deal architect

Burning Platform: Upskilling for the New AI Market

For the 125th episode of Burning Platform, I am repurposing a recent panel I was invited to be part of courtesy of Inside Jam. It focuses on the urgent need to modernize talent pools for the new world of Gen AI and broader automation

Moderated by John Santaferraro, CEO and Founder, Ferraro Consulting the panelists also included:

• Paul Byrne, SAP Programme Director, Dragon ERP
• Anders Green, Founder, Alox.Online
• Donald Farmer, Principal, TreeHive Strategy

We cover a very wide range of perspectives on literacy and training needs in the very fast moving world of automation including

• In the last couple of years, we have learned so much about the world of LLMs, GPUs, and Gen AI – go see earlier episodes of Burning Platform. Now we are facing up to the need for smaller and narrower models  
• We are waking up to the massive energy needs of modern data centers to support AI – and an opportunity for nuclear energy to play a much bigger role in powering this beast
• The need for the enterprise to be broadly defined beyond just white collar roles and include humanoid robots, drones, satellites, sensors etc. to support manufacturing, logistics, product R&D and other functions
• The growing realization that tech vendors have mostly SG&A data, AI use cases and talent. Most operational data and talent tends to be industry and geography specific and resides largely in user organizations. Any AI literacy program needs to address the need to manage expectations of what vendors can deliver.  

Lots more perspectives in this 55 minute session – not surprising given the brainpower on the panel.

Burning Platform: Dreamforce 2024 sneak preview

For the 124th episode of Burning Platform, Michael Maoz, SVP Innovation Strategies and Ed Thompson, Market Strategist at Salesforce provide a sneak preview of what to expect at Dreamforce.

Michael and Ed are former Gartner colleagues and it was great to reconnect with them as we prepped for the episode.

They cover a lot of ground in about 35 minutes. Several things stand out

• Agentforce will dominate the airwaves. Salesforce calls it a “suite of autonomous AI agents that augment employees and handle tasks in service, sales, marketing, and commerce, driving unprecedented efficiency and customer satisfaction.”  CEO Marc Benioff had previewed in a Jim Cramer Mad Money interview early examples from several industries including Wiley (publishing), Kaiser (healthcare), ADP (services), Wyndham and Open Table (hospitality). Michael promises there will be many more and DF attendees will be able to take their own personalized agent home. “That’s the new swag” he says. Ed points out attendees will learn about “71 use cases of Generative AI and agents that Salesforce is using internally ”. It’s about time the conversation in the industry moved beyond GPUs and LLMs, to practical use cases and payback and Dreamforce promises plenty of that.
• Data Cloud should also get plenty of attention. It has been scaling massively over the last couple of years “We're up to over a trillion different data interactions. And by the way, trillions of predictions. And “we have 3000 developers working on it. Everyone tends to look at Databricks and Snowflake, that category of vendors but we've got more developers than they have, just focused on this stuff.” Michael also clarifies “we're not trying to own your data. That's not our game. We're not building it so that we can charge you to store your data on our system and have it all trapped. Data Cloud is not a traditional database, the way people think about it.”
• There will be plenty more in the 1,300 sessions. As Ed summarizes “there are 500 features in the latest release, which get completely ignored.”
• Of course. Dreamforce is never just a product showcase. You get to meditate with monks, mingle with all kinds of mascots and musicians and Trailblazers and the creative team at Salesforce always takes the “National Park” to new heights. And the city of San Francisco which has been going through a rough time the last few years, always cleans up for the event.

Image Credit – Ray Wang

Nothing compares to being there in person. But you can feel the pulsating energy in their voices. Very nicely done.

 

Analyst Cam: Zoho’s Enhanced Analytics

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

Zoho launched today a new version of Zoho Analytics—Zoho's self-service BI and analytics platform. https://www.zoho.com/analytics/ It packages over 100 enhancements including new AI and ML capabilities, enabling diagnostic insights, predictive analysis, and automated report and dashboard generation.

Zoho Analytics, first launched as Zoho Reports in 2009,  has quietly become a major player in the crowded Business Intelligence market. It is the second most used application in the Zoho One suite (which I have written about often over the last few years). That’s particularly impressive when you consider the suite has over 50 applications.

In addition to 17,000 direct customers of the analytics capabilities, several ISV and SI partners have adapted the analytics engine for their platforms and as a result Zoho can claim 70,000 analytics customers. Importantly, that also translates to a wide breadth and depth of data which Zoho’s over 500 connectors have access to.  That range also positions it well for the growing Generative AI market, especially as customers look for cross-functional and vertical use cases.

As part of the launch, I had a chance to record Sailas Sundaram, Senior Product Manager of the Zoho BI Platform, as he summarizes some of the new capabilities. He does so crisply across these 4 categories.

He goes through a long list of features across the 4 areas including the pipeline builder which enables data engineers to orchestrate and monitor the data flow from source to destination.  He discusses integration with OpenAI, MS Teams and Slack and adding support for more regional languages to Ask Zia, their natural language assistant.

He covers DSML Studio with AutoML, a no-code assistant, to easily build custom ML models. He explains the BI fabric which allows for combing insights from multiple BI platforms, such as Power BI and Tableau, onto one, easily accessible analytics portal.

Lots more in the rapid fire 20 minute video. Very nicely done.

Industry Tea Leaves – Executives, Earnings and Events

It was a rough week for tech stocks on Wall Street. And with the uncertainty around US interest rates and elections for another 2 months who knows what other whiplash effects we will encounter.

I usually take a narrower pov - how will this affect enterprise software and services? And in the last two weeks have had several interesting conversations, and will have more at upcoming industry events in the next few weeks.    

Is SAP in trouble?

I heard from a couple of folks

“Three board members gone in less than two months”

“This is a lot of executive talent to replace on short order”

Is Salesforce taking SAP’s place as a vertical leader?

Marc Benioff was in fine form as he reported an impressive quarter on Jim Cramer’s Mad Money and importantly talked about AI use cases from several industries including Wiley (publishing), Kaiser (healthcare), ADP (services), Wyndham and Open Table (hospitality)

Are we in the Gartner trough of disillusionment when it comes to Gen AI?

Dreamforce, Workday Rising, SuiteWorld should give a better perspective on the trajectory of the industry and I have heard about product announcements from Zoho and others under NDA

When are we going to see Gen AI impact on SI developer productivity? And that in common phases in most of their projects - data conversion, testing, end user training etc?

Many SIs will have large booths at the industry events and should allow a chance to ask them about Gen AI impact on their practices.

I also tend to take a long term view of the sector in line with enterprise customers. They buy solutions which serve them for 2 decades or more. They spend months evaluating options and negotiating contracts. Throw in vendor events and news and all these data points are tea leaves which help me in my tasseography. You have to drill down in to the small patterns, not jump to conclusions from the clusters

I also rely on history for macro clues. Hardware and telecom vendors have historically provided the groundwork for architectural shifts. The initial set of applications and services tend to be “safe” and under utilize the new processing power. It took Apple and Google nurturing mobile apps ecosystems to help grow sales of mobile devices. It took Amazon similar to build a massive ecommerce engine.

