neighbor search and that vector space with 1536 dimensions. So where it differentiates is you're not searching content, you're searching for condensed semantic meaning.” It should hopefully allow us to go beyond today’s excitement around LLM’s powering text and document-centric sources to include many more structured and unstructured data formats.

Datasphere promises to unify all your data into a single semantic model. Over the years, customers have been exporting SAP data into data lakes. SAP’s delays in integrating many of its acquisitions encouraged some of that thinking.  Competitors have also been encouraging customers to bring operational data into their supposedly “more user friendly’ analytical tools.  From my early conversations with SAP customers there is plenty of excitement around Datasphere

Build Code brings generative AI and Joule copilot capabilities to ease/speed up development of new applications and extensions to SAP applications. There was plenty of talk around how that would accelerate low and no-code development.

However, reality struck me when Juergen jokingly said “I didn't know if I will have a headache tonight thinking about the space that has more than 1500 dimensions”.

It’s tough to reconcile enterprise complexity with promises of citizen developers.  I am hearing similar promises from hyperscalers and IBM that turbocharged DevOps will be the killer app from GenAI. The rapid adoption of ChatGPT has fired up the imagination of every enterprise vendor – we have to make our tools way more consumer friendly.

Like our solar system, enterprise landscapes continue to expand exponentially.  After 25 years of cloud applications you cannot find decent choice for most cells if you look at a grid by country/by industry.   

I wished I had gone in person to Bangalore. There were TechEd strategy sessions that were not streamed I would have like to have watched. But even more I would have liked to have visited with many Indian outsourcers and tried to understand how they are using GenAI on their own projects.

As an industry we have done several million ERP and CRM implementations, global rollouts and upgrades. Vast number are around SAP products. Which means we have at least 10X the number of artifacts – test scripts, parameter configurations, data conversion code, training modules etc. Can we populate LLMs and generate fairly decent first versions for the next 10,000 or 100,000 customers, rather than reinventing the wheel each time? Can you imagine the labor savings we could deliver?

I did several trips to Bangalore and other Indian and E. European cities in the first few years at Deal Architect I founded in 2003. I took C level customer executives on due diligence trips to many vendor campuses. May be time to start doing more of that.

We are staring at a massively different enterprise landscape. New DevOps tools. And very promising roles for everyday developers.

Time for new approaches.  

Burning Platform: Insights from Fall 2023 Industry Events

For this 104^rd  episode of Burning Platform, we host Pete Tiliakos of 3Sixty Insights and Jon Reed of Diginomica. I invited them both as we approach the end of Fall slate of Industry Events to get a distillation of perspectives from 25 or so events the three of us were privileged to be part of.

It is a rapid-fire 40 minutes and we broadly go over 5 topics. As smart analysts are prone to do, we have strong opinions, we disagree on several points, and take off on some tangents including one on the potential global scenario of “de-dollarization” starting around 31.00

The first section summarizes our “sentiment” and the attendee vibe we picked up from the events. Vendor AR and event managers will get some good, if contradictory, nuggets from this segment

Starting at around 9.15 we discuss the barrage of Generative AI coverage at most of the events. Lots of use cases and other angles here you may not have previously considered

Starting at around 18.50 we ask whether vendors are too focused on AI and not enough on transactional, vertical, localization and other customer needs including what Pete calls “blocking and tackling”

Around 27.20 we discuss economics of software projects. It is a timely discussion because there are expectations of premium AI pricing in the midst of the reality that IT budgets are under macroeconomic pressures. BTW, my episode with Geoff Scott, CEO of ASUG earlier this week also covered the economic angle extensively with a focus on the SAP customer base.

At 34.00 we have a broader conversation around automation and future of work, beyond AI and RPA technology.

Very insightful – no wonder both Pete and Jon are repeat guests on my episodes.

Burning Platform: Another Inflection Point for SAP Customers

In this 103^rd  episode of Burning Platform, we host Geoff Scott, CEO of ASUG and discuss a number of recent SAP announcements and what they mean to the ASUG and broader SAP customer base.

We discuss the SAP Q2 earnings announcement with its focus on product and pricing and the impact of RISE and GROW on ECC and early S/4 adopters. They have to factor change in one direction or another.

Next. we discuss Gen AI and other forms of AI. We talk about potential AI and automation to streamline SAP implementations, upgrades and other projects. We talk about planned Joule use cases and AI economics. More change.

We discuss stylistic differences in the way ASUG communicates with SAP executives compared to DSAG and other user groups around the world. Having dealt with vendor sensitivities for decades in my analyst role, I personally find SAP to be one of the more mature ones in dealing with all kinds of feedback. Some vendors only want positive comments – must be nice to have 100% market share😊

We discuss the sentiment in ASUG customers given all the global challenges we are facing. More changes.

However, as I tell Geoff we saw incredible innovation in the middle of so much chaos in the last few years caused by COVID, Ukraine crisis, climate change urgency and massive digital transformation – as vividly seen in Business as Unusual by Thomas Saueressig and Peter Maier we covered in a previous episode that Geoff hosted.

Importantly, we also find time to discuss baseball and college football.

As always, it is an educational and entertaining episode with Geoff – no wonder he is a regular guest in this series!

 

Burning Platform: All Things GenAI

In this 102^nd  episode of Burning Platform, we host repeat guest Tamas Hevizi, now in a new role heading the Office of the CEO at Automation Anywhere. As he says it was perfect timing with his focus on strategic initiatives with all the buzz around Generative AI

We explore many different aspects of GenAI and AI in general

We talk about a wide range of use cases across several industries - advertising, financial services, healthcare, railroads, retail and semiconductor among others 

We talk about the value of data. As he says we need to move away from ‘safe areas’ of the enterprise we have traditionally been comfortable in. Let’s focus instead on so many problems we haven’t been able to solve in the past 

We talk about technologies from Anthropic Claude to Microsoft CoPilot and approaches of enterprise vendors like Salesforce and Workday.

We talk about the economics of AI. He says ““There is this race going on in AI between data and compute. I don't know who's going to win that but so far, I'm betting on the hyperscalers and not the LLMs.”

We talk about the ethics of AI. Lots of perspectives you likely have not heard before.

Well worth spending half an hour on our back and forth. 

We end with the comment that we need to reconvene in a few months. This market segment is evolving so rapidly that we will likely have a completely different set of perspectives!

If Data is the New Oil, how should Enterprise Data and AI be priced?

Over my career, I have been in the middle of or on the sidelines of countless technology negotiations. Deal Architect loves that back and forth and yelling and conniving, so no wonder my ears have perked up quite often with some of the wild talk I have been hearing about enterprise AI pricing

I have heard Wall Street analysts goad technology CEOs “You have to pay for NVIDIA GPUs which are premium priced, so better charge your customers a premium for your AI”

I have heard tech execs, driven by FOMO or OpenAI-envy say “We deserve a premium. We are bringing highly sanitized and reliable book of record data unlike that in the “wild west” consumer web”

I have heard from customer executives “Wait, its OUR data and the vendor is just going to massage it and sell it back to us at a significant premium?”

Every byte of data and related AI is not worth the same. There is a reason why the Coca Cola formula, why pharma molecular data, pixels of high resolution satellite imagery and other strands of data are highly protected and likely will never be available for training of vendor machines. There is a clear hierarchy of data value – IP/product related and specific customer data is worth a lot more than back office benchmark data. If you can help identify signals from all the noise in IoT data, that’s worth a lot especially to prevent unplanned downtime of expensive capital equipment. Ditto for gigabytes of parametric data that comes out of semiconductor fabs. The value of each byte of data varies by industry and country. And over time depending on demand and supply. Everything does not neatly fit into the “it deserves a 25% premium” bucket.  

Many enterprises will think like energy companies when it comes to selling access to their data to train machines. Many energy companies drill for oil and gas and sell that in the open market. Depending on whether you are in Saudi Arabia where you can poke a finger in the sand and its oozes black gold or you are in Norway and have to spend plenty of capital for infrastructure to drill in the rough, dangerous North Sea, market prices determine how much they sell in the open market. The amount of sulfur in the oil – whether it is “sweet” or “sour” - affects the price even further.

Other oil companies refine their crude into literally thousands of products.  According to the IPRB “There are more than 6,000 everyday products refined from an/or manufactured with natural gas liquids and crude oil, including electronics, paint, cosmetics, synthetic fabrics and medicines. A 42-gallon barrel of crude oil is typically used to make 19.4 gallons of gasoline, roughly 11 gallons of diesel fuel and four gallons of jet fuel. The rest is used to make petrochemical feedstocks, waxes, lubricating oils, and asphalt, just to name a few.”

Some highly integrated oil companies own their gas stations and sell diesel and gasoline to consumers. Others sell refined products through retailers like Wawa and Costco.

This complex marketplace has taken decades to evolve. And it may be in gradual decline as we move to alternate fuels.

The challenge for data and AI pricing is there are no trading exchanges or supply chains (yet) like there are for crude or chemicals. And those are somewhat regulated, though by no means stable. Data trading, especially consumer data, on the other hand is associated with the Dark Web. We are a long way from regulated markets.

But first principles are emerging. Not all data is worth the same. Data will be worth more or less over time. Customers will expect to be compensated for data to train vendor machines. Some customer data will never be available for vendors to mine.  Many customers will mine their own data and offer it for sale to others.

I expect a lot of head butting between technology customers and vendors over the first few years of enterprise AI applications. I also expect vendors to be held accountable for outcomes if they are being paid premium prices.

The cloud revolution came with a new business model – subscription contracts. Cloud-native vendors enjoyed several years of advantage over on-prem vendors who could not adapt to the new business model.

I think we may see similar with the emerging AI market. A new business model based on outcomes or performance based contracts. It’s something pioneers like Rolls-Royce have been fine tuning for decades with their “Power by the Hour” and TotalCare offerings. And it will give results-based vendors a few years of advantage compared to those that just glibly expect premiums for their AI.

More about that coming up.

Burning Platform: Enterprise Architecture & Communities in SAP world

In this 101st episode of Burning Platform, we host Paul Kurchina, SAP Community Evangelist, Connector and Analyst. Paul has been a fixture in SAP World for 3 decades – as a customer, as an SAP Mentor, active in various user groups around the world, omnipresent at various Sapphires, and more recently conducting 19 road show gatherings across N. America and others around the world.

We spend the longest time talking about enterprise architects and their complex job as application portfolios keep growing and as application lifecycle management becomes more critical. We also discuss SAP’s recent acquisition of the enterprise architecture tools company, LeanIX, the impact of new AI applications on the EA role, the changing world economy and leveraging SAP’s global functionality and reach.

