deal architect

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

 

Burning Platform: Zoho – humble beginnings, ambitious future

In the 89th episode of Burning Platform, we host Tony Thomas, one of the co-founders of Zoho.

On this blog we have covered many aspects of Zoho – its unique culture, its vertical integration, its business model, its commitment to rural revival. In this episode, Tony describes the long journey the founders including the CEO, Sridhar Vembu have endured. Sridhar had provided his perspective in this blog post

They were humble back then – Tony says “we didn't know anything about business, we were technology guys having fun building something.”. They are humble even now “we realize things are never as bad as they seem, things are never as good as they seem. So realizing that there will be ups and downs, and looking ahead to better days is the way to be.”

We also discuss growth markets for Zoho – emerging economies, verticals, AI infused in their products.

Not surprisingly he ends on a positive note “It’s a great time to be technologists building solutions…..Technology is the answer to many of our problems, like solving climate change to other problems facing humanity. I'd say allowing teams to build with technology and continuing that is where I see the optimism for the future.”

30 minutes of wisdom. In his blog post, Sridhar had described Tony “as my personal daily Buddha”

A must watch – you will get another perspective on what makes Zoho tick.

Building on the Salesforce Stakeholder Impact Report template

It’s the time of the year for annual reports and shareholder meetings. I recently watched Warren Buffett preside over the annual Berkshire Hathaway shareholder meeting. Berkshire owns over 60 companies and has major shares in hundreds of others.  30,000 attended the meeting in person and millions more watched it live for several hours. It ran against the stiff competition of the coronation of King Charles in London that day.

That intense level of interest in corporate governance and the minutiae in annual 10-K and corporate filings that Buffett’s teams routinely parse reminded me to read the Salesforce FY23 Stakeholder Impact Report (for the year ending January 21, 2023).

Salesforce has an expansive definition of “stakeholder” to include “shareholders, customers, employees, partners, the planet and the communities in which we work and live”

CEO Marc Benioff is quoted “When we focus on stakeholder value as well as shareholder value, our companies will be more successful, our communities will be more equal, our societies will be more just, and our planet will be healthier.”

In an interview with Business Insider, Benioff’s definition of a stakeholder was even broader, “Yes, our investors are our stakeholders. Our employees, our customers, the homeless in San Francisco we've advocated for. Our public schools are a stakeholder. Our planet, and journalists — you're key stakeholders also. And I have to manage for all of them. And that's what it means to be a modern CEO today."

The acronym ESG (for Environmental, Social, and Governance) has become synonymous with a broad stakeholder focus. It was first coined by the United Nations in 2004. It has gained momentum in investing and related reporting, but not as much as you would expect over two decades. It is still controversial because much of the guidance comes from the United Nations and entities like the World Economic Forum with no jurisdictional authority. While some companies are still asking “why bother?” the reality is there is only inconsistent guidance on “how do we proceed”. I think the Salesforce template can guide in answering the “how” question

The road is long

Salesforce has been publishing its Stakeholder Impact Report for over a decade now. The FY12 report primarily focused on Sustainability and every year since it has steadily grown in scope. Salesforce’s founders had an even earlier start. A decade prior, they launched their 1-1-1 model, which commits 1% of their equity, technology, and employees’ time toward charitable initiatives. We should expect most ESG initiatives will evolve on a similar, gradual path.

Don’t try to boil the ocean

The United Nations has 17 broad Sustainable Development Goals each with many targets (169 in total at last count).

Throughout its report, Salesforce helpfully points out which of the UN SDGs a particular section meets.  Salesforce does so with its solutions like Net Zero Cloud, Net Zero Marketplace (see their presentation in this Analyst Cam episode), and contributions to entities like 1t.org, a global tree movement they co-founded in 2020 to conserve, restore and grow a trillion trees by 2030.

Salesforce also shares how it decides what to prioritize.

No law requires you to volunteer for all these goals and related targets – or indeed any. There are plenty of activists and regulators who are only too happy to guilt you about each of the goals. Decide on goals where you can contribute the most impact. For example, as a chemical company you are likely to have a much larger emissions footprint than a software vendor does.

Commit to data rich initiatives

Here are some of the highlights from the Salesforce report:

The Salesforce FY23 summary report runs 21 pages, and has another 24 pages of detailed schedules (and includes data on Scope 3 emissions, Sustainable Aviation Fuel certificates and data on Underrepresented employee groups among others) and audit commentary from the independent accounting firm, Ernst & Young.  The more you collect, certify and share specific data the more trust you will create that you are not just “virtue signaling” your commitment to a certain goal or target.