We are seeing the same when it comes to the power of GPUs and LLMs.  As I wrote here, the initial Gen AI use cases in the enterprise have not been very ambitious – especially when you consider the power of NVIDIA’s Blackwell platform. They have focused on SG&A, not on the much larger COGS and Revenue and Asset management opportunities on their customers’ P&L and Balance Sheets

I have said often that even after 25 years of SaaS applications, 75% of business processes across countries and industries do not have much vendor application choice. Vendors have been content to keep selling basic ERP and CRM functionality, and there mostly for English speaking countries. Those terms have been around 30 years – I helped coin some of them. If anything, the hype from GenAI has caused a pause in expanding their transactional functionality. Without the functionality they do not have data or the domain expertise to imagine ambitious AI use cases.

Even SAP which has the broadest reach of customers, functionality and talent across industries and countries has been cautious in the reach of its GenAI offerings. So about its exec departures, yes  it is somewhat concerning but I am more worried that SAP is not being more ambitious in its offerings and is mostly focused on an updated core ERP. As for Salesforce, I love Marc’s optimism but his use cases mostly focus on payback from customer service productivity. I would love to see in addition operational, vertical and geographic use cases.

And in turn this is a major opportunity for NVIDIA, other chip makers, LLM providers and hyperscalers to build a broader ecosystem of use cases and business cases. . Many of these markets should be highly differentiated and command premiums which Wall Street expects to pay for NVIDIA GPUs and hyperscaler pricing. It should be a virtuous cycle as it has turned for Apple, Amazon and Google in the last go around.

It is good to see Jensen Huang, Sam Altman, Thomas Kurian, Matt Garman make the industry rounds but I would love to see them drive more leadership and ambition in their enterprise ecosystems. As for me, I need to get an oversized coffee mug to read more tea leaves. As I wrote here, Wall Street’s definition of industry leadership has evolved over time from BOPS to FAANG to the Magnificent Seven. We cannot rely only on the current crop of application and services vendors for enterprise AI leadership.

Image credit

 

Who put OUR data in THEIR data centers?

A character in the upcoming book I am co-authoring titled The AI Analyst (due in November) says

“Patrick, did you know I was in the Service? Spent a fair amount of time in the Middle East. I used to hear the expression often, ‘Who put OUR oil under THEIR sand?’ Sounded funny most of the time. Idle talk, but sometimes it sounded ominously hostile.  We are going through something similar in the technology world: ‘Who put OUR data in THEIR data centers?’ There is zero respect for customer data. There’s a land grab happening.”

Our book is in the fiction, thriller genre, but I am already seeing it in the real world. Corporations have unique customer, product and operational data and related domain expertise. Most vendors have plenty of data and domain expertise, but it is usually not that unique – it tends to be back office, horizontal, country specific. Essential data, but not at premium commanding prices.

There is plenty of unique customer data which will likely never find its way into a vendor cloud – seismic survey data at oil companies, drug molecular data at pharma companies, pixel metadata at satellite imagery companies and plenty more. And even mundane IoT, patent detail, medical records, customer contract data is elusive – as it should be for privacy and IP protection reasons.

And when vendors have useful data, they tend to be very protective and put all kinds of restrictions if other vendors try to access it. A BI vendor recently recounted the issues they face when their tools try to access customer data in other vendor’s databases. They only get access to high level, summarized data. The other vendors have excuses like  “you cannot understand the detailed data better than we do. So why do you want it in the first place?” It’s their customers data but they behave as if it theirs.

We are seeing a backlash from customers. You see the pendulum starting to swing from public clouds back to private clouds. Much of that is due to the economics of public clouds, or in some industries because they prefer capex v opex spend for their infrastructure, but increasingly the unspoken agenda is also to protect their unique data and the potential to monetize that on their own.

And you are seeing vendors trying to beg, borrow, steal unique customer data so they can feed their machines for differentiated AI use cases. That’s necessary, but not sufficient. They also need domain expertise talent to understand nuances in the data and to come up with compelling use cases.

You often hear the expression “Data is the new Oil”. Exploring for oil has always has always been high risk and required complex equipment and expensive engineering talent. The same is happening around differentiated data. Wars will be fought in the quest for such data. We are at the beginning, idle envy stages. But as we have seen with consumer data, there will be much uglier behavior by rogue vendors.   

“Who put our oil under their sand?” -  in a few weeks you will be able to read more about that character and about criminal behavior in the tech sector in our fiction book.   

 

 

Technical Debt – the iceberg under the software vendor waterline

We are all familiar with the term “technical debt”. Most vendors and analysts define it to imply customers not keeping up with the latest software release. However, that definition is narrow and similar to what is visible in an iceberg – the portion above the waterline. In the case of some icebergs, the invisible mass under water can be 7 times as large as that above the waterline.  

The “invisible” technical debt portion very few vendors acknowledge is that they have not kept up with business changes – driven by innovative customers who are redefining their industries, those by smart governments around the world which are forcing new reporting and other requirements and those by co-opetition with non-software technology sectors.

I hosted Whynde Kuehn of S2E Transformation last month to discuss the critical role of Business Architects, alongside those of Enterprise Architects as she launched her new book The Execution Challenge: Delivering Great Strategy at Scale. You can watch the whole conversation here.

I have excerpted below a 6 minute segment where I said we use the term “innovation” very loosely. Much of it is really “catch-up” with years of vendors not keeping up with the accelerated rate of today’s business change. I talk about vertical applications which have become viable, even essential over the last few years. Then, I talk about localization – adapting to governments which are introducing new forms of taxes, eInvoicing, new payment formats etc. Next, I talk about how robotics, drones, satellites, sensors are allowing us to fundamentally rethink many processes. There is a fourth one I have covered elsewhere - ecosystems which think “automation first” during implementations and upgrades are raising the bar for last-gen ones very dependent on labor intensive partners.

Too many vendors have grown the “under water” part of technical debt by not keeping up with all those changes and they (and their customers) are paying the price in 4 ways

Customers continue with legacy versions

In SAP Nation 2.0 in 2015, I described customer migrations to next-gen applications in SAP, Oracle, Microsoft and Infor world. I predicted customer migrations from ECC to S/4HANA would take a decade. Now it looks like by 2025, only about half will have completed their journey. And SAP has done better than the rest of the industry. In the book, I described an Oracle event in early 2006 where it celebrated “Half Way to Fusion”. Its customers moves to Fusion are considerably slower than those in SAP world. Too many next-gen software products reflect new technology like cloud architectures, but not much in functional improvements. They also don’t come with automated migration tools. End result – pretty low ROI from the move.

Clean, but Tiny, Core

I coined the term “ring-fence” around 2009 when I saw customers were adopting Salesforce, Workday and other SaaS applications around their core ERP, CRM and other books of record applications. In my wildest dreams I could not imagine customers would end up with 30, 50, 70 applications that make up the ring, but here we are because their books of record have not evolved with the business world. I honestly cringe these days when I hear vendors talk about the benefits of “clean core”. To me, the term reminds customers how small a footprint of the enterprise their major vendors are supporting – and how much that share has shrunk in the last decade.