We kick off talking about communities and their changing role. He walks through his 8 Cs of community building  – conversations, coaching, content etc. He says “the half-life of education has gone down tremendously given all the rapid changes in technology”  In addition to curriculum, coaching is as important given the multiple generations of talent in the SAP community with its 50 year history and widespread customer base.

As he says “Community was important in the early days of R/3. We'd get together as customers to talk about different aspects of our journeys, whether we were implementing, or post go live, deriving value … we used to think R/3 was pretty complicated back in the day. Roll forward, 30 years later, oh, my God, it's off the charts. The importance of us learning together and working together, especially in the age of AI, has never been more important.”

We next discuss the changing SAP ecosystem which has exploded beyond the big SIs. We discuss some of the strategy firms, robotics firms, SAP.iO startups and newer players as what he calls the SAP “solar system” keeps expanding.

Finally, we talk about the resurgence of focus on Centers of Excellence.

Every step of this 30 minute conversation. I felt in awe of SAP’s vital role in our amazingly complex, global economy and admiration for enterprise architects who keep up with all the rapid changes and especially folks like Paul who have mentored so many for so long in the communities that make SAP run.

The State of Enterprise AI

“In the midst of winter, I found there was, within me, an invincible summer.

And that makes me happy. For it says that no matter how hard the world pushes against me, within me, there’s something stronger – something better, pushing right back.”

As I caught a glimpse of the Bay Bridge from my plane on yet another gorgeous afternoon last Friday, I happened to remember Albert Camus’ inspirational words.

I have spent nearly half of September in California, mostly at AI focused events. From a distance, it is a state which appears, especially after the tech meltdown last year, to be caught in a “doom loop”. But walking with my wife amongst its Redwood giants and surveying the majestic Pacific from Pigeon Point we felt nothing but awe. Even more, I was impressed by San Francisco which has cleaned up and stepped up to host several of those AI focused events. Quite a bounce back for a city which has descended to depressing lows. As Marc Benioff of Salesforce, ever a cheerleader for the city, has tweeted “San Francisco is the #1 AI City! SF will soon be sold out again! Never seen commercial real estate leasing at this rate. # of companies looking for huge amounts of space is incredible.”

You have to marvel at the power of people and places to self-heal.

Of course, as an analyst I hang around colleagues who slap me when my optimism gets carried away. I told a fellow analyst I love the term “joule” and SAP’s use of the term to brand its recently announced Generative AI digital assistant. It conveys momentum, energy and work, I said. He reminded me “it is a tiny unit of measure.”  He is right -  it is a force of a newton to move something only about a meter.

That is a good metaphor for the state of Enterprise AI between all the news coming out of Salesforce’s Dreamforce, Workday Rising, Google Next, Oracle OpenWorld, SAP’s announcements among others. Lots to be optimistic about, but realistically we are just getting started. Lots of moving and pushing ahead.

Let’s start with the positives first:

To me, the noticeable thing is how enterprise tech is threading the needle – taking advantage of the excitement generated by OpenAI and other LLMs and NVIDIA GPUs and yet distancing itself from the “wild west’ which is dependent on unstructured and often unreliable data from the consumer web.

The message from Rising was their AI harnesses “the largest, cleanest data set from 65M+ users and 629B+ transactions a year.” Dreamforce used even more eye-popping numbers for their Data Cloud, the underpinning for their AI: “900 trillion records processed per quarter”.

I heard the word “Trust” over and over.  Not just about the data, but the ability to transition customer bases across yet another architectural shift.

Aneel Bhusri of Workday expressed it pretty well in a session with analysts

“From mainframe to client server and then to the cloud (the shifts were about) re-platforming for business processes. When cloud got started, very early on, we said this is not just about business processes, it's about data. And so really, since day one, we've been building the foundation for data … I can't say we knew this world was coming but we were architected for the way that this world has materialized and you can't do the AI stuff if you don't have a really strong foundation.”

Two SAP executives made an even more compelling case of their “shock absorbing” capability in a book I helped them write last year. The preface said

“In 2022, we celebrated SAP’s 50th anniversary. Fifty years in the software industry means that generations of technology have transformed enterprise computing—from mainframes to client/server architectures, to the internet, and into the cloud. And we see the crests of new technology waves on the horizon.

Our solutions support and enable the daily operations of more than 400,000 customers. And what we consider “business as usual” today once was revolutionary and very un-usual. Real-time computing with SAP R/2 was disruptive when most of the world ran yesterday’s data and last month’s analytics on homegrown software. SAP R/3, with its scalable client/server computing, displaced the monolithic mainframes. Integrated 24/7 internet-based businesses replaced the usual 9-to-5 weekday schedules. The cloud is paving the way to scalable and adaptable computing power, high-security data management, and continuous innovation, giving companies the agility and resilience they need for an increasingly volatile environment. The pace of change has increased dramatically in the last few years as enterprises navigate one shock after another resulting from COVID-19, the war in Ukraine, climate change concerns, and massive digital transformations.”

One caveat – the trust factor would be much higher if vendors shared metrics on how many explicit customer permissions they have gathered to use their data to train their machines.

The use cases I heard in the last month were not just about Generative AI.  The vast majority of enterprise data is structured. Between SAP’s early Leonardo and Salesforce’s Einstein examples, we have early successes around demand forecasting, anomaly detection, next-best action and other scenarios. We need to turbocharge these incorporating newly available external datasets. And when it comes to GenAI a killer app will be around DevOps productivity, especially with hyperscaler platforms as George Gilbert pointed out in this Burning Platform episode. Talking of leveraging a wider group of developers, I liked Workday’s focus on AI in its Extend toolkit and its focus on startups in a new AI Marketplace.

I also liked Salesforce’s comments about “bring your own models” and commoditizing LLMs and SAP’s investment in Aleph Alpha, Anthropic and Cohere. I want application vendors to build more use cases, collect more relevant datasets and build more domain expertise, not invest as much in the plumbing.

Specific to use cases I saw many which should appeal to individual users – to help craft better email responses or job descriptions or career paths. I did not see them expressed enough in enterprise terms. “You can use the functionality for 10,000 instances a month and save xxx of $ in people time as a result”. We need that to show clear value from AI applications. In a recent conversation, I heard we are going through a phase of “AI fog” – a good way to describe that we have hundreds of potential AI use cases, but not enough value analysis around each so enterprises can easily prioritize them.

And yet, the reality is even after 25 years of cloud applications, if you chart a grid of available solutions by industry and global regions, 75% of the squares have very little coverage.  Most vendors do not have the specific domain expertise or access to relevant data as a result.

In a LinkedIn post about Oracle I recently wrote

“Brian believes Oracle’s earlier acquisitions - JDE, Siebel, MICROS, Primavera and others have brought it plenty of vertical knowledge. To me, those are all legacy applications, many from the 1980s. Made more contemporary at a cloud architectural level, but not always reflecting rapidly changing sectors. As is the core Cerner EHR. I have been particularly interested in new vertical applications which have become viable in the last 5 years”

My view is enterprises will find more AI value in the other “squares” on that grid. Vendors will need to move out of their functional comfort zones to help customers better understand these “unknown unknowns”. Their machines cannot be expected to provide truly valuable insights without curiosity about these unexplored domains. Even SAP which covers more squares in that industry/country grid tends to focus more on well-trodden horizontal areas. Over the next month we will hear at its events about use cases around HCM, procurement and CRM, when vertical and geographic operational use cases are much more elusive to find.

Another area for improvement- too many software vendors have taken Marc Andreesen’s comments on “software will eat the world” too literally. Software in concert with satellites, sensors, robotics, drones and other physical automation delivers X times more value to customers.

Mercifully, I did not see too many demands for premium AI pricing at these events. In earlier months, I had heard talk of that to mimic inflated pricing around GPUs and AI talent, but it appears to have quietened down a bit. Focus on expressing crisply the value from an AI use case and the pricing discussion becomes much easier.  

Over the last couple of decades we have seen consumer tech lead the enterprise through waves of cloud, social and mobile adoption. With this wave of AI, I see a caution around blindly adopting consumer tech. That’s healthy. Next, we need to broaden our horizons to help enterprises with data and analytics around way too many blind spots they continue to live with.  But do so quickly at the speed of consumer tech.

PS – I am not a political analyst, but if I were I would deliver a similar objective scorecard on the state of the State of California 😊

Burning Platform: Platform Wars turbocharged by Gen AI

In this 100^th episode of Burning Platform, we host George Gilbert, Principal Analyst at TechAlpha Partners. He has been a long-time tech financial and industry analyst and has focused more recently on the evolution of platforms and I invited him to discuss the likely impact of Generative AI on hyperscalers, ISVs and outsourcers.

I have known George since his Wall Street days in the 90s and every conversation with him gets me energized. This one was no different. To start with, he is extremely excited about Gen AI

“Gen AI is the biggest accelerant this industry has ever seen. We've never had a new technology that accelerated both demand and supply…

 It allows software to be used in new contexts and by new people. Because you can interact with it in natural language soon, it'll be like an agent, like a Siri that can, you can give instructions to it, and it'll go off and do stuff on your behalf. That's accelerating the demand side.

Gen AI, is its first real killer application, other than as a conversational interface is to write software. It doesn't do it completely for you. But it dramatically raises the productivity of developers, and not just like code completion. But writing the glue code between the building block services of the hyperscalers and writing the code to deploy and monitor and soon remediate applications. It doesn't turn Infrastructure as a Service completely into Platform as a Service. But it does start to close that gap and the complexity.”

With that as a nice setup we discuss the world of platforms, the coopetition between hyperscalers and ISVs, the coming pendulum swing from buying to building applications, especially industry and company specific. We discuss the likely impact on outsourcers as low code development becomes increasingly ubiquitous and likely AI use cases that will get prioritized.

He also touches on the economics of AI infrastructure

“You know, the scarcity of NVIDIA GPUs is exactly like Cisco was in the late 90s. People are double and triple ordering. Because they want to make sure they get some allocation. There's a lot of work going on to make the inference costs come down, way down. We're already hearing rumors of order cuts to Nvidia, at least, you know, at the margin. This could be rumors, but we're gonna solve that problem. That's not where the value is being created. And by the way, we saw from, from Google, that they anticipated this problem like 10 years ago and started designing their own TPUs. So they're not constrained by the GPU shortage.”

We cover a lot more ground in this 30 minute episode. Agree or disagree with us, it will make you think of other angles to the rapidly evolving world of Gen AI and AI, broadly.