Negotiate more disclosures from activists and politicians

Part of the resistance we hear about ESG is that it is about one-way transparency. Many politicians, NGOs, charities and activists do not appear to be that open to debate or disclosure. Charities should better explain their program expense ratio. In many cases the executive compensation is too high and takes away from funding designated for their mission. Similarly, politicians demand plenty of reporting from businesses, but don’t often reciprocate. Many are banning combustion cars with aggressive timetables. They should, in turn, be able to show whether local utility grids will be able to support the transition needed for regular charging of EVs. They should be able to show the vehicle makers who sell in their jurisdiction have negotiated sufficient supplies of lithium, manganese and other critical materials needed for EV batteries. The Ukraine crisis has shown us energy independence is just as important as a focus on emissions. We have a right to see and debate if their transition plans from point A to B are well thought out. 

Summary

Not every company will take as expansive a definition of stakeholders or ESG as Salesforce has. However, their Stakeholder Impact Report provides a nice template for every company to review and adapt to their more limited commitments. Just as importantly, as a society it also allows us to seek similar accountability and transparency from those who are setting the “rules” for such commitments.

Business as Unusual – Conversation with Peter Maier at Sapphire Orlando

At SAP’s Sapphire event in Orlando this week, ASUG kindly invited Peter Maier and me to present themes from the Business as Unusual book at their Hub on the show floor.

We covered how the book came about, discussed some of the megatrends in the book – Everything as a Service, Circular Economy, Resilient Supply Chains, Integrated Mobility - and also wove in some of the announcements made at the conference about Industry Networks, AI and others.

We announced that SAP Press has a Sapphire promotion till the end of May. Purchase the ebook or hardcover here and enter the promotion code of SAPPHIRE23 at checkout to qualify for a 22% discount of the list price.

It was a very busy floor and there were multiple parallel sessions so we could not video the conversation but I did manage to record an audio file – we made the conversation interactive with the audience, with free book giveaways and the audio quality is not that great – and I also share below the slides we used.

Here are the links to the

Audio MP3 – about 50 minutes

PDF – 16 slides

 

 

Burning Platform: SAP Sapphire 2023 Sneak Preview

In the 88th episode of Burning Platform, we host Clare Henry of SAP. Nice of her to take time out of a hectic week with last minute prep to provide us a curtain raiser on the Sapphire event next week in Orlando.

Her key points and some of my comments:

• The event theme is “The Future-Proof Imperative”. That certainly resonates given the repeated shocks from COVID, Ukraine crisis, climate change urgency and massive digital transformations that most enterprises have been through in the last few years. It certainly came through in the Business as Unusual book we helped Thomas Saueressig and Peter Maier research and write last year.
• CEO Christian Klein will be joined by CMO Julia White and customers, for Tuesday’s opening keynote. The show floor will play a big part in that session and will feature Farm to Consume scenarios. That should allow SAP to showcase its strong agribusiness, commodity trading, CPG, sustainability, traceability and supply chain credentials.
• Thomas and Juergen Mueller will keynote the innovation keynote Tuesday afternoon. I am especially looking forward to what they will share about their approach to AI throughout the SAP portfolio.
• Scott Russell will keynote Wednesday morning. I look forward to an update on the RISE with S/4HANA initiative. Knowing him, sure it will have wide global coverage.
• Serena Williams will keynote Wednesday afternoon. She is such an accomplished athlete and now an entrepreneur, mother and overall role model.
• Clare promises virtual attendees are in for a “first class experience”. Sounds like the events team has put a lot of thought into digital experiences. They will be competing with the closing celebrations on Wednesday at nearby Universal Studios!

It was also nice of her to ask me to share some of my experiences from previous events. See if you smile at my reminiscing.  Of course, I am an amateur compared to folks like Paul Kurchina who can draw on 30 consecutive years of Sapphires. In a side note, I told him I am just a padawan – I will bow to the Jedi Master when I see him😊

Clare has a useful reminder for in-person attendees. Pack some comfortable shoes for walking up and down International Drive and the convention center. Also as someone who lives just 90 minutes away, I would recommend some sunscreen and light wear. The mornings and evenings have been comfortable for May but the afternoon humidity is already stifling.  

Finally, I too have a reminder. I am hosting at the ASUG booth on Wednesday 1 pm, a conversation with Peter Maier about the book mentioned above, Business as Unusual.

Hope to see many of you in person! In the meantime, enjoy this session with Clare. Her excitement shines through and should get you psyched for the event.

Analyst Cam: SAP Verticals – Public Sector

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 Ulrike Kleifeld, VP Strategy, Global Public Services and Chris Atkins, VP Global Digital Transformation at SAP.