More Custom development

I like to tell young folks in the industry when I started my career it took a lot of effort to convince customers to buy v build enterprise applications. With DevOps productivity shaping up as one the most promising GenAI use case,  we may find ourselves in the same predicament again in a few years where customers build way more than they buy

 Wall Street penalties

As I wrote here,  enterprise software vendors were Wall Street darlings in the late 90s. 30 years later their relative lack of ambition has allowed hyperscalers, chip makers to become the stars and we have “Mag 7 envy” as a result.  

Talking about icebergs, It’s trite to bring up the sinking of the Titanic, but the reality is as an industry we may be headed to that fate. That’s unless we significantly increase the business architect ratios in our staffing and start to deliver much more business functionality for a dramatically different world.

The eye of Hurricane GenAI – the calm surrounded by destruction

Margaret and I drove through Hurricane Debby on Monday because of flight cancellations from Charlotte, and it reminded me of conversations with folks at the National Hurricane Center. While storms are extremely disruptive, the 20-30 mile wide eye of most hurricanes is relatively calm.

It is a good metaphor for what is happening in GenAI markets

Larry Dignan at Constellation analyzes recent earnings calls at Microsoft, Alphabet and others and summarizes what he calls a “halo narrative” around GenAI.

“Enterprise software vendors haven't been thrilled about the narrative that they aren't directly monetizing generative AI so the narrative is subtly being flipped”  and

“GenAI is just software so don't go looking for direct revenue impacts.”

Larry and I had recorded a Burning Platform episode last November which presaged many of the trends which have led to this predicament and you can revisit them here

I would not scoff at any revenues, so don’t want to dismiss the halo effect explanation. However, to me it also highlights a lack of imagination at many vendors and the lack of appropriate data to create compelling GenAI use cases. I find Wall Street tends to often be myopic about CapEx spend at software and services firms, but in this case, we are throwing massive GPU and LLM resources at the problem, and it is not unreasonable to ask “where’s the beef?”   

Developer productivity is showing up as a compelling GenAI use case for many vendors. They have plenty of previous written code in their own software, at their customers and at their partners to train their machines and at least generate a first draft of new code. SIs and outsourcers have plenty of data in 000s of proposals, custom code, test routines, data conversion, training modules and other assets and if they could get over their labor intensive mind set they could also deliver significant productivity with GenAI.

Vendors also have plenty of what Malcolm Frank calls SGA (sales, general and administrative) data to generate attractive (but not necessarily premium priced) GenAI use cases - watch this Burning Platform episode where we talked about raising the bar for AI. However, most vendors don’t have much COGS (Cost of Goods Sold) or Revenue or Balance Sheet data. They also don’t have many practitioners with depth in those areas. Operations and business models tend to be very different by industry and country and without that data and talent you cannot imagine or offer compelling AI use cases.

The chickens have finally come home to roost. I have said often that even after 25 years of SaaS applications, 75% of business processes across countries and industries do not have much vendor application choice. Vendors were content to keep selling basic ERP and CRM functionality, and there mostly for English speaking countries. If anything, the hype from GenAI caused a pause in expanding their transactional functionality.

Even SAP which has the broadest reach of customers, functionality and talent across industries and countries has been cautious in the reach of its GenAI offerings

The good news is the market is wide open for incumbent vendors and new entrants to build transactional functionality for so many unexplored markets. They can build their talent and data, and GenAI use cases for several niches. Many of these markets should be highly differentiated and command premiums which Wall Street expects to pay for NVIDIA GPUs and hyperscaler pricing.

There is one big caveat to all this. With the excitement around GenAI over the last couple of years, I have seen customers wake up to the realization that they themselves have the relevant practitioners and they also have the operational and revenue data. Why should they share that intellectual property with vendors and additionally need to pay for the privilege? Many customers are learning how to monetize that data. They will share such IP at very different price points. 

The tech customers of yesterday could become tech vendors of tomorrow. Indeed that is a sub plot in my upcoming fiction thriller titled the ’The AI Analyst’ which is expected to be released by Thanksgiving.

Now that is fiction,  but even in real life, data is the new oil and battles are already being fought where data is being stolen and traded 

Gen AI is real. Finding use cases that justify the computing cost and talent are still elusive. It will take a new vendor mindset and business model to get use cases which justify pricing premiums that pay for the AI CapEx and practitioners.  

But you need to get to the calm eye of the GenAI hurricane. The eyewall is way too turbulent. Even better get to terra firma. Driving through the relentless rain from Debby this week, we were glad we weren't flying through it.

My 10 asks of the next POTUS

For 35 years, I have helped clients make complex technology decisions – and do so objectively and quantitatively. The process involves spreadsheets with evaluation criteria, scores and weights. 90% of weight tends to be related to functionality, architecture, economics, ecosystem etc. Rest tends to be driven by soft factors like vendor charities, social good etc. I encourage vendors to be innovative in their responses and I advise clients to penalize vendors who sell negatively about the competition rather than showcase their own capabilities. 

I use a similar process every 4 years for my Presidential vote. I am a registered Independent – technically, NPA (No Political Affiliation) - in my state. And honestly, with just 3 months left to Election Day, I worry the candidates are not talking enough about our burning issues. The Democrats want to continue to prosecute Trump. Trump wants to keep calling Kamala names. Poor Robert cannot get even a few words in the mix.

I want them to start articulating how they will address my ten issues and earn my vote and that of many other voters who think like me

1. Reduce National Debt

Both Republican and Democratic administrations have run up massive debt in the last 8 years. I want them to articulate how they will reverse course. Don’t laugh. A Democrat, Bill Clinton showed budget surpluses are doable. My Republican state Governor, Ron DeSantis is delivering them even in today’s environment. I want to see it done at the Federal level. Servicing that debt at current interest rates is insane.

2. Deliver trade surpluses

The US has been running trade deficits for decades. Trade deficits mean we keep exporting good jobs. We are chumps who continue to believe in ‘free trade” while China, Germany, India and so many countries continue to take advantage of our openness. Trump tried with tariffs on imports. We need much more. We need foreign companies to make and hire more right here at home. In turn, we also need to encourage more US companies to urgently adopt an export mindset. We are the biggest single market in the world. We should use that as negotiation leverage.

3. Make the US an energy innovator

US greenhouse gases have stayed level for over 3 decades while our GDP has gone up 5X largely because our utilities moved from coal to natural gas. We need to quit feeling guilty about our gas usage – it is pretty damn clean. Additionally, we need to encourage investments in carbon capture and storage so the methane from the gas can be mined for hydrogen as next-gen industrial fuel. We need to invest much more in modular nuclear, next-gen geothermal, and next-gen solar and wind, not keep hoping the current solutions will magically work for us.

4. Get serious about “affordable” healthcare

It is shameful that we spend 20% of our GDP on healthcare, have miserable outcomes and yet our politicians continue to use terms like “affordable”. Time to lock up payer and  provider executives and tort attorneys in a room till they can agree on reducing our spend and delivering quantitative improvements in patient outcomes.

5. Tie immigration to our talent needs

The Bureau of Labor Statistics tracks trends in over 800 occupations – white, blue collar, trade jobs etc. Let’s align immigration with our needs by occupation. Many immigrants like me went through a labor certification process, FBI and other checks, a formal naturalization process before we were allowed to vote. We do have a WORKING process. Let’s get back to that - not the open border we have tried in the last few years.