The new Enterprise Applications Gold Rush

I arrived at Gartner in 1995. My colleagues there were doing Congressional Hearings, had thrown out a number of $600 billion for enterprises to fix the Y2K bug – stuff which woke up CEOs and Boards to their technology challenges. Over the next 5 years, our applications analysts handled a fire hose of client calls about TLAs we had coined – ERP, CRM etc. In my case, it approximated 10,000 30 minute calls (yes!) related to the software vendors and related Sis – we logged every call in a database Gartner had built. The patterns across those calls meant our Magic Quadrants basically wrote themselves.

At Deal Architect, we have already been tracking a stream of new applications this decade. COVID. Ukraine war, climate change and massive digital transformations have made many vertical edge applications viable – telemedicine and personalized medicine in healthcare, EV battery management and billing in utilities, intelligent returns and reverse logistics around eCommerce, Direct to Consumer and related last-mile, small-lot logistics in consumer industries, CPQ for industrials to handle complex outcome based pricing which bundles product, spare parts, all kinds of monitoring and maintenance services, financing etc.  And many more for other sectors.

There is also a growing number of applications aimed at rapidly growing economies around the globe – they factor unique business practices and digital trends, local languages, currency, scripts. taxes, regulatory and other nuances.

Beyond these new vertical and geographic applications we are seeing a new generation of AI and data enabled applications.  This week at Dreamforce I saw Marc Benioff interview Sam Altman of OpenAI – the man who without needing any industry analysts has single handedly started a new Y2K type stampede. And in addition to the multitude of use cases I heard about during the event, Sam threw out another potential category. In his keynote, Marc had said “They call them hallucinations; I call them lies. These LLMs are very convincing liars.” Sam basically said hallucinations are not a bug, they are a feature. “A lot of value from these systems is heavily related to the fact that they do hallucinate….If you want to look something up in a database, we already have good stuff for that…The thought before was that physical and repetitive tasks would be transformed first before moving on to creative endeavors. The model takes existing data and presents it in different, novel ways (so can be used for creative and strategic work as well)

In a different session, Peter Schwartz, Futurist at Salesforce responded to my question how his Shell (the global oil company) Scenarios Group in the 70s (and comparable ones today) could benefit from today’s AI

“Most people are uncomfortable with uncertainty. They'd rather deny the uncertainty that's inherent in most of the methodologies around things like scenarios. It's not about predicting the future. It's about making better decisions today by looking at the alternatives and managing the risks both the upside and downside far better. I think AI will be a very useful tool in that. Think about it as a current conversational strategic planning partner that presents alternatives. In fact, one of my very first applications of ChatGPT was writing an article on the future of electric vehicles. And I said, give me three scenarios on the future of electric vehicles. And it gave me three really smart ones. I didn't use them literally in what I was writing, but it was a great start. And it was really amazing and actually being able to create alternatives. So when I think about it, frankly, most companies, especially small and medium sized companies, don't have somebody like me working for them. Now imagine an AI strategic planning partner that's trained on various alternatives on the methods. the mathematics of various kinds of models, and can generate real alternatives for small and medium sized businesses”

To Peter’s point about uncertainty, Gartner had taken those scenarios a step further. We assigned probabilities to them and were actively discouraged from publishing any which had a probability of 0.4 or higher. That meant it likely was not bold, edgy enough – it likely did not have enough uncertainty factored.

Couple of weeks ago, reacting to Snowflake CEO’s comments about Nvidia’s blowout quarter, I had written the premium costs driven by GPUs and scarce AI talent would lead to “premium AI applications” being prioritized. Drug discovery, mineral insights, trading patterns, design nuances are some of the use cases which would justify them. I also said “For many vendors, their predictive AI may offer more value to customers than generative AI. If you can preclude unplanned shutdowns of expensive assets with preventive maintenance AI or you can reduce production and logistics footprint, waste and scrap through better demand forecasting AI,  that may be exactly what your customers need.”

The good news about Dreamforce (and likely again at Workday Rising coming up in a couple of weeks) I heard plenty of generative AI use cases. Between the vertical, geographic and now AI enabled applications, it should allow the Gartners to come up with a new gen of TLAs. I also heard about CEOs and Boards really energized (trust me, they grudgingly go along with compliance, ESG type projects).   Except, that given the shocks of the last few years – COVID, Ukraine etc. – most enterprises have seen their industries and countries radically transformed and they expect a lot more agility than they did around Y2k.

Besides the agility, I hope companies are also less wasteful than they were around Y2K. In the 90s, I saw massive project overruns, plenty of shelfware, suites which underperformed and had to be ring-fenced with best of breed solutions.  I also expect enterprises will want their projects to be much more automated. AI should also allow SIs to rethink their labor-intensive delivery models.

I am looking forward to another fire hose of application functionality, architecture and implementation conversations. It’s the got the same feeling I got when I got to Gartner in 1995.

As Yogi Berra famously said: "It's déjà vu all over again."

Analyst Cam: SAP – AI across Consumer Industries verticals

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

For all the noise around Generative AI, I have not seen many use cases which would deserve the premiums the industry is expecting as I wrote here. I am looking forward to Dreamforce and Workday Rising over the next couple of weeks for more inspirational use cases and creative. “premium” applications for enterprise AI

In the meantime, I reached out to Matt Laukaitis who heads Consumer Industries for SAP to get his AI perspective. Their definition of CI is really broad to include consumer products, retail, wholesale distribution, life sciences, health care, and agribusiness. He is a great story teller and is always full of tales of innovation at his customers. Sure enough, he presented across a wide range of processes across the enterprise and discussed predictive AND generative AI applications.

He used examples from around the world  – Arla with Dairy products from Denmark, Agrobit with farming in Argentina, Kaufland, a grocer in several E. European countries, Villeroy & Boch in ceramics and other household products in Germany and others.

We also cover ethical and other issues we are seeing with GenAI. As he explained “We've enacted and are living by a global AI ethics policy that is focused on four key principles of ethical AI. We believe it's focused on human agency and oversight, addressing bias and discrimination and application of the models with transparency and explainability. And also, what is their impact on society. We are a core member of the European Commission's high level expert group on AI, and providing input on forthcoming legislation.”

Very nicely done in about 30 minutes.

Burning Platform: Zoho’s “Transnational Localism”

In this 99^th episode (and 98^th yesterday) of Burning Platform, we host 3 Zoho global executives: Carla Garcia, Head of Latin America; Suvish Viswanathan. Head of Marketing for UK and EU and Ali Shabdar, Regional Director of MEA.

Zoho announced yesterday they have reached the impressive 100 million user milestone (from just 1 million 15 years ago)

CEO Sridhar Vembu, in an interview, said

“We have an impressive innovation pipeline covering the next 10 years and are investing in deep technologies to serve billions of users around the world…”

The conversation with the 3 executives brings out how Zoho’s unique approach to globalization – what they call “transnational localism” - has accelerated growth in the last few years and will be critical to reach the billion user milestone.

In the first episode yesterday, they talked about how they target across the 150+ countries in their 3 focus regions. Ali mentioned Bahrain, Israel, Jordan, Kenya, Nigeria, S, Africa, Saudi Arabia and UAE in his comments. Suvish mentioned developed economies in Europe and also emerging demand in Southern and Eastern Europe. Carla described how Zoholics events help in a culture where customers prioritize face to face interaction, and how Zoho is unafraid to leverage billboard and other analog marketing channels.

In episode two today we drill into 6 additional topics

• How they prioritize localization for so many countries (language, currencies, unique laws and business practices)
• Liaison and collaboration with host governments and commitment to their digitalization journey
• How they customize economics and licensing to many local demands
• Relationship with hyperscalers like Microsoft, Google and AWS which are shaping DevOps around the globe
• How their regions are reacting to the GenAI phenomenon
• How CIOs in their region are adopting low and no code tools to build v buy applications

Worth watching both episodes – they cover so much ground. In a recent post I wrote there is a lot of glib talk about the collapse of globalization. I maintain we are going through a re-globalization. This episode captures Zoho’s unique approach to this new world.

 

Burning Platform: Globalization and Zoho’s next milestone: a Billion Users?

In this 98^th episode (and 99^th tomorrow)  of Burning Platform, we host 3 Zoho global executives: Carla Garcia, Head of Latin America; Suvish Viswanathan. Head of Marketing for UK and EU and Ali Shabdar, Regional Director of MEA.

Zoho announced today they have reached the impressive 100 million user milestone (from just 1 million 15 years ago)

CEO Sridhar Vembu, in an interview, said

“We have an impressive innovation pipeline covering the next 10 years and are investing in deep technologies to serve billions of users around the world…”

My conversation with the 3 executives brings out how Zoho’s unique approach to globalization – what they call “transnational localism” - has accelerated growth in the last few years and will be critical to reach the billion user milestone.

In the first episode below, they talk about how they target across the 150+ countries in their 3 focus regions. Ali mentions Bahrain, Israel, Jordan, Kenya, Nigeria, S, Africa, Saudi Arabia and UAE in his comments. Suvish mentions developed economies in Europe and also emerging demand in Southern and Eastern Europe. Carla describes how Zoholics events help in a culture where customers prioritize face to face interaction, and how Zoho is unafraid to leverage billboard and other analog marketing channels.

They use the term “trust’ often which is reinforced by their regional data centers, clear commitment to data privacy, their private ownership, fair pricing and their unique culture.

In episode two, tomorrow we will cover 6 additional topics

• How they prioritize localization for so many countries (language, currencies, unique laws and business practices)
• Liaison and collaboration with host governments and commitment to their digitalization journey
• How they customize economics and licensing to many local demands
• Relationship with hyperscalers like Microsoft, Google and AWS which are shaping DevOps around the globe
• How their regions are reacting to the GenAI phenomenon
• How CIOs in their region are adopting low and no code tools to build v buy applications

Worth watching both episodes – they cover so much ground. I end the session tomorrow with this comment:

“I am hearing a lot of glib comments like “globalization is collapsing”. Or Germany's getting “de-industrialized, or after Brexit UK is dead, or the US is going through “de-dollarisation”. I keep telling them, we're going through a “re-globalization” phase. Multinationals are moving resources around – they leaving Argentina, they've been forced to leave Russia, they are moving the supply chains away from China. There's a lot of change going on. And then you have the emerging economies. Kenya is coming up with new consumers, new developers. Ali, you probably have six countries in your region that are blazing new trails. We've got places like Indonesia, you know, there's so many emerging markets that are going through a re-globalization phase.

So I love talking to folks like you that are on the ground. Seeing that happen. Keep the faith. We'll have you back in a few months. Let's do this every few months.”

A new business model for AI?