Ulrike starts off with some of the challenges government bodies face in nearly every country. The COVID pandemic accelerated digitalization in every industry but also exposed how much the public sector lags. This was followed by the Ukraine war and other geopolitical crises. We have economic burdens from the pandemic, and the energy crisis has only added to that. Disruptions have been coming in waves and governments are struggling to adjust to that “new normal”

They also address the loss of trust in government. I ask if it is lack of trust in politicians v  government agencies. They say there is a view that government is not agile or farsighted. Ulrike says “on the one hand we want governments to be cautious and risk-averse with tax payer funds, but we also need to help them accelerate their execution capabilities.”

Chris walks through the functional scope of their solutions across the value chain from policy and planning to public finance to supporting programs and services – the citizen facing part. He shares several customer examples. About the State of Arkansas he describes the amazing outcomes the project delivered: “they were able to achieve a 95% reduction in accounting processes, from a time perspective, going from four weeks to one click for many of their processes, a 91% reduction in cost allocation process from six months to 10 days. And, yes, you heard this right, a 1,150% improvement in creating their budget reports, what used to take days now take them minutes. And for the first time ever, they were able to submit their federal quarterly reports on time.”

I like that he represented multiple countries and the “end to end value business model for how they deliver value to their citizens”

Talking of different countries, they all have their own demands around data sovereignty, security clearances etc. Ulrike mentions one “In the US, we have the NS2 cloud, which is on US soil run by US personnel in a special secured environment that is FedRAMP certified.”

They do a really nice job covering a lot of ground about this complex but vital sector in about 20 minutes. 

Burning Platform: Org agility, global talent, Generative AI in HCM

In the 87th episode of Burning Platform, we host Steve Goldberg and Pete Tiliakos of GxT advisors. We discuss a wide range of HCM topics. Between them they have 7 decades of HCM experience in a variety of roles.

We start with an area which is Steve’s passion – organizational agility. I like his anticipate, adapt and act framework. Many enterprises invest heavily in listening to external signals, but neglect internal ones from their employees.

We next talk about what they learned from the Unleash event in Vegas a couple of weeks ago (where they presented more fully on the agility topic) and the Zoho event last week. I make the point that Zoho may not be a major HCM player today, but the exemplary bond between employee and employer some of us saw in Chennai in March gives them a significant test bed to try out and package innovative HCM practices.

Pete’s expertise is around global talent pools and related payroll and HCM matters. So we spend time talking about opportunities especially in fast-growing emerging economies.

We next talk about the excitement around Generative AI and some early use cases in the HCM realm

Finally, we talk about the perennial question – how do we make the HR function more strategic to their organizations? Steve makes a strong point. HR is a total enterprise responsibility, not just a functional responsibility.

So nice to spend half an hour with these veterans. Pete is another type of veteran – he is a former US Marine. Both are also fun guys to hang around. You will enjoy their perspectives.   

Time for a pivot in enterprise software

On Saturday, I watched the Berkshire Hathaway annual shareholder meeting. Warren Buffett was less than optimistic: “During the last six months or so, the “incredible period” for the US economy has been coming to an end”

Earlier in the week, in a welcome letter to analysts for the Zoho event in Austin,  Vijay Sundaram , Chief Strategy Officer pointed out

‘The SaaS model, as validated during the pandemic, will stay and thrive. But many providers won't. We believe that the next 10 years will be influenced by the recessionary conditions that have begun. Venture capital will now chase AI—the new shiny object—leaving less capital on the table for SaaS. Valuations will drop for the vast majority of companies that remain unprofitable and cannot feed the growth-at-any-cost monster. The industry will restructure as value shifts back to customers.’

It's hard to argue with either, but I am sure Buffett will find diamonds in the rough even in a challenging economy, and Zoho is doing well with its very different business model especially in emerging economies that are growing even as Western economies are slowing down. As Peter Maier of SAP, who I am moderating in a session at Sapphire next week, would say as his recent book does – it’s time for Business as Unusual.

In the doom and gloom in tech these days – valuations are down significantly; layoffs are up significantly,  there are at least four market segments which still show strong growth potential.

Vertical “edge” applications

A whole bunch of vertical edge applications became viable/necessary as a result of “shocks’ from COVID, Ukraine crisis, massive digital transformations and impact on every sector. They include servitization driven CPQ (to handle product, various services, spare parts, financing etc.) in industrials, smart insurance using new risk analytics, telemedicine in healthcare, curbside pickup and smarter ecommerce returns processing in retail, EV charging management and billing in auto etc. We are tracking over a hundred “edge” application areas. Most of them we could not have imagined 4-5 years ago – industries have been reshaped so rapidly in recent years by those shocks.