6. Take care of our aging baby boomers

Quit eyeing Social Security and Medicare as “banks” to be raided. They are not entitlements – Baby Boomers and their employers funded them. Also, Baby Boomers were expected to self-fund retirements with 401Ks and IRA funding. Protect those nest eggs from the IRS and financial advisers who can easily take a 25 to 50% bite over the retirement years. Finally, question DEI hypocrisy which only applies to gender and ethnicity, but not to aging workers who want to continue in the workforce.  

7. Quit spilling our young blood in faraway places

And funding 2/3 of NATO’s budget and guarding the world’s naval trade routes for free. We have helped create middle classes around the world. They can afford to provide their own defenses and compensate us for our support. Let’s instead use our young men and women to refresh our own physical and digital infrastructure.

8. Be fluent in STEM

I want the US to lead in space, oceanography, anti-aging and other health areas, AI, robotics, next-gen financial instruments, crop genomics, GPUs, energy and more. I want the next POTUS to present an annual STEM State of the Union, be articulate and passionate about our leadership and get our young excited about our opportunities.     

9. Celebrate the nuclear family

The “Population pyramid’ is real in many developed societies with aging populations and insufficient young workers to drive production and consumption. We have brought it upon ourselves with over 100 million abortions. Fixing that with reckless immigration only worsens the problem. We can chuckle about childless cat ladies, but let’s get a leader who celebrates vibrant families with boisterous kids and plenty of cats and dogs.

10. Re-prioritize common sense

In recent times we have let activists and ideologues drive our policy. Germany has tried for 5 decades and spent trillions of euros to run its economy on wind and solar, and it is still heavily dependent on foreign gas and its lignite. Why do we think other countries will do better and quicker with that path? For decades, we have depended on natural immunity as protection against various diseases. During COVID we appeared to forget that lesson. Many more examples where we should we asking lots of questions, not just going along with what is being proposed by so-called experts.

I want to end this with a request. Don’t let single litmus issues decide your vote. Don’t let your favorite media source influence you too much.  Instead, draw up your own list of major issues. Do your own primary research. Talk to practitioners in various fields. And bombard candidate campaigns and your media sources for position papers and proof points.

Make the candidates earn your vote. And penalize them for every negative comment about their competition. Make them focus instead on solutions to your issues.

Make the next three months count.  

Burning Platform: The Workday Extend Platform blossoms

For the 123^rd episode of Burning Platform, we host Jay Wieczorkowski, GM Extend, and discuss many aspects of the Workday platform and the growing ecosystem around it  

The first 25 minutes are a presentation by Jay where he discusses platform features and use cases, the recent hackathon at their DevCon event, the GenAI impact on the platform, the growing user and partner developed applications

We then have a discussion around how Workday is managing the wide spectrum of users of the platform – end user and citizen developers and much more sophisticated partner and IT developers.

We cover the growing partner ecosystem (which Matt Brandt, Senior Vice President, Global Partners had also discussed in this episode) and the fact that developer productivity is shaping up as one of the most promising uses for Gen AI, and how Workday is balancing that with its goals of “responsible AI”.

We discuss the co-opetition with hyperscaler platforms. Jay says it’s “not a zero sum game” and discusses how they are leveraging AWS Textract and Lambda and Google Gemini among other capabilities.

I love his passion when he describes the energy and intensity of the hackathon

“We have 40 judges that go around to each table, and (project teams do) 10 rounds of rapid fire presentations where they have to literally present their project to people 10 times in a row, five minutes each time. The energy in the room between the judges scrambling to go to the next table and then learning about all these projects, and then real time judging on their phone, and then the teams, practicing and rehearsing and honing their presentations. They keep getting better with each round, and we use that process to create our top 10, where they present on stage, and then we choose the final winners. That energy truly encapsulates our community. These are folks that built their career on Workday, folks that we are committed to investing in. These are folks that are often behind the curtains, making change happen, and it's just really exciting to celebrate that and also celebrate that they are learning new technology, exploring and seeing the art of the possible…that brings it all together.”

Very nicely done in under 40 minutes.

Analyst Cam: Workday – Office of the CFO solutions

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

Rob Zwiebach, VP Product Management at Worlday presents a rapid overview of their solutions aimed at the CFO

“We are talking about the overall solutions for the office of the CFO, and it's a very broad set of capabilities - everything that a medium to large organization needs to manage its financials across record to report, procure to pay, quote to cash - really the full set of financial processes.

The solutions harness what he calls “intelligent data core”. “It is a fundamental differentiator for Workday built on a common set of platform capabilities, including common security model, common privacy model and with artificial intelligence built right into the platform."

He spends some time explaining first principles they applied to their product suite at its origin over a decade ago. “We don't have this fixed accounting key where users always have to enter these codes with a certain number of characters. Instead, we just focus on capturing what dimensionality is relevant and contextual based on what the user is doing.”

Rapid fire, he talks about transactional functionality, AI use cases, Prism Analytics, Adaptive Planning, consolidations, country specific localizations and more.

I have invited him back to drill further into some of the areas. For now, enjoy this very crisp overview in 25 minutes.

Analyst Cam: SNP Group - Automating ERP Migrations

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

One of our major research focus areas is Applications Modernization and Migrations. As I wrote here “After 25 years of cloud applications, it is shocking how many customers are stuck with client/server and even mainframe applications”.  And how expensive and high-risk migrations continue to be because they are so labor intensive.  

So, it was nice to host Jens Amail, CEO of SNP Group, which has automated data transformation and migrations across 15,000 projects and claims a 77% market share for that phase. He runs through his presentation in 25 minutes and you should listen to the whole episode, but a few things really stood out.

Their extensive experience is allowing SNP to tackle much more ambitious migrations to RISE versions of SAP S/4HANA. As he says “Customers have to deal with certain carve outs based on regional instabilities - classic examples at the moment are China and Russia.  They need to upgrade all their instances to the latest enhancement pack. …We have many customers who need to implement the new GL which is a requirement  consolidation of instances, document splitting etc.

When you look at our approach, we can basically collapse all of these individual projects into one phase, and this drives a number of customer benefits… you have faster time to value, because you don't have to do pre projects first, have to finish them at the end of the fiscal year etc.”

They are building two very impressive ecosystems. He says 17 of the 20 largest SAP SIs are using their tools. He proudly compares the “Bluefield” adoption by this wide spectrum to the very successful “Intel Inside” ad campaign of old.

SNP is also building an ecosystem of tools to automate other elements of migrations. They include SmartShift which helps automate migration of SAP custom code (watch their Analyst Cam presentation here) and Tricentis for User Acceptance Testing.   

 He also talks about their very well attended Transformation World event – he has convinced me to attend the one next June.

Plenty more in the 25 minute conversation. Very well done.

Importantly, it shows we can automate major chunks of enterprise migrations, lower their costs and also their project risks.

“Draw a bigger circle”

I recently saw an article which talked about Oracle at a trillion dollar market cap. Whoa!

Then, I looked closely and it said perhaps if the AI boom continues, and maybe if starting 2026 its CAGR increases from a current 6 year average of 5.6% to 12% it could have that heady valuation in 2030. As of Friday, its market cap was just shy of $400 billion.

Similar "4 comma club” scenarios are being painted for SAP, Salesforce, Accenture and other enterprise software and services vendors. SAP and Salesforce closed last week near $250 billion, Accenture at $200 billion.