This post is inspired by Frank Slootman, CEO of Snowflake. In an interview with CNBC he commented

“AI is not going to be cheap. I mean, somebody's paying for these wonderful Nvidia results. There needs to be a business model that's associated, you know, with the technology. One of the great things about Search, when it showed up was not only that it was great technology, but they also had a business model that paid for it.  We need that here as well. Otherwise, it's fun and games, and it's an expensive hobby, that's not going to last…”

He was alluding to another Nvidia blowout quarter. Jensen Huang, CEO of Nvidia explained some of the trends driving their demand

“The world has something along the lines of about a trillion dollars’ worth of data centers installed in the cloud and enterprise and otherwise…And that trillion dollars of data centers is in the process of transitioning into accelerated computing and generative AI.”

This of course, begs the question – Is ALL the data in ALL those data centers fodder for processing with Nvidia products? They could be - but not necessarily at today’s premium prices. This documentary does a nice job describing Nvidia’s evolution from gaming chips to a powerhouse in generative AI. It touches on “premium” use cases in healthcare, design etc. that nicely leverage his technology.

My recommendation would be vendors poll their customers for use cases where they are willing to pay premium pricing. And think broader - the investment is not just going be around the GPUs, LLMs and other plumbing. Vendors will need to accumulate data around high-value applications. That will call for hiring unique domain experts and accumulating plenty of domain specific data not easily accessible today in the cloud. It is squirreled away somewhere in those trillion dollar worth of data centers, and even worse in corporate spreadsheets.

Let’s face it – the vast majority of enterprise data in the cloud today is back office accounting, HCM, procurement and basic CRM data. If you expect premium pricing, it will likely come from operational data unique to verticals and countries. To access that data, you will have to acquire specialist vendors like Oracle did with Cerner. Not cheap – Oracle paid $28 billion for a small fraction of largely US patient-specific data and it will have to navigate HIPAA and other privacy constraints around that data. Another option – come up with incentives for some of the most innovative customers in each domain to share their data to train your machines. Either way be prepared to invest.

For many vendors, their predictive AI may offer more value to customers than generative AI. If you can preclude unplanned shutdowns of expensive assets with preventive maintenance AI or you can reduce production and logistics footprint, waste and scrap through better demand forecasting AI,  that may be exactly what your customers need.

I like Frank’s call for a business model for AI. I think vendors should start with finding out what customers are willing to pay for as “premium” use cases, then work backwards and figure out whether/how to acquire the premium infrastructure, domain knowledge and the data to train machines for those ambitious use cases.

That would be a business model better aligned with customer value and far easier to sell.

Globalization – time for a fresh look at a complex topic

I was in 4 countries recently, and it reminded me I had been to each as part of my book tour a decade ago for The New Polymath. It also reminded me I had started the book with “sprezzatura” and ended it with “shoshin” – not exactly words you hear every day.

Sprezzatura is a term from the Italian Renaissance that would translate today to “being cool” – showing a confidence even when tackling complex assignments.

Shoshin loosely translates from Japanese to a “Beginner’s or Child’s Mind”. It is a Zen Buddhist concept of looking with wide openness when studying a subject.

I certainly felt both terms at work during my conversation with a friendly German immigration officer at Frankfurt airport. Flipping through my passport he asked “first time in Germany?” I said no, been here at least 25 times. “Always to Frankfurt?” No, Berlin, Hamburg, Cologne, Hanover, Munich, Fussen….”Only travel to Germany?” no, been to 75 countries. His eyes visibly widened. The more we talked the more I admired his curiosity. The more I talked I also realized I was trying to confidently answer his questions but he had no trail to confirm my statements. They were on 9 expired passports in a safe. Some visas like the Israeli had been issued on a piece of paper, not on any of the passports.

With travel opening up in the last year, I have started traveling more outside the US, listening to global strategy experts, reading more books about regional trends. It is a brave new world, post-COVID and Ukraine crisis, where we need to balance curiosity versus the confidence that comes from previous experiences.

Lots of change – and even more noise

What is particularly striking is the plethora of bold commentary you hear. COVID driven travel restrictions and supply chain chaos have led to the “collapse of globalization”, many say. The Ukraine war related energy crisis has led to terms like “deindustrialization of Germany”. Political rancor and large deficit spending in the US is leading to terms like “dedollarisation” – spelled with an “s” it suggests an even more imminent US decline. China’s one child policy has left it with a dead-end in the form of an aging, noncompetitive workforce, others say.  BREXIT, many say, signals the end of the UK.

MNCs like Shell have long had internal analysts which shape their global strategies – in their case, “Scenario groups” have been looking at global trends since the early 70s, when the OPEC oil shock took much of the world by surprise. Their team, their website says, has expertise in fields like “economics, politics, energy analysis, climate policy, socio-cultural change and competitive intelligence.”

Other MNCs leverage think tanks and geopolitical analysts (similar in some ways to us technology market analysts) like Ian Bremmer of Eurasia, Shaun Rein of China Market Research Group and Peter Zaihen among others. There is a ton of global intelligence available – demographic, industrial, energy, agricultural, climate and other data, military assets, political trajectory etc.

When you read the cross-currents across this mountain of data, most individual projections tend to be overly simplistic. Incumbent powerhouses, be they corporations or countries, rarely just roll over and die. They decline slowly and, in many cases, bounce back. Japan has started to grow nicely after a couple of decades of relative stagnation. Most companies have also become way more agile post-COVID and Ukraine. German industrial companies have moved aggressively away from Russian gas with moves to gas from other countries, to metallurgical coal, to their lignite and increasingly a focus on hydrogen as a fuel. The 2023 Fortune Global 500 list shows the power of incumbency – “The companies’ revenue adds up to more than a third of the world’s GDP. And 68% of that revenue is concentrated in companies in Japan. Greater China (including Taiwan), and the U.S.”

A wave of “re-globalization” – a gradual realignment

MNCs are not static. I am seeing more reallocation of resources across countries than I have ever seen before. Supply chains are moving to “China+1”. Sanctions against Russia have forced even more sourcing diversity for fuel, fertilizers, minerals and other commodities. High inflation in places like Argentina is causing a move to neighbors.   

Emerging economies are generating their own MNCs. In fact, Saudi Aramco barely missed being ranked number 1 on the Fortune Global 500 list – only $7 billion less revenues than Walmart which has held that rank for a decade. Companies from other rapidly growing economies – India, Indonesia, Nigeria, Brazil among them are joining the next wave of MNCs – servicing their own large markets and focusing on markets western companies have traditionally neglected

There is also a surge in digitally savvy governments. Assisted by proliferation of mobile technology and hyperscaler clouds, entrepreneurs and SMEs in places like Kenya and Estonia are flourishing. We are seeing more real-time digital tax compliance, digital citizen services and other innovation in the public sector around the world. Many governments see AI as a strategic investment focus.

An exciting time for technology vendors

We have come a long way from the time when “two-tier ERP” meant global subsidiaries were on very different software on LANs and AS/400s versus those at the HQ. We have moved to a world of hyperscalers like MS Azure, AWS and Google Cloud which have democratized DevOps across the world. We have moved to a world where Eva Zauke of SAP talks about “585 local versions (including support for payroll processing in 104 countries) as it supports 200+ million users at 440k customers worldwide.” At a smaller scale – both functionally and regionally – vendors like Zoho and Papaya Global are allowing SMEs to think beyond their borders. In the next wave of AI and ML, operational data needed to train machines will be increasingly localized and verticalized.

Not every vendor is keeping pace. It will take the investments the hyperscalers have made with presence in most major markets while meeting local data protection guidelines. It will take localization like SAP has done across so many country tax regimes, currencies and languages.

Here’s why every vendor needs to re-think global opportunity. Forget all the glib talk and simple projections. There are vibrant markets around the world. Someone else will step up to service them if you don’t.  

Time for lots more curiosity and yes, the confidence which comes from new investments and customer validation. much more than previous experiences.

Fall research agenda

As summer comes to an end – never feels that way in Florida, but I digress – I am looking forward to a packed Fall. Have two big projects, several industry events, a list of video recordings and other items to juggle on the agenda.

Some major goals – in line with the on-going research agenda I shared earlier in the year here, where I said we are seeing a pivot in the software industry

Enterprise AI

AI and ML have been evolving for decades. I hope to hear from vendors about all branches of AI, not just Generative AI. We all heard endless talk about GenAI in the first half of the year. We also heard why vendors believe they are entitled to premium pricing. I want to hear about specific and hopefully differentiated use cases to justify those premiums. Also, examples of customer payback and ROI for that premium.  There is so much talk about “ethical AI”. My definition is I want more candor about how much data volumes vendors are training their machines with. And how they have handled the thorny issues of customer permissions and GDPR compliance around such data. What audit trails and other risk mitigation they are providing their customers around the AI results. In other words, much more detailed conversations at a use case, not just a conceptual, level.

Verticalization and Globalization

Vinnie Vertical is always prodding vendors to showcase what they are doing around industry specific operational applications, especially at the edge of massively changed industries. That’s not changing. However, the shocks of the last few years did not merely transform industries, they have shaken up whole countries. In my travels this year, I have seen seismic changes across many of them. I am pushing vendors to showcase how their MNC customer base has evolved and also what they are doing around rapidly emerging economies. And how their AI training data and use cases are becoming richer as a result of more vertical and global data.

Hope you have had as enjoyable a summer as I have had. Time to look forward to an exciting Fall. We are squarely in the midst of a pivot in the industry.  

Enterprise Software: Don’t stop thinking about tomorrow!

In my role as industry analyst, I have always pushed vendors to look ahead, rethink what they had in their bags over 5 years old and to cannibalize legacy revenues. Especially after the turmoil of the last few years. No industry or country has come out unscathed from the recent shocks of COVID, the Ukraine crisis, increasing climate change urgency and massive digital transformations. No surprise, as I wrote here, we are tracking 4 large software and services markets – hundreds of vertical “edge” applications, applications for fast-growing global economies, custom development using low and no-code tools and Generative and other AI.  

So imagine my surprise when I got from DSAG (the German speaking SAP user group) an email which led off with

“At SAP's annual press conference on July 20, 2023, Christian Klein, CEO and member of the Executive Board, announced that SAP's latest innovations would only be available in the cloud. Specifically, they are to be accessible only to customers using SAP S/4HANA Cloud, Public Edition or SAP S/4HANA Cloud, Private Edition via GROW-with-SAP or RISE-with-SAP contracts. This does not mean that on-premise solutions in general will not be functionally enhanced. But on-premise customers cannot, for example, benefit from major innovations such as artificial intelligence (AI) and green ledger. This also applies to larger function modules and extensions based on the Business Technology Platform (BTP). At the same time, SAP plans to increase maintenance fees. From the point of view of the German-speaking SAP User Group (DSAG), SAP is leaving numerous loyal customer companies in the lurch with this approach.”