Emerging economies

On the recent trip to India I spent time in 7 states across the country. I saw a very different energy and pace. They are in a hurry to make up for lost time during COVID and to match China’s speed. We have long talked about “two-tier” ERP opportunities around subs of multinationals around the world. That opportunity is still wide open. The bigger opportunity now, though, is with fast growing, midsized local enterprises in not just BRICS countries, but also Indonesia, Nigeria, Chile and many others. However, they need different functionality, go to market and price points than selling in the West.

Generative AI

We are still in the first innings of what machines can dream up based on massive data we can train them on. And most vendors are still focused on the plumbing – should we use tools from Microsoft, Google, IBM and others or cobble together our LLMs using open source components. The winners. to me, will come from those who focus on differentiated use cases and gather mountains of relevant data.  All the more reason to invest in industries and geographies which differentiate you.  

Low code custom development

The vertical and geographical solutions I describe above are needed today. Many buyers are not willing to wait years. Others are tired of the cost and pace at which enterprise solutions are delivered.  They have started to arm their domain experts with low code solutions to at least get version 1 of the functionality in place. Too many software vendors think the low code tools are their differentiator. This is a bigger opportunity for service providers – again, those with deep industry and geography credentials.

Each of these markets will require new investments, not spray painting of existing solutions. Does not mean existing ERP, CRM and other markets will go away. But repaving older cow paths does not generate adequate ROI, especially when so many analog processes are screaming for digital innovation.  

Time for a pivot. Time to think Business as Unusual. New frontiers await.

Analyst Cam: SAP Verticals – Aerospace & Defense

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 Torsten Welte, Global VP and Head of Industrial Business Unit for Aerospace & Defense at SAP.

As you see in the image (and much more in the video ) below, the coverage is mammoth but as he says it's only the "guys that make the toys, not play with the toys". SAP's Travel and Transportation Group covers the airline operators, the Public Sector group covers space agencies like NASA and ESA, SAP's SuccessFactors and other units cover the human side of these large customers.

I tell him I am envious he gets to go to Paris, Farnborough and other airshows. The technology in modern spacecraft, avionics, eVTOLs and naval equipment he covers is drool-inducing and the design, manufacturing, monitoring, maintenance, earned value calculations, contract management have all evolved to keep up. Torsten talks about smart factories, digital twins, augmented reality, robotics, ML-enabled inspections and more as part of the solutions SAP and its ecosystem is delivering.

When we recorded the session, he was getting ready for the industry Innovation Day SAP hosts every year. This year it was in Huntington Beach, CA.

Torsten told me later they had “over 250 experts from the industry.  During the innovation days, the community comes together to network and exchange their best practices and learnings.  Our host company provides insights into their operations and innovations.  This year, Northrop Grumman was our host. Besides touring their facility, we got insights on the James Webb (telescope) project.  Truly an amazing innovation in technology and how it was launched in space.”

“Presenters showcased projects which tackled supply chain planning and manufacturing constraints.  It was all about visibility and operational improvements through digital. They showcased solutions to manage data to make the right decision to improve throughput, cost, optimize constraints, and stay flexible.

Very exciting to see SAP solutions helping the industry to not fly blind.”

Torsten does a really nice job covering all of that in half an hour.

Burning Platform – Even More Business as Unusual

In the 86th episode of Burning Platform, we host repeat guests, Peter Maier and Tilman Goettke of SAP. We discuss reaction to the book, Business as Unusual that Peter co-authored and both Tilman and I helped research and curate - link to the Amazon page via the badge on left.

Peter and Tilman discuss feedback about the book as they have handed out bunch of copies at book signings, podcasts and customer  events. Tilman says he is glad the book recognized only a few business executives have time or patience to read books from cover to cover. So the opening chapter has short, two page overviews of each of the 8 mega trends. The book also has "thought experiments" to engage readers. For example, what if a maker of coffee machines wants to evolve beyond selling machines to also offer coffee by the cup? What impact does that for financial streams and for sales and customer engagement? Pretty much everything changes when you try to change your business model and adopt the hot trend of "servitization".

The book offers similar opportunities to think about countless vertical applications for their companies which have emerged as a result of COVID, digital transformations, the Ukraine crisis and the climate change urgency.  Most of these are applications that we couldn't have imagined in 2019.

We also discuss new addressable markets in fast-growing emerging economies around the world. We cover the excitement and hype around Generative AI and low-code tools.    

It is nice to have Peter provide commentary in his new role around strategic customer engagements in the office of the CEO. He says amidst all this choice, customers expect very clear guidance from SAP and consistency from its massively expanded ecosystem (in the book, we included perspectives from strategy firms, Industry 4.0 robotics firms, SAP.iO Foundry startups and many others – see details in this post). He hears from customers their highest priority is their customers and their top line. He lists other customer expectations around sustainability, standardization, efficiency (especially in asset intensive sectors), vendor consolidation and related governance.  