It is what I call “Mag 7 envy”. Mag 7 as in the Magnificent Seven stocks - Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla.  3 of them were valued on Friday over 3 trillion each, 2 over 2 trillion. Tesla in the only one whose market cap has dropped under a trillion.  

I call it “envy” because each of the enterprise vendors could already be part of that rarefied club, but have missed out on major market opportunities over the last couple of decades. Now, they don't even have a tenth of the valuations of several of the Mag 7!!!

I had 2 conversations last week about the missed opportunities – one with Whynde Kuehn, starting around 21.00 here and another with Dan Aldridge – see video below.  (My points deal more with enterprise software, and Accenture did well in acquiring a series of digital agencies, but they sat out the cloud infrastructure market that hyperscalers have run away with, and the huge contract manufacturing market that Foxconn and others dominate)

I have regular conversations with executives at these enterprise vendors and keep hearing comments like

1. Our advisers tell us focus is good – just keep executing
2. You are always pointing to markets where we need to make investments – why don’t you help us sell what we have in the bag today?
3. We cannot make our economics work in emerging economies

In one of my books, I quoted Bill Joy, one of the co-founders of Sun Microsystems, and all-round Polymath

“If you cannot solve a problem, make the problem bigger. If you draw a bigger circle, you start to see several systems you can work on.”

It’s going to require a lot of new thinking – new business models and partners to sell into fast growing economies, joint ventures with customers to help monetize their data assets, build deep vertical operational capabilities, develop very different AI use cases which get us out of our SG&A, white collar comfort zone, find a drug to cure our allergy to large CapEx investments and more.

Don’t get me wrong – these are healthy companies. They are entitled to be content with where they are – they are doing much better than most of their competitors.

However if they have Mag 7 envy or aspirations, I would say they are need to draw bigger circles. Much bigger ones.

Burning Platform: Turning Strategy into Reality with Business Architecture

For the 122nd episode of Burning Platform, we host Whynde Kuehn of S2E Transformation and discuss the critical role of Business Architects, alongside those of Enterprise Architects. She has a new book coming out July 11 titled The Execution Challenge: Delivering Great Strategy at Scale.

This episode is in 2 parts.

She leads off with a presentation around her approach to Business Architecture as a disciplining force for turning strategy into reality. She introduces her passion "is to help organizations (especially large ones) take really big ideas and move them into action. I've had the honor of working with organizations all around the world, from large corporations, governments, startups, and helping them to bridge the journey between the big ideas and being able to implement them across organizational units, products, geographies …how I'm able to make that possible is through the discipline of business architecture. I'm a long time business architecture practitioner, thought leader, educator. I live these ideas every day. I've led some of the largest transformations, ran my own team of business architects, and I'm a co-founder of the Business Architecture Guild.”

She then delves into the detailed and disciplined components of her approach

Next, we go back and forth on innovation projects and what I call “catch up” investments to reflect massive changes in industries, geographies and companion automation like robotics, drones etc. We also discuss the need for business architects to not just work with enterprise architects but to challenge and lead them so the end result is business objectives not just shiny new technology.

Fascinating presentation, followed by conversation of roughly 20 minutes each.

A must watch

Analyst Cam: Unit4 Success4U - Outcome-driven approach to cloud customer success

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

One of our major research focus areas is Applications Modernization and Migrations. As I wrote here “After 25 years of cloud applications, it is shocking how many customers are stuck with client/server and even mainframe applications”

So, it was nice to host Jean De Villiers, Chief Customer Officer at Unit4 and have him present on their Succes4U offering which is “a subscription wrapper that provides you with a single access point to the Unit4 Service Portfolio, with expert guidance to enable maximum value realization from your Unit4 investment.”

He says “we looked at all of our red projects over the years, and identified common trends in what drove the projects red?” in developing this offering.

Too many migrations just sell cloud architectures and new features and functions. They don’t focus enough on the change management when your IT is now longer managing the infrastructure, when upgrades are more frequent and many other changes when you move to the cloud. And most don’t focus on business outcomes from the migrations.

22% of Unit4 customers had migrated to the cloud offering by the end of 2023. Since Success4U was announced in Nov 2023, they have had conversations with 87% of the remaining customer base, and 175 are actively migrating.

We talk about why customers resist change, whether they attempt greenfield projects when they do migrate, if Unit4 and partners are automating pieces of the migration, the business outcomes Unit4 helps them achieve as part of the migration and plenty more. As he says they are “revolutionizing the way we take our customers to the cloud and also the way we onboard new customers to our platform”

Very nicely done in about half a hour.

Workday joins the Fortune 500

Workday entered the prestigious Fortune 500 club this year.

Importantly, 60% of its Fortune 500 peers use its software. It has shown it can scale its HR and Financial applications to support very large payloads.

Impressively, in a world where large companies tend to go with “safe choices”, Workday managed to break through as a startup and in the early days of SaaS. I had the opportunity to profile one of its earliest large customers, Flextronics (which had a run rate of $20 billion back then) in one of my books. My write up profiled the meeting on Saturday, February 23, 2008 between the Workday founders, Dave Duffield and Aneel Bhusri with the CEO and CIO of Flextronics.  

Dave Smoley, then CIO there, had given me some of the backdrop  

“It was the meeting where our IT council gave me the green light to proceed with a major global project to consolidate 80 different HR systems across the world. We had settled on our existing ERP vendor’s software…. I thanked them for approving such a large project and then I surprised them. I told them I may come back to them in the next month with a ‘better, faster, cheaper’ option.”

I remember I blurted out at the audacity “You did what? You turned down an approved budget and stuck your neck out for a global project with an unproven vendor?” and he explained they had a “fail faster culture” and the due diligence they had already conducted on Workday.

Mike McNamara, then CEO, told me it took him 20 minutes to get comfortable with the two founders. “Yes, they did not have the size or scale, but these two had done this before a few times.”

Since then I have had a chance to talk to many customers who have often gone through even more torturous evaluations and decided on Workday.

The next wave of opportunities for Workday will come from global expansion – today only 25% of revenues are outside the US. They will come from increased verticalization in the services sector as their execs in healthcare and professional services have shared in our video series. They will come from AI use cases which new (as in just over a year) CEO Carl Eschenbach explained in a recent Q&A

“With more than 65 million users generating more than 800 billion transactions per year on our platform, the volume of clean, trusted data that Workday and our ecosystem can leverage for AI is truly unmatched. Today we have 50 AI use cases available to customers, and 25 generative AI use cases on the roadmap to help our customers make confident decisions faster, increase efficiency, and drive productivity.” 

So, what could be next goals? Clearly climbing up from rank 490 in the F500. Also, brand new benchmarks are being set by the “Magnificent Seven” stocks – Apple, Microsoft and NVIDIA each have valuations of over $3 trillion. Alphabet and Amazon hover around $2 trillion. The highest Workday has been is around $80 billion. So, literally the sky is the limit.

Much more about their likely trajectory in this blog post I wrote after their recent Innovation Summit – about “unleashing the beast”

From BOPS to FAANG to The Magnificent Seven

Larry Dignan of Constellation Insights summarized the state of enterprise GenAI in a recent column

“We're in the pick-and-shovel phase of the AI buildout and that means Nvidia, server makers and that's about it.” And “The recent earnings parade from enterprise software companies highlights the big hurry up and wait approach when it comes to AI.”