And of course, several bloggers and journalists have piled on top of the DSAG reaction.

Huh? By our research benchmarks, SAP is one of the few vendors to have kept expanding its portfolio of vertical edge applications and global functionality. Try finding anything close with its on-prem or cloud competitors. In fact without the vertical and global functionality these vendor’s AI talk runs a huge risk – their machines and LLMs will mostly have access to what will increasingly be commoditized back office data. The next battle field will be around operational data, highly verticalized and regionalized.  BTW, AI will be lot easier in the enterprise as cloud data grows along with customer permissions – today, it is mostly squirreled away in proprietary data centers – highly fragmented and not easy to train machines with.

User groups play a very useful role in our industry and DSAG has faithfully represented the voice of the customer, especially mid-market ones in Europe, but this commentary sounded like Rip Van Winkle waking up, shocked after a long slumber. The enterprise world has been moving to the cloud for 3 decades now, and contrary to industry myth, SAP and its customers have been a major force in this transition. Some data points:

1. In my 2014 book, SAP Nation, I pointed out one of the most common strategies at many SAP customers was to “ring-fence” core ECC functionality with cloud solutions – 10, 20, 50 of them.
2. SAP, under Bill McDermott, Rob Enslin et al acquired a number of cloud properties in the HCM, procurement and CRM areas. The Ariba and Concur acquisitions have created one of the largest business networks in the industry – which SAP is increasingly verticalizing to include direct material suppliers. You think continuing to expand ECC or even S/4HANA would have easily accomplished that?
3. SAP has been delivering vertical edge applications in the cloud – intelligent returns around eCommerce, cell and gen therapy orchestration in healthcare, e-mobility and EV charge point billing for auto and utilities sectors among others
4. Countless customers are taking advantage of hyperscaler clouds as part of signing up for RISE with SAP.
5. In my 2019 book, SAP Nation 3,0, we had discussed the growing emphasis on cloud functionality and increasing talent challenges recruiting and retaining ECC and on-prem talent. Holger Mueller of Constellation had looked ahead and asked “Do you want to be in 2030…with an ERP system that cannot run machine learning, which does not have a good IOT story and so on?”

So, not sure I understand the DSAG surprise about Christian’s comment given all these signals going back so long.

About SAP’s economics – no CIO I have worked with pays full list price. There is no single enterprise software price point. Given SAP’s vertical investments and country presence it has a dominant position in many segments and can demand a premium. In many other segments it will not be able to do so. It has a very capable Value Advisory team which will have to help it justify its pricing.  I may be off base, but I don’t see a repeat of the customer pushback to maintenance price increases in 2008. That was boneheaded in the middle of a recession. This is aspirational and each customer will do their own value analysis and in case of AI, I am already seeing plenty of risk mitigation being factored in ROI assessments.

Not just picking on DSAG, I am also increasingly impatient with industry analysts. As I wrote a few weeks ago “I go to too many events where we still use dated TLAs (I admit I coined some of them in the mid-90s at Gartner). Two flagrant ones are ERP and CRM. Research firms have armies of analysts who still create Magic Quadrants, Waves and other tools around those TLAs and they parachute in droves to industry events. Worse, vendors spend months responding to questionnaires from these analysts to justify microscopic changes in their annual scorecards.” And “Let’s get away from umbrella, fossilized terms. Let’s talk the language of today’s business.”    

Every customer decides its own technology footprint and path. For many staying with the true and tested is the best path. But let’s not shackle our vendors to that past. Let’s push them to keep thinking about the future. The world has changed dramatically in the last few years and the pace of change will only accelerate.

Burning Platform: The urgency of thinking about Business as Unusual

In this special 97^th episode of Burning Platform, I invited Geoff Scott, CEO of ASUG to moderate a session with Peter Maier, who heads Strategic Customer Engagements in the Office of the CEO at SAP.

Geoff spends much of the time talking to Peter about his (and Thomas Saueressig) new book, Business as Unusual, that we helped research and write for them. Geoff keeps coming back to the theme of what CIOs and Enterprise Architects can learn from the book, and we provide plenty of reasons why it is worth their while to spend some time, not necessarily read the 300 page book from cover to cover.

No industry has come out unscathed from the recent shocks of COVID, the Ukraine crisis, increasing climate change urgency and massive digital transformations. The book represents across 8 megatrends the massive changes in sectors and countless new edge applications that have become viable, even essential in this changed world. And the book does so in the voice of many customer case studies and partner and analyst commentary.

The graph below shows the 8 megatrends and their relative impact on various industries SAP services

Geoff also probes if a future edition of the book will have more of focus on Generative AI. That leads to the discussion of the current excitement around the technology and the fact that we need a much broader focus on AI and ML for a number of operational applications across most industries.

I love Peter’s comment that he hopes the book encourages customer execs to challenge SAP to solve some of their most complex and unique industry challenges. He invites customers to visit him in Walldorf for a discussion and to pick up a signed copy of the book. He also regularly travels around the world and is very accessible.

An extremely invigorating 40 minute session. Thanks to Geoff for doing a very nice job moderating the flow.   

Burning Platform: A tour of enterprise software world in 30 minutes!

In the 96th episode of Burning Platform, we host John Wookey, a long time veteran of enterprise software world

John is one of the rare execs who has worked in a wide range of software and services companies which have defined the enterprise tech sector over the last few decades. He describes his role at Andersen (now Accenture), Ross Systems, Oracle, Salesforce and SAP. He has worked closely with some of the people who have shaped this industry including Larry Ellison, Marc Benioff, Hasso Plattner, Keith Block and Ken Ross. He has also had a chance to integrate and influence the trajectory of companies like Siebel and Concur after they were acquired.

So, it is not on overstatement to call John one of the best industry market analysts. It was an honor to have him on the show. We broadly cover 4 topics

1. How the next gen of applications will be “data-influenced” – Generative AI is giving vendors a chance to reimagine applications, but it is early days. We discuss challenges and adoption speed among other topics.
2. The verticalization opportunity for application vendors – he explains why vendors need to overcome their caution “ they feel it limits them. If you say you are going after financial services, then they're by default, not going after healthcare or retail. So in a way, I think they feel like by declaring that they actually are or in some ways limiting themselves in other markets. But you have to take that step for a couple of reasons. One is, I think your relevancy to customers in those industries grows tremendously. When you declare and you make that investment. Second, I think the even more important reason is, in order to build especially new types of products based on artificial intelligence and leveraging the data, you will not do that well if you don't have a deeper understanding of customers in those industries.”
3. The localization opportunity for applications. He describes his own experience helping Oracle prepare applications for the birth of the European Union early in the century. He also explains the balancing act “You may not have justification for (a country like Nigeria) as a standalone market. The question is, where the multinational companies you work with? What's their relative importance? And how much do you want to invest to make sure that they have the ability to operate in all the countries that are critical for them? So you're always kind of balancing those two things, the what is the organic (local) market? And then what's the support market you have from a multinational perspective?”
4. We discuss the service sector and why the business model is still so people dependent. John explains why it is so difficult to give up on existing business models. He cites the example of Concur. “At some point, the Singh brothers said, this isn't the future and their stock price took a hit for a couple of years. They made an incredibly courageous decision to shift to the cloud. And I think in the case of systems integrators, I think it will be the same thing. When someone new comes along and says we're going to be tied more to something more value based, something that's more objective outcome driven, as opposed to, you know, hours based, you know and think more about lifetime value of a customer. Until someone else does that and gets to scale, it'll be difficult for them to make that shift.”

Overall, I really enjoy John’s continued optimism and excitement for our sector

“We've always been trying to better approximate the businesses that we're supporting. How do we shape information in a way that makes them more successful. The job really hasn't changed in a lot of ways. It's continued to adapt and evolve, but ultimately, what we're really trying to do is help (customers) be more successful.”

Real honor to have John. I need to bring him back more often.

Watch the entire 30 minutes. He is a delightful font of wisdom. Decades of industry experience and close working with some of the industry’s best talent distilled into this conversation.

 

Burning Platform: Operational Excellence at Bergen Logistics using Zoho

In the 95th episode of Burning Platform, we host Keith Cooper, VP of Customer Experience at Bergen Logistics

This is a two-fer – an overview of Bergen and a discussion about how they have grown explosively and with all kinds of metrics with Zoho

Keith does a nice job (in about 10 minutes starting at 4.48) summarizing Bergen’s focus in the logistics world, particularly for the fashion/apparel sector (the “better-to-luxury” segment), how they have tripled in revenues over the last four years, how their acquisition by Elanders (of Sweden) opens up significant global opportunities, their warehouse management and other software that most of their customers utilize

What’s impressive about Keith is the constant thread of operational excellence. He has taken his continuous improvement mindset from the fulfillment world and applied it to his current role in customer service – terms like volume and velocity flow naturally

He talks about the journey with Zoho, how his staff keep discovering new applications in the Zoho One suite, his global expectations of Zoho, how he is starting to leverage their AI capabilities.  

We then spend some time talking more broadly about AI and use cases which excite him both in the CRM and transportation management areas.

Two very competent and fast growing entities – Bergen and Zoho. Real pleasure to have Keith cover so much ground in about half an hour.

5 goals for the next 5 years

I am about to hit several career milestones – 20 years of Deal Architect, 30 years since I was at Gartner and we coined TLAs like ERP, 40 years since I first implemented a packaged application – they were called COTS back then. So naturally, people ask me or at least wonder if I have plans to retire or in reverse, try to keep up with Ray Wang’s travel schedule😊  After 6+ million airmiles, 3000+ hotel nights, 500+ car rentals across 75 countries, 9 books, 12000+ blog posts, 500+ video episodes, hundreds of advisory projects, countless industry events the body has its fair share of scars. The good news is I have several months of sabbatical time accrued and I could take a month off each year if I chose to.

The reality is I am unbelievably excited about new opportunities in the industry. As I wrote here, we are tracking 4 large software and services markets – hundreds of vertical “edge” applications, applications for fast-growing global economies, custom development using low and no-code tools and Generative and other AI.  

So I have just committed to 5 more years at Deal Architect – actually 3 with an option to extend another 2. I have seen the industry grow through countless architectural shifts. Don’t want to miss the next AI and network driven shift.