Both say the pace of change has definitely accelerated. Peter points to the phenomenal pace of adoption of ChatGPT. He adds “all the more reason to get up early”. Tilman adds we need to acknowledge “what was science fiction yesterday is today's everyday business reality and the constraining factor is business agility”.

It truly is a thrill to have a strategic discussion with these two industry veterans at a vendor with so much industry and global depth. Enjoy this half an hour. So much change – so many new opportunities!!

I will also have a chance to share a session with Peter about the themes from the book at Sapphire in Orlando in a couple of weeks. Details to follow.

Analyst Cam: SAP Verticals - Semiconductor

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 Jeff Howell, Global Vice President, Head of High-Tech Industry Business Unit at SAP.

We have all heard about the geopolitics and risks of continuing to be dependent on SE Asia for a steady supply of chips. We have heard about the chaos in the auto sector with the inadequate supply of that increasingly important component as vehicles get smarter and electrified.

Jeff takes us through a much more nuanced perspective on the complexity, the long lead times and capital intensity of the semiconductor sector. I was first introduced to him as I was helping SAP with research on the recently released Business as Unusual book (available on Amazon – click on badge on left)

Here are just a few excerpts from the conversation in the video below:

• The semiconductor industry amounts to 0.3% of the U.S. GDP, yet semiconductors are required to produce 12% of the U.S. national output. It is even more pronounced in Japan -  with impact on 30% of their national output
• If you and I decide to go into the chip making business we would need to come up with $10 to $15 billion and spend about two to three years building that production capability
• Over 400 chemicals are used in a combination of solids and gases to make those chips. Over a dozen noble gases on the periodic table are critical supplies
• Roughly 30% of the neon that's needed in the semiconductor industry comes from Ukraine
• 2 to 4 million gallons of ultra-pure water are required every day during the chip production process. Almost half of all the world's chips are manufactured in Southeast Asia. Well, a couple years ago, there were droughts in Southeast Asia  
• Every wafer produced in a typical fab generates two to three gigabytes of data and you multiply that by 24 wafers in a lot and 1000s of lots per day, it's very easy to come up with terabytes, and generate even petabytes of data every day.
• The little known fact is more than 80% of that data is never even looked at - not enough process engineers who can examine that data

He spends a fair amount of time talking about networks like Catena-X which is auto industry-centric but heavily depends on semiconductors. He cites use cases at companies like NVIDIA and Wolfspeed (a critical supplier of silicon carbide) and partners like PDF which helps companies analyze that mountain of operational data for better yields and other outcomes. He also discusses how SAP is blending financial and operational data for the sector.

It is a master class on critical components for so much of the economy and the unique systems the industry needs. Very nicely done in about half an hour – he could easily have gone much longer

Analyst Cam: SAP Verticals - Chemicals

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 Matt Reymann, Global VP of the Chemicals Business Unit at SAP.  He provides an overview of SAP’s extensive work in the sector. Did you know 99 of the top 100 chemical companies run SAP? And that SAP's first customer 50 years ago was a chemical company, ICI. So, as Matt says “Chemicals are in SAP’s DNA… as technology has evolved, as our customers have evolved, we've evolved with the industry.”

Matt has example after example of innovations in the sector like molecular recycling. He shares use cases across the enterprise as in the graph below.

He also covers business model changes where as with complex industrial products, chemical companies are learning to sell their products and capabilities as a service. He also cites examples from the new SAP book, Business as Unusual.

Very nicely done in 30 minutes. His passion for the sector really shines through. And you get a really nice perspective on the macro trend in a sector which has an impact on most everything we use on a daily basis.

Burning Platform: The Best of Times, the Worst of Times

In the 85^th episode of Burning Platform, we host a repeat guest, Dion Hinchcliffe of Constellation Research. Dion is one of the most strategic industry analysts I know and he is always in tune with high level trends CIOs are factoring.

I invited him to present on the morphing world of IT services.  We discuss consolidation of providers we are seeing in many companies, near shoring and maturing of S American talent, value pricing in services, the major impact of low-code tools, the coming impact of generative AI like ChatGPT, the emergence of FinOps as CIOs re-balance public cloud loads and optimize hyperscaler budgets.

He is extremely positive - says we are at a plateau of IT productivity.

As I have written in the last few weeks I too am extremely optimistic about new application markets which have emerged as a result of shocks from COVID, the Ukraine energy crisis, digital transformations. From intelligent returns in retail to EV charging infrastructure management and billing in auto to servitization support in industrial markets to smart insurance using new risk analytics, I am tracking over a hundred vertical extensions that have become critical in the last couple of years. Also, my recent trip to India has opened my eyes to application opportunities in emerging economies which reflect their unique regulatory, language and business practice needs. Many more opportunities there.