Almost exactly six months ago, he and I had discussed LLMs, GPUs, value of data streams in this Burning Platform episode about the economics of enterprise AI.

He also quotes Tom Siebel of C3.ai, which has a broader AI portfolio than other vendors and had a better quarter

“Silicon will get commoditized. It always gets commoditized. Infrastructure will get commoditized. It always gets commoditized. What doesn't get commoditized in the long run are the applications and that's where C3 AI plays.”

Tom is a brilliant executive who has successfully navigated previous architectural transitions (and his execs, Ed Abbo and Bruce Cleveland have presented their perspectives in our video channel) but I think this enterprise transition looks and feels very different than previous ones.

I say that as I simultaneously work on two books (yeah, call me crazy). My writing style requires a lot of research and that also helps my industry analysis. The one to be released in 2025 is SAP Nation 5.0 - about the post-Hasso Plattner SAP. It is a world of RISE and hyperscalers, of their co-pilot, Joule and their platform, BTP, of more automated migrations from ECC. Not your Dad’s SAP or enterprise sector by any means. The other one my co-author and I hope to release in 2024 is fiction – a thriller involving a Silicon Valley AI and Automation billionaire CEO who disappears. And an industry analyst, Patrick Brennan, who worked at the company and now covers it, helps the FBI with suspects and motives. It has required analysis on the verticalization of AI, robotics, drones etc, customer data breaches and many more topics.

And as a result, I am seeing 10 enterprise trends – many contradictory

“The Magnificent Seven”

When I was at Gartner in the mid-90s we coined BOPS for Baan, Oracle, Peoplesoft and SAP as the hottest technology vendors. 15 years later, Wall Street had seen consumer tech budgets and innovation skyrocket and Facebook, Apple. Amazon, Netflix and Google (FAANG) were the new darlings. Now the hottest stocks are the Magnificent Seven - Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. During the decade ending December 2023, their cumulative market capitalization increased more than tenfold.   They chase each other in the “four comma” club – those with individual valuations over $1 trillion. Close on market valuation are TSMC and Broadcom. Oracle, SAP, Salesforce, Accenture, even telcos like Verizon are far behind. It reflects Wall Street views that hyperscalers, GPUs and other silicon are massively reshaping data centers. That the hyperscaler AI use case of developer productivity is, at least in the short term, more promising than those being offered to the enterprise C suite. Each one of these players has invested massive CapEx, and has been unafraid to spread wings in new verticals and countries. In contrast, most software and services firms have played it safe with little CapEx investment and stuck to market categories like ERP and CRM which we defined at Gartner in the 90s.

We are seeing a different breed of IT infrastructure vendor

The IBMs and HPs of old – and even today – sold “speeds and feeds”.  They are addicted to high margins – from printer ink to enterprise storage. The modern infrastructure vendor is much more business model savvy. Look at NVIDIA’s DGX Cloud – an AI factory in the cloud on a pay as you go model. They will commoditize themselves before someone else does. These vendors are as comfortable with consumer as with enterprise markets – look at Microsoft, or NVIDIA in gaming or Amazon in retail. They have been willing to enter and reshape markets. Look at how hyperscalers have enabled DevOps capabilities across many emerging countries. How Meta with WhatsApp has commoditized mobile calling and texting in many countries.

Software alone cannot eat the world

Enterprise Software vendors have taken Marc Andreessen too literally. Software by itself cannot eat the world but combined with satellites, sensors, robotics it has a much better shot. As a character in the fiction asks “You think Apple would be able to make money off apps, Apple Care, Apple Card, and countless other services if it had not invested in developing the hardware for the iPhone? Or Tesla would be able to sell its full- self- driving software or its insurance without first building its electric vehicles?”

Digital, industrial services dwarf white collar, labor based services

Systems Integrators and outsourcers continue to milk IT and BPO labor arbitrage models which have only evolved slightly over decades. They still don't leverage factory concepts or automation which can learn from tens of thousands of previous projects. The much more contemporary services are coming out of capital intensive sectors. Monitoring, maintenance, refurbishing of aviation, mining, shipping, industrial equipment and other sectors. They leverage new forms of CPQ to package hardware, spare parts, services, financing and other components. They have digital twins to mimic expensive assets. They have tons of IoT data to train their machines on. Their techs have augmented reality, navigation and other technology. They are pushing new business models – outcome based, as a service. These are next-gen services markets but the IT service vendors have not invested in domain expertise or the broader range of STEM skills needed for these new services.

The globe is spinning much faster

The software industry was only starting to internationalize software at the turn of the century. Vendors would proudly talk about supporting right to left scripts and double byte characters. Today that is table stakes as over 20 billion devices, thanks to Unicode standards, can handle 150,000 characters across most languages and nearly 4,000 emojis which have become a common international language.

Now, the software focus needs to be on deep localization  –  compliance with new statutory reporting formats, e-invoicing, direct and other taxes, payment protocols, labor and compensation matters, customs, sustainability initiatives and other business to government interaction.

US vendors are particularly challenged. They prefer to focus on English speaking markets in developed countries. They are used to selling through expensive direct and partner channels. Emerging markets are growing much quicker than Western countries. But they need local business practice support, new pricing models, new channels. Time for fresh thinking.

Verticals are becoming more granular

More inspiration from Polestar, the fictitious automation company whose CEO disappears. It treats each of the nearly 900 occupations the Bureau of Labor Statistics tracks as a potential vertical. “They have solutions not just for firemen, but also for pilots, nurses, farmers, shop- floor technicians, insurance claims adjusters, wealth advisers, garbage collectors, warehouse pickers and packers – no job was too petty pedestrian or lofty. They would think about how robotic limbs, conveyor belts, machine vision, artificial intelligence, forklifts, autonomous vehicles, light, heat and sound sensors and countless other technologies could improve human performance.” Most software vendors covet larger horizontal addressable markets. And there they would rather sell platforms where customers can custom develop. The problem is horizontal markets have been saturated over the decades.

Customers are back to custom development with a vengeance

I love reading Jamie Dimon’s annual shareholder letter at JPMorgan Chase. He is one of the most tech savvy CEOs. “We’re one of the world’s biggest technology-driven companies. We spend $15 billion in technology, at unparalleled global scale and speed.” While they may spend only a fraction of what the NYC bank spends, many other companies have gone through massive digital transformations over the last decade. They are comfortable custom building systems and in that sense we are “back to the future” at the dawn of data processing when packaged software was a novelty.  Now they spend plenty on software and services but are impatient with the pace at which those vendors are verticalizing and globalizing. They are willing to custom build or explore creative collaboration with other companies with similar needs.

Customers have way more unique operational and top line data than do vendors

Partly because of their custom development and ring fencing core packages with specialist cloud solutions, customers have way better operational and top line data. They can train their machines for  high value AI use cases because they also have much more domain expertise. Many are increasingly looking to monetize these unique data streams. And this is leading to vendor envy. In the fiction book, there is a thread around “who put OUR oil under THEIR sand?”  