Having shared my excitement, let me also share one of my concerns. Some of you have heard me say “when I started my career, companies mostly built, not bought, enterprise applications. It’s been a glorious phase for buying v building. By the time I end my career, I hope the pendulum has not sharply swung back to building”

To make sure it does not end that way, I have set (actually refined) 5 goals to help, in a small way, shape the industry trajectory

Re-imagine business processes

Some of you have heard me say that if Bezos had run a RFP for software for Amazon’s fulfillment centers, he would have ended up with a traditional WMS which had been migrated to the cloud. And they would have likely needed 10x the workforce to fulfill the massive scale of orders they have grown to. Instead, as I wrote here after a tour of one of the centers, Amazon completely re-imagined the old warehouse pick, pack, ship mindset. It's now stow, pick, pack, verify, and in their lingo, SLAM and "chaotic storage". Kiva robots and miles of conveyor belts bring work to employees, not the other way round. Scanners, scales, sensors monitor and facilitate the worker - what size box to assemble, cut right length of packing tape, apply shipping labels etc.  Ditto for BMW’s global SUV manufacturing plant in S. Carolina, Uber’s ride share app, Rolls-Royce Aerospace’s “Power by the Hour” and many others who rethought traditional processes and business models.

The enterprise software industry has been blessed with brilliant architects – Ellison, Plattner, Harris, Chakraborty among them. It has lagged in a similar balance in process visionaries. Its service partners are better at implementing applications as delivered, not leveraged to re-imagining the process flow and UX in the first place. The good news is Gen AI is allowing the industry to rethink applications. But that’s necessary, not sufficient. Software alone cannot eat the world. Robotics, scanners, satellites, drones, sensors, mobile phones all need to be factored. A blend of digital and physical is necessary to re-imagine ecommerce returns, EV battery infrastructure management, telemedicine and many “newer” applications which have become essential in the last few years. The West can also learn from new digital processes and massive scale of mobile technology in markets like China, India and Kenya among others – see some thoughts from Thomas Otter of Acadian Ventures in the Burning Platform episode. 

The increased focus on AI is also highlighting how little enterprise data we actually have in vendor clouds especially that with customer permissions to train machines. Too many vendors glibly talk about how they will leverage “someone else’s” industry or regional data.  It will be a lot easier to re-think and broaden their own process coverage and harvest data that way.

Retire decades-old terms

I go to too many events where we still use dated TLAs (I admit I coined some of them in the mid-90s at Gartner). Two flagrant ones are ERP and CRM. Research firms have armies of analysts who still create Magic Quadrants, Waves and other tools around those TLAs and they parachute in droves to industry events. Worse, vendors spend months responding to questionnaires from these analysts to justify microscopic changes in their annual scorecards.  

We knew this risk at Gartner way back in 1995. We coined an umbrella term, ERP but knew that was a long-term path for customers not a one-time buy.  Analysts were organized by categories of buying centers  - AAS for Administrative Applications, ILS for Logistics, CIM for Manufacturing etc. If anything, we were already issuing warnings that the so called ERP solutions in the market were not really that enterprise wide and you needed to plan for a whole new category of CRM, EAM and other capabilities. In the two decades we should have coined hundreds of new categories – instead we keep using tired old acronyms.

Consumer Reports has an annual New Car issue where they nicely summarize details and scores of 300+ new, not 20 year old, makes and models. Still, do you buy the issue every year? No, you likely only do so in the year when you are in the market for a new vehicle.

It’s the same thing with analyst tools. Buyers look at them when they are in the market for a new piece of software. Oh, once every 20 years. And many have bought into the concept of “composable architectures” – they buy individual pieces of software, not complete suites, to reflect changing business needs.

 I wrote a few years ago:

a) Buyers intently look at such market assessments when they are in purchase mode. Once they move to implementation or steady state, their interest in the next MQ drops dramatically. I think that painful realization came to me in my 3rd year at Gartner.

b) In contrast vendors, especially their AR groups, intently follow each version of the MQ and lobby analysts and create a buzz around each version where they are favorably positioned.

c) Even in evaluation mode, the MQ or Wave is only one (small) influencer. Most buyers go through RFP responses, demos, reference checks, site visits, negotiations in their decision process. Many often find individual calls with the analyst who produced the MQ far more useful than the document itself.

Let’s get away from umbrella, fossilized terms. Let’s talk the language of today’s business.

Prioritize the real influencers – customers

Some of you have heard me say "In the 70s buyers turned to IBM for advice. In the 80s Andersen. In the 90s Gartner. More recently even to Wall Street for guidance. Increasingly, they turn to each other."

Over the last decade, I have been proud to be associated through my blogs and videos with a new generation of market watchers at Constellation, Diginomica, HfS, Redmonk and others. Each has been innovative presenting market trends; however, they mostly summarize vendor perspectives.

We have our fair share of customer contact through advisory projects, book case studies and many other formats we do not publicly share, but one of my goals is to increase focus on that signal source even more going forward.

Rethink ecosystems and economics

For too long, the industry definition of ecosystem has focused on implementation partners and systems integrators and more recently, hyperscalers.  A contemporary definition should also include strategy firms, automation vendors (to cover robotics, drones, autonomous vehicles etc), vertical and regional specialists and research firms, startups and more.

The other focus in ecosystems should be on dramatically shrinking the labor component. Migrations and upgrades are still too expensive, lengthy and low quality because we have not automated many repetitive steps. I am brimming with ideas including use of LLMs to ingest test scripts, data conversion code, training materials and other artifacts from 000s of ERP, CRM and other projects we have done over the last few decades. No need to reinvent the wheel at each project.  I will admit I don’t know how to convince service providers that there is an alternative business model to selling school buses filled with consultants.

Return to Polymath thinking

In 2010, I wrote The New Polymath – I defined it as “an enterprise that excels in multiple technologies—infotech, cleantech, healthtech, and other tech—and leverages multiple talent pools to create new medicine, new energy, and new algorithms.” Most of our books since focused primarily on infotech. Last year I had a chance for help two SAP executives write “Business as Unusual”. Guess what? It was also about new medicine, new energy and new algorithms. I thoroughly enjoyed the experience and refreshing my STEM education by opening up biology, geology and other science textbooks. I expect to do more of that over the next 5 years. If my wife lets me, I may even use the sabbatical time for that😊

The Deal Architect backgrounder describes us

“Deal Architect was founded in 2004 by a former Gartner analyst and PwC consultant. He had worked for 2 decades at those companies in multiple global locations. Each firm had its own competence, but many clients wanted a combination. That led to his philosophy that technology advice and research should be symbiotic - advisory clients should benefit from our research, and our readers should benefit from the practical, field feedback from our clients. Additionally. the advice and content should be ahead of the market and be global, not parochial. For two decades now, we have not strayed from that vision.”

We intend to continue to follow the course.

Of course, every few years, tech vendor leadership changes. Too many vendors miss out on large new markets. IBM and HP allowed rank outsiders with little data center experience like Amazon and Microsoft to dominate the hyperscaler market. Indian IT outsourcers missed out on the much larger contract manufacturing market to the Chinese. CRM vendors lost the digital marketing market to Google and Meta.

Someone will rise to dominate the markets I highlighted at the start. Will it be the incumbents or newcomers? I am putting in my request for a front row seat to watch that play out for the next 5 years.

Burning Platform: The changing “world” of work

In the 94th episode of Burning Platform, we host Thomas Otter of Acadian Ventures

Thomas talks about their HCM startup investments across 17 countries. As he says 3.3 billion people go to work every day – most of them in emerging economies. Not only do they represent a significant market opportunity, we can also learn from them – as in innovative use and massive scale of mobile/SMS technologies in some of these markets.

He emphasizes democratization in terms of access to platforms. “So, 15 years ago, if you were trying to build a software company in Africa, in, say, Kenya, you needed to find a data center, you needed to support the infrastructure and that was really difficult whereas today you've got a choice in Nairobi, between AWS, Azure and Google. The developer in Kenya, has access today to the same coding environments, the same infrastructures, the same technologies that a developer anywhere in the world has access to, so that boundary is now gone. You can build great software anywhere in the world.”

He discusses a slew of use cases serviced by their portfolio of startups. Some of the ones he mentions in the conversation include

• Worky, Mexico City, Mexico
• Techwolf, Ghent, Belgium
• AG5, Amsterdam, The Netherlands
• Figures, Paris, France
• Fifty, Paris, France
• Brio HR,  Malaysia / Singapore
• Palm HR,  Riyadh, Saudi Arabia
• Workpay, Nairobi Kenya
• Arist  remote USA
• Compa  remote USA
• Holiva, Marseilles, France

He also describes how by leveraging other VCs like Workday Ventures and accelerators like SAP.iO Foundries, his relatively small fund manages to have such a global reach.

Fascinating conversation about the changing “world” of work in about 35 minutes.

Analyst Cam: SAP - Farm to Consume Walkthrough

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

Most vendors have software demos as part of their events. SAP has taken that up a notch by blending the digital with the physical world. They showcase robotics, sensors and other physical world technologies in the many experience centers Sven Denecken had described in this episode.

Last year at Sapphire, the show floor had the Trilogy fashion/apparel demo company on the show floor which showcased next-gen tech for product innovation, sustainability, robotic manufacturing and retail experiences.

This year they went much further and actually served 25,000 helpings of (real) ice cream to attendees while showing off the Farm to Consume process flow.

I invited Andre Bechtold architect of the setting and other similar experiences to present. He has a 4 minute video of the show floor in Orlando then double clicks into the Farm-Source-Make-Deliver-Consume flow across agribusiness, CPG, logistics, retail and other industries. 

Andre also talks about a similar setting he is working on which simulates the energy-mobility sector convergence around EV charging. He also discusses the investment and logistics of repeating the experience in 3 consecutive weeks of Sapphire in Orlando, Barcelona and Sao Paolo.

Very nicely done in about 30 minutes - he makes the setting look so easy - took lots of coordination across partners, technologies and locations. Brings to life the art of the possible to re-imagine business processes in the midst of industry convergence.

Analyst Cam: SAP – Industry Convergence Perspectives

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Sven Denecken, Chief Marketing and Solutions Officer for SAP Industries and Customer Experience. I had enjoyed his session on Industry Convergence at Sapphire last month and invited him to present an adapted version for this series. My write up from Sapphire is linked here

He discusses some of their research around industries creeping into each other’s turf including an extensive analysis of the SEC database for shifting industry density. He drills into the Farm to Consume process flow which was brought to life at the Sapphire show floor – bringing out SAP’s strong agribusiness, commodity trading, CPG, sustainability, traceability and supply chain credentials. He also describes the convergence of utilities and oil and gas sectors and the growing influence of retail and entertainment as EV charging opens up opportunities for new consumer experiences.

He describes four new Industry Networks – industrial manufacturing, life sciences, consumer products and high-tech - which plan to leverage progress over last couple of years in the automotive Catena-X network. These take SAP beyond networks of indirect materials like Ariba and Concur into tiers of direct suppliers.