What’s not to like?

Here’s the reality check. Somebody will have to write these new applications and support them. Service firms will happily custom write them for you but need to accept shrinking revenues from previous legacy relationships. They have resisted previous opportunities to automate their own operations and will face new pressures to do so. Customers can have their own domain experts use new low code and AI tools to write them. Many, however. have forgotten the art of building and supporting new applications. They have become better at buying applications and integrating them. But buy from whom? Many software vendors are cautious about vertical or global extensions and hope partners will write them on their platforms. Lots of wishful thinking.

Both Dion and I are optimists but it is clear new fortunes will be made and many others lost. As Charles Dickens famously wrote “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity ….”

As the recent book I helped SAP execs write, it is imperative you adopt a “Business as Unusual” mindset given the big changes afoot.

Enjoy our banter for a little over 20 minutes     

Burning Platform: A 360 degree perspective on the Truly Zoho event

Earlier in the week, Sandy Lo and Pooja Mittal of Zoho discussed the elaborate planning and intricate logistics of the week long Truly Zoho event in Chennai and Tenkasi in South India. 

In this, the 84th episode of Burning Platform, we host David Fauser, a Zoho customer at Cimco Refrigeration in Canada and Rebecca Wettemann, an analyst at Valoir. Both were part of the entire week and provide a very entertaining recap.

In a world which become virtual during COVID, we review the additional payback accrued from making the physical trip (over 15,000 miles round trip) and the investment in time. We discuss the huge investment Zoho makes in its people – schools, hospitals, cafeterias and whether that mindset can be adopted in the West. We discuss how other vendors will be benchmarked based on our visit – most Zoho customers have ERP and other applications from other vendors. The trip was made with the backdrop of a series of layoffs in Silicon Valley. It was striking to see the loyalty of Zoho employees and the wide berth their executives give their staff – each was extremely articulate and unfettered in every discussion.  

David and Rebecca came back with very different perspectives given their customer and analyst personas, but both are extremely positive about the week. Lots of entertaining anecdotes from from the trip. Well worth your spending about 25 minutes with them below.

Analyst Cam: SAP Industries – Partner Ecosystem

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 Frank Ruland, Global Head of Industry Ecosystem at SAP. As we know, SAP has a massive ecosystem with 23,000+ partners employing over a million people around the world. While many of them implement and support SAP’s ERP, CRM and other products, a growing number are helping SAP innovate industry specific applications. Besides traditional SIs and outsourcers, he discusses ISVs, strategy firms, SAP.iO Foundry startups, Industry 4.0 robotics providers and provides examples of several emerging vertical applications the ecosystem helps innovate and support.

I had a chance to profile this wide variety of industry partners in the book by SAP executives, Business as Unusual.  You can see 6 of the partner interview cameos in this post.

Industries are increasingly morphing and encroaching on each other. Frank provides an example of what today’s EV charging applications require – utility asset management capabilities. the investment planning capabilities of a utility, public sector features when it comes to infrastructure permits and licenses to operate, subscription billing and managing roaming charges among other capabilities. So, partners need to be broad enough to support this new breed of applications.  

A striking figure in his presentation is 80% of new customers come from partner introductions – obviously many of those are small to mid-sized enterprises but it brings home that today’s partners don’t just implement, they also help SAP innovate and sell.

Not your Dad’s ecosystem. Very nicely done in under 25 minutes  

Burning Platform: Raising the Bar for Analyst Summits with Truly Zoho

In the 83nd episode of Burning Platform, we host Sandy Lo and Pooja Mittal in the marketing team of Zoho and they talk about the elaborate planning and logistics it took to host the Truly Zoho analyst event in Chennai and Tenkasi in India.

You have likely read perspectives from several analysts including Brian Sommer, Jeremy Cox, Ankita Singh, Thomas Wieberneit and seen videos from Paul Greenberg and Brent Leary and others. It is not an overstatement to say it was one of the most talked about events in the industry, especially considering only 15 analysts participated.

However, the positive outcomes and experiences took months of planning, which as they say had backups to backup plans and extremely complicated logistics many of which changed on an hourly basis

Here they are summarizing many of the gory details in about half and hour and sharing some of the photos and social media from the event.

Raising the bar for analyst summits does not give it enough credit – they blew the roof off!!

 

 

Will Workday lead us out of the Enterprise “AI Winter”?

I smiled when Sayan Chakraborty, Co-President mentioned “AI Winter” in his presentation at the Workday AI and ML Innovation Summit last week. I smiled for two reasons:

He expressed eloquently in two words what took me much longer to describe in my 2016 book, Silicon Collar.