Many customers are content to stay with legacy systems

On the flip side, it is interesting to see how few customers have moved to Oracle Fusion, or Infor or IFS or Unit4’s cloud solutions.  SAP is one of the few vendors which is seeing traction and there because of a 2027 “wall” where the previous ECC product is at support end of life. Customers complain the migrations are too labor intensive, expensive and prone to project failures. Many are waiting for more automation in migrations. Others are moving to third party support for legacy versions at lower costs and with extended end of life scenarios.

There is a new group of influencers

It is not my former colleagues at Gartner or IDC or Forrester. It is not in today’s boutiques or bloggers. In the 80s, strategy firms like Nolan Norton and Index and the Big 8 accounting firms were influential in technology decisions. Today firms like McKinsey, BCG and Bain have become much more influential as they helped clients with ambitious digital transformations. Now they are helping clients with high value AI projects and data monetization. VC firms have led the way defining new operational metrics for startups and defining new market categories much more so than market watchers. A new genre of geopolitical advisers, vertical energy, fintech, healthcare and other advisers are maturing. Those analysts are under a lot of pressure to support woke political positions and to not piss off ruthless dictators around the globe. But many take unpopular positions.  IT market analysts, in contrast, are afraid to offend far less powerful vendor executives or bureaucrats.  

Back to the Magnificent Seven. While Wall Street loves them, they only account for a quarter of the enterprise and consumer spend on technology. There are plenty of niches – and money - for innovative solutions. But it requires getting off the beaten path and traversing the ten trends I described.

A new enterprise technology market is emerging. Its still early days but research for my two very different books is starting to show some of the shifting sands. It’s going to be a thrilling and scary ride. Like riding the SandWorm in Dune 2.

.  

 

Burning Platform: SAP Sapphire 2024 Sneak Preview

For the 121st episode of Burning Platform, we host Clare Henry who heads Analyst Relations at SAP.  She provides a sneak preview of Sapphire in Orlando this week, in Barcelona next week and other locations to follow. She provides a 360 degree perspective.

I ask her about the “Bring Our Your Best” theme for the event. “It fits into a brand campaign we've been running for a while. SAP’s purpose continues to be that we help the world run better and improve people's lives. That is a cornerstone of our identity. However, we've updated our vision to say bring out the best in every business. It connects to our heritage, of course, while still embracing our future to help our customers embrace their future. And it's very customer-centric. It's one of the real things that differentiates SAP and certainly what drew me to the company.”

She calls the event “one continuous keynote with multiple chapters”. CEO Christian Klein and CMO Julia White will kick it off Tuesday morning (EST) and weave in multiple C level roles, and how they can strategically work together and how AI can supercharge that collaboration. They will be joined by the new AWS CEO, Matt Garman and I am sure they will talk about RISE and the role of the hyperscaler. Matt is also expected to talk about Amazon’s internal use of SAP products. Other SAP partners will make cameo appearances. Tuesday afternoon, Muhammad Alam and Juergen Mueller will present a “demo heavy” innovation keynote. Wednesday morning, Russell Scott and Thomas Saueressig (in his new cloud focused role) will focus on customer success and finally, Wednesday afternoon, Academy Award winning actress Reese Witherspoon will deliver an inspirational talk.

She next talks about the Experience Center which will feature the Semiconductor supply chain. Last year it was “Farm to Table” and a hit with attendees as you ended with a scoop of personalized ice-cream. This year you may walk away with a personalized microchip. In the book I helped Thomas and Peter Maier write last year, Business as Unusual, we brought out the impact of chip shortages on the auto sector and the resulting genesis of Catena-X, an industry specific network. Jeff Howell had brought out in this Burning Platform episode the broad role SAP plays across the semiconductor sector.

I love how SAP is able to combine the physical and digital aspects of complex supply chains in such exhibits and effortlessly move them from one event to another around the world.  Andre Bechtold had presented on last year's exhibit in this episode

We next talk about some of the other news planned at the event including that of the expanding role of Joule, the SAP AI Copilot.  

I ask her if SAP will ever go back to the 3 day, “big tent” format. She explains how the time-concentrated but location-decentralized format is delivering a lot more engagement for attendees.  

Finally she turns the tables and asks if I have anything to say about founder Hasso Plattner as he retires from official duties after an amazing 52 years at the company. I share some snippets from my blog post where I described Hasso’s storytelling prowess, a facet not many people got to see.

It is impressive how much ground she covers. One area she was coy about was when I asked her for details of the Wednesday evening entertainment. Actually I know and I could tell you, but then...:)

A must-watch especially if you are not going to Sapphire – she summarizes in 25 minutes what you would need to invest days of travel and onsite time.

Very generous, Clare!

Burning Platform: Analyzing the Analysts

For the 120th episode of Burning Platform, we host John Taschek, Chief Market Strategy Officer at Salesforce.

We go through his two decades at the rocket ship called Salesforce and how he has handled industry analysts differently than most other vendor executives.  His humility through out the conversation is striking.

I ask him how he got comfortable with boutique firms and independent analysts when most others prefer to deal with institutional analysts like Gartner and Forrester. His philosophy is he prefers to rely on the knowledge and the curiosity of the individual. and not the firm.

“Instead of tiering the analyst firms, why don’t we tier the analysts? That opens up the world quite a bit when you get away from just Gartner or just IDC. You look at all the independent analysts who have really unique point of views. I did it when Salesforce was very young and we could learn a lot from individual analysts, but I have never shifted from that position.”

We discuss how he has benefited from being on the Product side of the business versus the Marketing side

“I pushed early on to be on the product side. Because being closer to the product gives you a whole bunch of benefits when you are talking to analysts. You have more collaboration with the product teams, which are developing the strategy. I was against being positioned in marketing or comms… because that’s much more outbound. I didn’t want to be a pitch factory, just saying stuff about what we did and how great we were.”

We cover the massive new opportunity around Generative AI and the huge growth in their Data Cloud. We also spend a few minutes on monetizing data and impact on trust, emerging global opportunities and my upcoming fiction book – a thriller where an analyst helps the FBI around the disappearance of a Silicon Valley AI billionaire.

We discuss improvements he would like at analyst firms (too many silos across analysts, the “walls” between the sales and research sides of the firms) and the fact that “the bigger firms have great analysts who are doing great research. But overall, they are seen as safety nets for decision makers.”

As I mentioned earlier, his humility shines throughout. It is a truly enjoyable 40 minute conversation with plenty for both vendor executives and analysts to learn.

SAP Nation 5.0 – in 2025

This year marks the 10^th anniversary of the release of SAP Nation.  It was a wake up call, as I modeled the SAP economy, and importantly described how SAP customers were coping. In the vendor world the focus was on the first, and for some a chance to pick on SAP. Most customers I talk to thanked me for describing various strategies like ring-fencing core ERP with surround cloud CRM, HCM, SCM and other applications.

Since then, I have written 3 more books on the SAP economy.

2.0, released in 2015, looked at the newly released S/4HANA and I compared it to next-gen products from Oracle, Microsoft, Infor and others. I predicted customer adoption would be gradual – not SAP’s fault, most of the competitors have done far worse.

3.0, released in 2019, was a “State of the Union”. I broke the customer base into 4 groups – Risk-takers, Modernizers, Diversifiers and Bystanders. I also described SAP’s progress in integrating tens of acquisitions and several markets it missed.