Sven covers much more – Business AI around vertical operational data, two-tier ERP to transfer industry configurations from western markets to emerging economies, sustainability applications across industries including the Green Ledger announced at Sapphire, and Experience Centers across the world which increasingly bringing to life “the art of the possible” with SAP and partner applications, robotics and sensors    

All that in around 25 minutes. I have invited Andre Bechtold from his team to present more on the Farm to Consume show floor and invited Sven back to drill down into many of the topics he quickly presented.

Vinnie Vertical is always energized after such industry focused sessions!

Analyst Cam: WorkSpan Ecosystem Cloud

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Chip Rodgers, Chief Partner Officer at WorkSpan. He describes how enterprise technology has evolved over the last couple of decades especially as we have moved to a cloud, API first world and a co-selling model.

Chip provides an example of the complexity of today’s deals.

"Think of an example like SAP, working with Accenture or Wipro. And deploying it all in the cloud on Google or in Azure. Maybe there's some technology in there, or there's a specific industry solution. Most deals have three, four or sometimes six or seven partners working together. And by the way, each of those partners has their own technology, their own solution, their own deal, and likely some subcontractors. Everybody's got their own CRM so how do you coordinate that co- selling effort and leverage the best of each of the players that are participating?”

Their solution covers collaboration across various marketing, sales, and other activities across partner cohorts.

WorkSpan has grown nicely in the last few years and claims $50 billion in joint pipeline value across vendor ecosystems

Chip explains all that and more in about 20 minutes – very nicely done.

Burning Platform: Global Payroll and HCM trends for a turbulent world

In the 93^rd episode of Burning Platform, we host Pete Tiliakos of GxT Advisors and Brent Skinner of 3Sixty Insights

One of the Deal Architect research agenda items is the rapidly changing global landscape for business and impact on enterprise software and processes.  Pete and Brent bring a HCM lens to major global trends.

We discuss UKG’s acquisition of immedis (Pete’s more detailed commentary is here) we cover EOR, payroll and benefits managed services, and cloud software available to customers. We other global players like SAP, Workday, ADP, Ceridian and Papaya Global among others

We discuss what it means to be a “multinational company” these  days. You don’t have to be a F500 company  – even startups are born global. And as I have written earlier, MNCs are shifting country commitments at an unusually fast pace – some due to embargoes, others to escape high inflation, still others to balance out their global supply chains.

We discuss fast-growing emerging economies which look poised to grow quicker than the Western world over the next decade. They will be major software markets with unique functionality, language requirements and different price points.

We just scratched the surface in this 32 minute episode. Will be good to bring the two of them back on a regular basis for updates. As I like to say, there will be plenty of churn in the turbulent world we find ourselves in.

Burning Platform: Business as Unusual for HCM

In the 92nd episode of Burning Platform, we host Meg Bear, President and Chief Product Officer for SAP SuccessFactors and Trish Steed, co-founder of H3HR Advisors, both longtime influencers of the world of work and workplaces

My team recently helped two SAP executives explore the impact of 4 major shocks – COVID, Ukraine crisis, climate change urgency and massive digital transformations on several industries and the resulting vertical “edge” applications which have emerged. The results were presented in a book titled “Business as Unusual with SAP” – the badge on left links to the Amazon page.

Did we naively believe the shocks would slow down or that the HCM function would be exempt from them?

Meg, Trish and I explore 2 macro trends - back to office mandates and re-balancing of employee, investor, consumer, other stakeholder voices and 2 exciting new technologies - Generative AI and Apple Vision Pro and their impact in the workplace.

We start with a discussion of work locations. Work from home, celebrated at the start of COVID is now being litigated in just about every workplace. Trish holds out hope we will not swing the pendulum all the way back. She quotes Pew Research which estimated in early 2020 at the start of COVID about 23% of people worked remotely. By October 2020, the number was up to 71%. In January of 2022, it was down to about 59. Will we go all the way back to 23% or settle at around 50%?

We then talk about Generative AI. Meg nicely summarizes we are going through an overabundance of both enthusiasm and fear and uncertainty. She talks about SAP’s announcements at Sapphire last month (see my commentary about the event here).  Meg comments “AI is really about augmentation of what we as humans can do. It will change how we spend our days, that creates real opportunities for each of us to kind of re-imagine how we bring value to work, and how work brings value to us.”

We next talk about Apple’s recent release of its mixed-reality Vision Pro headset. We discuss fun uses in our personal lives and likely work use cases. We also discuss how it will play in a world where we are pondering the appropriate mix of remote v office work.  We pause to wonder about eye fatigue most of us experienced over the last couple of years.

Next, we discuss the seesaw where HCM is pivoting toward focus on worker productivity and less on DEI and other topics which got more focus in recent years. Meg and Trish both comment that DEI needs continued maturation with the reality check that the voice of the shareholder, and especially of the consumer is as important as that of the employee.

No easy answers but continued change for HCM executives. It will be good for them to also adopt the “Business as Unusual” mindset.  Meg and Trish do a great job covering a lot of ground in 35 minutes. We will have them back for more - we just scratched the surface!

 

Apple Vision Pro: Drooling v Doing

Over the last few days, I have drooled plenty as I have watched videos and reviews of Vision Pro and Apple’s new era of spatial computing.

Personally I would love it as my virtual “IMAX theater”, as a HUD in a vehicle, as my companion on long flights.

But I am especially drooling as I see how far we have come since I was one of Gartner’s first remote analysts starting in 1995. The technology I had back then was-a-hand me down Apple laptop, a first-gen HP multi-function printer, and an additional phone line to support 14.4K baud digital communications. So, I am thinking ahead to the next decade as this device scales down to (even) more portable form-factors, longer battery life, and more affordable pricing and of course far speedier connectivity, especially on the road and in the air.

And a lot more enterprise use cases. I can see plenty of mixed reality applications in field service, on-boarding, training and other enterprise areas but I would like to see it enable even broader white collar collaboration.

Two reasons to pause:

Having spent inordinate time on video channels the last 3 years I worry about even more eye fatigue. Being so dependent on eye tracking, Apple wants eyeglass wearers to take them off and use Zeiss optical inserts for optimal performance with the new device. Interesting that Apple has simultaneously focused on digital eye strain in the iOS17 Health Feature set.

The launch comes smack-dab in the middle of an attempt by a number of employers to re-balance the hybrid workforce mix to encourage more in-person interaction. I have a feeling if Apple had this available in 2020, lots more of us would be using it and FaceTime compared to Teams or Zoom on laptops and mobile devices.  

Back to my 1995 experience. Gartner was not exactly visionary with their decision to allow my cohort to work remotely. The stubborn fact is none of us was keen to relocate to HQ in Stamford, CT. Instead, I had to commit to relocate to a compromise location, Atlanta, within 12 months. I spent most of the first few months commuting to HQ learning the ropes. However, Gartner was a smart organization with tons of data. They could measure analyst productivity seven days to Sunday – number of client query calls, number of pages of new content generated, new presentation slides created etc. As part of my 6-month review they had enough data to see our remote cohort was off the charts in productivity and they listened to that data and told me to stay put in Tampa. As my boss told me “I can put the relocation budget to better use.” In the three decades since, while Gartner’s competitors stubbornly stuck to relocation policies, Gartner made remote work part of its culture, and expanded it to international recruiting and other talent sourcing.

I hope more companies who are mandating back to work are similarly smart about metering the hybrid-work mix and not just letting real estate economics and management egos drive the in-person time.  And one smart technique for them will be to invest in Vision Pro pilot project. They need to see if they can get their productivity which should balance out commute time, family demands and other reasons staff prefer to work at remote locations. That will need a lot of metering and a lot of technology. Honestly, it is a shame that few HCM groups have evolved their talent metering over the 30 years since Gartner showed it could be done to measure a high-functioning, white collar role. Now is a good time, and Vision Pro could be an enabler.

And by the way, my experience at Gartner was a stark contrast to my previous experience at PwC which was was more of "drop everything and meet a client in person" culture. I have learned to work from anywhere - in an aisle seat, at a Starbucks, at hotels, at events. Six million air miles on Delta and others , over 1800 Marriott and 1500 elsewhere nights, over 500 Avis car rentals, visas from over 75 countries are proof of that.

Today's younger workers need to be similarly flexible. It is frustrating to see intransigent bosses and employees tussling over where and how to get work done.  Just do it - ffs!

 

Generative AI – my next book?

I shared in this post that our research agenda is tracking four large software and services markets – vertical “edge” applications, applications for fast-growing global economies, custom development using low and no-code tools and Generative and other AI.

The interest and noise around Generative AI is off the charts. In my long career in technology, other than the Y2K scare, nothing else has generated this much attention, so quickly. Much of it is coming from:

• Investors – NVIDIA’s blowout quarter and ChatGPT’s eye popping user growth have woken up capital markets after the funk about tech in the last couple of years
• Chicken Littles – many in the media who thrive on anxiety are busy projecting massive job losses from the AI automation
• Politicians – who are never afraid to meddle are fascinated with the opportunity of regulating the new wave of “prompt gurus”

Enterprise Gen AI will be a major focus in one of my coming books. That I can say with some confidence. But in my very next one? Not so sure. My books are full of case studies and use cases, and the early Gen AI ones I have heard about in enterprise settings are still not that compelling. Maybe because they are still early in their deployment, and teams are acutely conscious of “hallucinations” and inadequate audit trails, potential loss of control over their data and IP. In some cases, they will end up with competitive offerings and they don't want to show their cards too early. Vendors, in turn, are being cautious of use cases they promise because they realize the vertical operational data (that will generate the best business payback) is locked up in customer data centers, not in their clouds. Besides, many don’t have explicit customer permissions to use their data to train machines.

I must add that just a few short years ago, I conducted a comprehensive look on automation (robotics, AI, drones, exoskeletons, autonomous vehicles etc across 50 industry settings) for my book, Silicon Collar. It covered over a century of UPC scanners, ATM machines, driver assistance, AI and other technologies.  I summarized the findings in this Strategy+Business article and concluded “History shows that new technologies evolve faster than society adopts them.”

In the years since, COVID, Ukraine, climate change and massive digital transformations have turned every industry and country upside down. That is brought out vividly in the new book, we helped SAP executives write titled Business as Unusual.

In this changed world, perhaps Gen AI will have a more rapid impact on businesses. That’s why I am eager to learn about a variety of use cases across industries, business processes and countries. Not just in the back office, also customer facing, product creation, supply chain and vertical operational areas

All this will be sorted out – but it will will take some quarters, not mere weeks.  