“Since the 1950s! That is when Alan Turing defined his famous test to measure a machine’s ability to exhibit intelligent behavior equivalent to that of a human. In 1959, we got excited when Allen Newell and his colleagues coded the General Problem Solver. In 1968, Stanley Kubrick sent our minds into overdrive with HAL in his movie, 2001: A Space Odyssey. We applauded when IBM’s Deep Blue supercomputer beat Grandmaster Garry Kasparov at chess in 1997. We were impressed in 2011 when IBM’s Watson beat human champions at Jeopardy! and again in 2016 when Google’s AiphaGo showed it had mastered Go, the ancient board game. Currently, we are so excited about Amazon’s Echo digital assistant/home automation hub and its ability to recognize the human voice, that we are saying a machine has finally passed the Turing Test. Almost.”

Also, a few days prior, Margaret and I had returned to the US via New York JFK. I have done so countless times especially in the 80s when I did multiple overseas assignments for PwC. Each entry required long lines, paperwork and interaction with human bureaucrats. Even my signing up for Global Entry a decade ago had not changed things much. Broken kiosks, clumsy fingerprint scans – the UX was not pleasant. This time, Margaret went to a manned line (she does not have Global Entry), while I walked into a completely empty room with my choice of twenty kiosks. While I fumbled for my passport, the associate guided me “Just take off your glasses”. A bit cynically I did and facial recognition took over and a few seconds later I was through. Wow!

It took Margaret another 20 minutes to go through her more analog process and while I waited for her, I reminisced about the hundred times (not kidding) our passports had been touched during our trip to India. With a ten-year visa which the Indian government would not transfer from expired US passports, we were each required to travel with two passports. Several times at each airport, at every hotel, every currency conversion, even entry to monuments like the Taj Mahal our 4 passports were eyeballed by a human and a scanner and likely printed and filed. Think of all the wasted time and paper, not to mention the constant worry of losing our passports.  This when the Indian government already has digital records of our passports and visas. Talk about a stark contrast to my JFK experience – the term “AI winter” definitely struck a chord.

But I am an enterprise technology analyst. Most AI innovation we have seen in the last decade has come from the consumer world – speech to text, machine vision, etc. I have been excited about enterprise AI countless times and it always appears to deliver less than promised. Like when I interviewed Zach Nelson, then CEO of NetSuite in 2009 for my book, The New Polymath.

He had told me:

“We have some of the best leading indicators on the economy. We can aggregate order value, cash flow, and several other metrics instantly in our base of over 6,000 customers and watch trends.”

And I had written:

“Soon, those customers will be able to benchmark themselves against aggregated data of their peers. That would obviate the need for mailed–in surveys. That capability has been the domain of benchmarking firms like Hackett, not of the software industry, so that is another innovation NetSuite is working to deliver. Nelson explains: “Take those benchmarks and some of the creative BPO [business process outsourcing] partnerships we are exploring (such as one announced in April 2010 with Genpact, the spinoff from GE described in Chapter 3), and the industry could see SLAs [service - level agreements] that don’t just monitor technical metrics like systems availability but business process metrics that have been elusive to codify.”

The reality nearly 15 years later, is that much of enterprise data is still locked up in on-premise systems and private clouds/proprietary data centers that few vendors are allowed to access. Corporations love to see benchmark data from their peers – but have been (overly) cautious in sharing their own data. Bureaucrats around the world have complicated data gathering with their privacy and data residence regulations. The amount of enterprise data available to train computers is minuscule compared to the billions of images, voicemail messages and other data that Google, Microsoft, Amazon and others were able to collect without the data gathering restrictions they have used to train their machines.

Workday Co-Founder, Co-CEO, and Chair Aneel Bhusri had got me excited about enterprise vs. consumer AI when at an investor conference the week prior, he commented:

“With ChatGPT, you can ask good questions but you get some wacky answers at times, because the Internet is the Wild West... But our data is absolutely constrained, normalized, it's clean. And as a result, we can produce pretty powerful results.”

The point about caution about the consumer web as a data source for ML data was reinforced several times during the Workday event. Adobe’s event this week also focused on protection against the coming misuse of Generative AI and had coincided with deep-fake photos of President Trump being arrested.  

Sayan had also elaborated in a blog post:

“Workday was an early adopter of large language models (LLMs), the technology that has enabled Generative AI, and we use them in production today. We have started adopting Generative AI at Workday to solve a host of additional customer challenges. A canonical case for LLMs is content creation, and we can see how drafting performance reviews, job descriptions, and a host of other documents will be transformed by this approach. We’re going to continue to identify key use cases where Generative AI can add value to our customers and develop unique models that leverage both Workday data and external data sets.”    