As Sayan Chakraborty, Co-President of Workday pointed out in his presentation at their AI and ML Innovation Summit in March we have been in a long “AI Winter”.

I am looking forward to the "AI Spring" and writing that book.

Burning Platform: Inflection Time for Enterprise Software

In the 91st episode of Burning Platform, we host Tim Crawford, founder of the research and advisory firm, AVOA. Tim has served as CIO and in senior IT roles with many organizations and brings that pragmatism to his market research.

The conversation broadly covers 4 areas – macro business and IT trends, the buzz around Generative AI, feedback about SAP Sapphire in Orlando that we both attended and round it off with what Tim calls “modernization of the enterprise”.    

Tim covers macro-economic trends and impact on IT budgets and which projects are getting greenlighted. I talk about vertical edge opportunities and emerging global opportunities I am seeing.

On Gen AI, we have a spirited discussion. Tim thinks we have sufficient enterprise data, and actually will do better with targeted data. I say vendor data is often stuck in customer data centers, and that which is in their public clouds, they don’t have enough customer permissions to use to train their machines. We discuss use cases we have seen and “guard-rails” we will need as usage increases. The technology is evolving at warp speed and it will be nice to bring him back in a few weeks to do another gut check.

We then discuss Sapphire. Again, we saw very different things. Not surprisingly there was a lot to unpack with so many product announcements. BTW, I wrote a long note about Sapphire here. https://bit.ly/3Wwlgzb

We finish off with “modernizing the enterprise” and we discuss the role of ERP in that.

It is a longer than the usual episode, but you will find it moves along rapidly and Tim and I bring out a number of varied perspectives on economic and technological fronts.

“Back to the Future” at SAP Sapphire

I skipped SAP Sapphire Celebration night at Universal Studios last week. One of the reasons was that park no longer has the Back to the Future ride. Besides, I got plenty of the juxtaposition of the past, present and future at the event.

On Day 0– the analyst track day that a few of us were invited to, I thought the feel was retro. Julia White, CMO and her team have spent a lot of effort on the new SAP.com site. It is uncluttered, crisp and pleasant and provides a nice index to its portfolio of hundreds of solutions. However,  the jargon on the home page jumped out – ERP, CRM, SCM, HCM. Those are acronyms that my colleagues and I at Gartner had coined in the 1990s. A disproportionate majority of attendees for that track wore Gartner, IDC, Forrester name badges and they keep reinforcing those acronyms with their MQs and Marketscapes. The signage on the show floor magnified those terms in large font. We were given a series of media announcements – under embargo. It all felt very 90s for an event which was themed “future-proof”.

It got better – I knew it would. Clare Henry in Julia’s team had given us a sneak preview of the event. In her session on the day, Julia had given us a preview of CEO Christian Klein’s kickoff keynote and promised it would focus more broadly on enterprise buying centers and sure enough it did.

Some of you have heard me say a switch went off in 2019 and we have seen 4 major (I estimate they will get to over a trillion in TAM each) application markets open up – I had written about them here. COVID, the Ukraine crisis, climate change urgency and massive digital transformations have turned every industry and geography upside down. That is allowing for a new breed of vertical edge and regional applications. Now low/no code tools for domain experts and excitement about Generative AI are morphing the market even more.

You have also heard me say I am increasingly impatient with vendors who just try to spray paint what they had in the bag in 2019.

Sure enough, S/4HANA got plenty of play at Sapphire, with new variants of RISE and GROW. S/4 adoption is finally accelerating – I had predicted it would take a few years to do so in my 2015 book, SAP Nation 2.0 ( I had also compared that to slow maturing and adoption of Oracle, Microsoft, Infor next-gen ERP). 

There was a lot of pleading about keeping the “core clean”. Christian shared a visit with a customer who had lifted and shifted their heavily customized system to the S/4 cloud and added new customizations and ended up with a 30X implementation to software ratio. Walking around the partner booths there was plenty of similar migration project talk.  

So, how do I benchmark SAP in those 4 emerging markets after what I heard at this Sapphire?

Vertical Edge applications

SAP had a head start here. My team helped Thomas Saueressig and Peter Maier research and write the Business as Unusual book and I ran a session with Peter at Sapphire. We discussed many of the “megatrends” in the book and the impact on various industries and the emergence of vertical edge applications like intelligent eCommerce returns and EV charging management and billing. We presented the slide below and several others – you can download them here.

In the Integrated Mobility chapter we had talked about the Catena-X auto industry network that SAP is part of. SAP has been evolving its experience around Ariba, Fieldglass, Concur and related indirect expenses and materials into networks which touch on direct materials and tier 1 and lower suppliers. In his keynote, Christian introduced similar plans for 4 other sectors – Industrial Manufacturing, Life Sciences, High Tech and CPG.

Sven Denecken’s session was about “Industry Convergence” and he presented on verticalized CX with examples from Retail, CPG, Automotive and Utilities. His session provided more context to the Farm to Consume show floor where SAP and partners showcased various applications, robotics and sensors with use cases from agribusiness all the way to retail.

Talking of industry convergence, I spent some time with Daniela Sellmann who talked about how Utilities and Energy sectors are blending.

I can confidently say SAP is the most verticalized of the enterprise applications vendors. But I have seen plenty of that with the time I spent with its industry experts as part of the book process. SAP would do well to expose more of that internal talent and industry specific partners at such events – and also invite more industry specific media and analysts

Emerging economies

I spent a month in India earlier this year. The energy and momentum is palpable. More importantly I heard people talking about new trading partners in the Middle East, Indonesia, Nigeria etc. These emerging economies look poised to grow quicker than the Western world over the next decade. They will be major software markets with unique functionality, language requirements and different price points.

Eva Zauke had presented on SAP’s localization efforts in this Analyst Cam episode – SAP has 585 local versions (including support for payroll processing in 104 countries) as it supports 200+ million users globally. At Sapphire, I spent some more time with her and it struck me how MNCs are shifting country commitments at an unusually fast pace – some due to embargoes, others to escape high inflation, still others to balance out their global supply chains. SAP is well positioned to support them in such transitions.

What about fast-growing local companies in these emerging markets – not just subsidiaries of MNCs? I asked Scott Russell, who I first met at an event in Thailand, and has done a lot of business across Asia. His thoughts: “In the Middle East and other regions we have a benefit in that we have (already) scaled out our field coverage. And we operate in a lot of local markets with a lot of local partners with a lot of localization. Our challenge is how do you get an ecosystem to support that local market? We're building across the organization, the digital engagement model, and a tele and remote engagement model, it gives us more ability to reach into those further markets with partners on the ground, and our kind of digital engagement backstop to it. So I'm pretty optimistic about our ability. One of our assets as a company is we're so globally oriented. We get it and we know how to move into remote regions effectively.”

Their growing S/4 public cloud, the emphasis on mid-sized enterprises with GROW and solutions like Business ByDesign also give them an opportunity to compete more effectively on economics in these markets. Sapphire used to be centrally hosted in Orlando in the past. In the last couple of years, it has been split up. This year it is being hosted in Orlando, Barcelona and Sao Paolo (run in Brazilian Portuguese). Another way, SAP can continue to target more regionally.

Custom Development

SAP showcased Enterprise Automation at Sapphire emphasizing Signavio, the Business Process Management tool it acquired in 2021 and Integration and Build components of the Business Technology Platform (BTP). In a nice touch, Julia, a marketing not a development exec, herself ran the demo and talked about “1000s of pre-built integrations, bots and workflows”

Historically, development in SAP world has relied on capabilities of SAP Mentors and SI specialists. SAP would do well to build a Salesforce Trailblazer type ecosystem with a lighter set of admin and developer skills as their answer to the call for more no/low code capabilities.

AI

Given the hype around Generative AI, I found SAP’s somewhat cautious positioning at the event a bit refreshing. They did announce integration of SuccessFactors HCM with Microsoft 365 Copilot and Copilot and Microsoft’s Azure OpenAI Service to access powerful language models. The result could be better job descriptions, learning recommendations and job interview questions. SAP also shared a series of AI enabled use cases in procurement, customer service and freight management among others.

Given SAP’s much more differentiated capabilities by verticals and countries, I would expect a much bigger chunk of use cases to follow. There is of course the pesky question of how much operational data is available with appropriate customer permissions to feed these models.

I have a provocative challenge to SAP and its ecosystem. Use Gen AI to automate a number of SI steps on projects. Thousands of ECC to S/4 migrations have been completed. There are work plans, data conversion code, testing scripts, end user training manuals and countless other artifacts to be mined. With Gen AI, you don’t just automate lift and shift – you can specify specific filters that would tailor them to each implementation.  Time to bring that long awaited productivity to the ecosystem and de-skill the talent needed on these projects.

Side note – my former colleague at Gartner, Andrew Dailey recently asked me if I still had a copy of a report we had written about ERP SIs in 1998. I found it in my archives and smiled when I read the opening para. “”Michelangelo should not charge Sistine Chapel rates for painting a farmer’s barn” once ruled a U.S. Circuit Court of Appeals. Although the ruling in this case related to lawyer’s fees, it might well have related to systems integrator fees on an application implementation project.” Amazing how labor intensive and overpriced the SI world still is – another throwback to the 90s

Much more

There was plenty of other product focus during the event including a Green Ledger which combines financial and environmental data at different points across business processes and an Open Data partnership with Google Cloud. In conversations with other analysts I got the feedback that this event appeared to have much more product focus than in the recent past.

Summary

Over 50 years SAP has sheltered its over 400,000 customers through multiple recessions and architectural transitions. Christian Klein and his young management team have navigated the pandemic extremely well. They now have the opportunity to start looking more into the future and distance themselves from the competition in these new markets I described.

They can start thinking about the next 50 years, not just leveraging the product portfolio they already had in 2019. In other words, become more ambitious about the event’s theme of “future-proofing” the customer base.

Burning Platform: a pivot point for Enterprise Software

In the 90th episode of Burning Platform, we host Bob Evans, founder of Cloud Wars and co-founder of Acceleration Economy

We discuss the state of enterprise software in the middle of 2023 with the end of the COVID pandemic and the return to in-person events, the excitement around Generative AI and the realization that both SAP and Oracle in different ways have bounced back very nicely. We also discuss my observation that we have entered a new stage with vertical edge applications, with emerging global economies, with more custom development with low-code tools and with the infusion of AI.

We also discuss our observations from 4 industry events we participated in - SAP Sapphire, Workday’s Innovation Summit, Truly Zoho and Oracle’s Application and Database summit.

A nice summary of the state of enterprise software as it goes through yet another pivot.

PS - I have a longer analysis of the SAP Sapphire event coming up