Thankfully, the AI/ML Innovation Summit was not just about ChatGPT. Workday provided several optimistic cues about the broader evolution of Enterprise AI and their own role in shaping the journey.

Here are some:

Large enterprise databases to train machines and related customer permissions

Workday today services 60 million users. Skills Cloud was launched 5 years ago. Half of Workday’s HR customers have participated and shared their continually evolving employee skills with their peers. At its scale it would be impossible to maintain without machine support. And it gives Workday a template to build similar clouds around other enterprise data attributes.

Now, you may say, 60 million users is not that large. These users generate plenty of data - over 400 billion transactions a year. Very few enterprise vendors can show that scale – at least in their clouds.

Side note - CMO and Executive Vice President, Corporate Growth Pete Schlampp’s comments on Workday’s Rock Star commercial during this year’s Super Bowl brought home another significant impact of these 60 million users. Enterprise tech companies have had a patchy record advertising on that widely watched show, but, Workday’s brand is much stronger and their logo is more recognized in the consumer world because of this user base. Aneel’s comments about conversations with CEOs and politicians suggest we may also see Workday active on policy matters.

Analytics and ML

Since Workday acquired Platfora in 2016 and branded it as Prism, it has become a vital tool for its users to analyze cross-functional data especially that from vertical feeder applications. As a result, we heard plenty from Workday and from several customers on panels that Workday’s datasets are growing beyond its traditional Finance and HR focus. But the vertical perspectives are still skin-deep. From a process design perspective you want to ensure quality and accuracy at the source. Anomalies and variances should be presented to operational users like clinical professionals, not wait for a Financial or HR user to notice them.  A big reason, I believe, why Workday will grow a solid core of vertical processes (in what it defines as service industries) and its base of operational users, employees and partners. I am a broken record when it comes to verticals but think their expanded ML focus will accelerate the demand for industry specific operational data. However, Workday is not likely to acquire a legacy vertical application. As Aneel said during the event “We are always looking for next generation players - cloud native using AI and ML for industry applications. We would never take something that is outdated technology because the first thing we have to do is throw it all away and rewrite it from scratch.”

Planning and ML

Since Workday acquired Adaptive Insights in 2018 it has become a planning powerhouse. The pandemic and the chaotic maneuvering at most enterprises the last few years have led to more continuous planning, and increased the need for more machine-driven planning. I also heard at the summit about an expanded range of planning in areas such as demand forecasting. All the more reason to mine external weather and vertical data. I wrote a case study in 2019 about Costco and demand forecasting at its Food Courts. Besides factoring weather and nearby events, their algorithms were also starting to factor gas prices and related impact on pump traffic. If a customer comes for gas, he/she is likely to also be a prospect for prepared food.

No scary job loss forecasts

Many vendors will use an event focused on AI and ML to talk about doom and gloom around job losses. Frankly, that complicates enterprise adoption even more. Sayan took a contrarian step. He presented a slide which shows that at least in developing nations, we face shrinking workforces. Machines will be needed to make up this shortfall.

In Silicon Collar, I had highlighted how even the smart folks at Oxford U. and Gartner had fallen prey to wild doomsday models of job losses from automation. I had presented several examples of slow adoption of automation technologies over the last century – UPC scanners, ATM machines, autonomous cars and others. I had summarized the examples in this Strategy+Business article. Job losses from automation tend to be gradual – and in many scenarios there are job gains. I also made the point that automation helps eliminate what are 3D - dull, dirty and dangerous - tasks. Automation reshapes jobs, not eliminates them.

Enterprise AI will do similar – think of the drudgery I described above that India will be able to reduce as tourism booms over the next decade. Air India just placed a massive order of 500 new planes in anticipation of this boom.

Of course, from the questions during the Summit, today’s smart folks appear to want to focus more on bias in AI, Federated ML and other contemporary topics that will keep Workday engaged from other angles.

Aneel’s comments

Aneel’s prepared and casual comments showed his belief we are at yet another inflection point in the industry. Having upended the client/server market with Workday’s cloud offering, he is acutely aware of architectural disruptions in our industry. The arrival of new Co-CEO Carl Eschenbach has clearly energized him and he wants to get back to more of a product and platform focus. He said he is looking for a condo in Boulder, Colorado to spend more time with Sayan and the ML team.

One of his comments summarized his sentiments “I am not afraid of Oracle or SAP. I am more afraid of a disruptive new enterprise player built on ML and AI.”

Bottom Line

I walked away feeling more optimistic that enterprise tech may finally be poised to exit its “AI winter” – and that Workday will play a key role in this transition.