Business as Unusual, released in 2022 was written for two SAP executives and brought out the massive changes in every industry as a result of COVID, the Ukraine crisis, climate change and big Digital Transformations. I have since had a chance to work with SAP on their continued localizations for markets around the world. You will see some of that content soon.

It’s time to start on the fifth book on SAP.

We are seeing seismic changes in the enterprise software world. SAP is leading some of them, reacting to others

• A dramatic shift from focus on transaction processing to analytics, data and AI
• But TP is not dead - so many new edge applications and localizations have become necessary – by industry, by country. Never in my career have I seen so many new opportunities
• Hyperscalers have replaced SIs as the most influential ecosystem players especially as SAP emphasizes RISE – and they definitely have Wall Street’s attention as many of them chase each other in the trillion dollar valuation club.
• Automation tools are finally gaining traction in migrations like ECC to S/4HANA, upgrades etc.

Customer strategies are often divergent

• Many are sticking with last gen applications – looking to lower maintenance and bolt on modern AI, IoT, vertical functionality
• Too many customers are back to custom developing applications as enterprise software vendors fall dramatically behind in functional coverage
• Not every customer is sold on a as a service model. They would rather pay as they go.
• Many customers have woken up to the fact that they can monetize their operational and other data streams

Why so much focus on SAP? Love it or not, it is the most dominant enterprise application vendor in terms of customer count, country and industry coverage, enterprise budgets and many other metrics. 

Ok, so why wait till 2025?

For my books I take a 360 degree look. I talk to many customers, partners, competitors, other analysts. It’s not unusual for me to end up with 2500 pages of transcripts, slides, white papers etc. From that I condense down to a punchy 300 page final product.

Some of the content will show up along the way in the form of my advisory projects, blogs and video episodes, but the synthesis and trend analysis takes time. Not to mention I need time for my editor and for the creative firm which formats my books.

Another reason for the 2025 release - I plan to release a very unusual (for me) book in 2024.

It is fiction genre. A thriller. Written with a lady co-author.  Involves AI, crime, SV billionaires, industry analysts, the FBI and more.   

More on that soon😊

 

Hasso Plattner, Storyteller

Dr. Hasso Plattner has finally stepped down from official duties at SAP. Over his 5 decades at the company he enriched the lives of tens of thousands of people around the world.

I got to see a different side of the man few others did. As a story teller. 

I first ‘met’ SAP in 1989. I was on assignment at PwC London for a couple of years. We had a brand new data center in the Docklands when that area was just starting to be developed and I led a team which installed and prototyped use cases on the mainframe based R/2 system. We would demo it to clients along with comparative functionality in the US based McCormack & Dodge system. Back in the US I next led an internal ‘Gartner Group’ which helped clients evaluate the emerging client/server market - SAP R/3, Oracle, PeopleSoft, i2 and others. I then went on to do a stint at Gartner and played a small role in SAP’s explosive growth in the US from 1995 to 2000. 

I first met him in person in 1996 but he was already a legend leading one of the few companies which had pioneered packaged software and had navigated frequent architectural shifts and global expansion. 

Hasso liked to set a couple of hours aside to meet with analysts at each Sapphire. I was part of the Gartner contingent. It was not an auspicious encounter. I had written a paper which talked about the high SAP TCO. He stormed into the room waving my paper and asking ‘who the fxxx wrote this?’ I was at the other end of the room and desperately tried to hide. After he finished screaming, he broke out into the sweetest smile. I started to finally breathe. 

Fortunately our later meetings were much more pleasant. He continued to meet us analysts at every Sapphire. Most of my colleagues and the analyst in me would want to geek out with him - 2 v 3 tier architecture, multi-tenancy, aggregates and memory based databases.  The author in me would wait for his human side to show up. Fortunately he would also share sailing, auto racing, golf and countless other stories. And talk about early customers like ICI and the code he personally wrote and about his beloved guitar. Not to forget, stuff which would make his PR folks cringe. I remember a couple of times they ran out and warned me ‘you cannot write about ABC’ 

I shared his story telling in one of my books 

This meeting was safe enough - talk of multi tenancy, quantum computing, blockchain, microservices. But then he was talking about Tom Sawyer and Peter Pan, two characters who have brought him much joy throughout life.

He was doing his best Mark Twain describing how young Tom Sawyer had turned whitewashing a picket fence - a punishment for skipping school - into a group activity. He had conned his friends into thinking it was fun and required a unique skill - 'only one in a thousand, maybe two thousand can do it'. So much so that his friends paid him for the privilege of doing that tedious task in the hot sun.

The tale has clearly helped Hasso motivate customers and employees over the decades even when he is proposing something radical. 

Somehow, I don’t think the man will just retire to golf or academia. I hope he writes a couple of books and tells lots about the 5 decades of enterprise software and weaves in a bunch of stories from his travels, his charities, from HPI etc. in addition.

I would be honored to help him tell his story if he needs help. It would be an instant classic and a nice reminder to everyone that today’s cloud computing world is built on the shoulders of what giants like Hasso pioneered.

In one of our last meetings he told me he was proud how young SAP felt. He is a natural born teacher and story teller.

In the meantime Hasso, to quote from the Hitchhiker’s Guide to the Galaxy, 

“So long and thanks for all the fish” 

Analyst Cam: Rimini Street support for SAP and Oracle

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

One of our major research focus areas is Applications Modernization and Migrations. As I wrote here “After 25 years of cloud applications, it is shocking how many customers are stuck with client/server and even mainframe applications”

While many of these customers would like to migrate to newer product versions, the reality is migrations in enterprise world are still too labor intensive and as a consequence expensive and high-risk. Many customers are looking to stay with older ERP, database and other systems software, but to do so at lower costs. And they are using “ring fence” strategies to modernize components of the application portfolio with newer, more bite-size solutions from other vendors.

I invited Scott Hays and Frank Reneke of Rimini Street to present on what they are seeing in the market. They do a nice job summarizing the vast differences in the choices SAP and Oracle customers are facing. ECC customers are looking at a 2027 wall and increased pressure to migrate to S/4HANA. Oracle has more of a “rolling 10 year window” and gives customers a bit more breathing room but they mostly get support in a portal led, self-service model even at the premium maintenance prices they are paying. SAP is encouraging moves to its hyperscaler partner clouds, Oracle to its OCI. Both have their own lock-in considerations.

They also do a nice job presenting Rimini’s value proposition and impressive record – over 5,500 clients since inception where they say they have delivered $8 billion in savings. How Rimini has moved from just level 4 Product support to level 2 and 3 application management services. How their support has plenty more automation and AI. How they are better positioned to support interoperability across heterogenous vendors.

Many more nuances covered in this 45 minute episode. Very nicely done.  

https://youtu.be/Bg9Hwg7sRtA

,

Analyst Cam: Rimini Street support for SAP and Oracle

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

One of our major research focus areas is Applications Modernization and Migrations. As I wrote here “After 25 years of cloud applications, it is shocking how many customers are stuck with client/server and even mainframe applications”

While many of these customers would like to migrate to newer product versions, the reality is migrations in enterprise world are still too labor intensive and as a consequence expensive and high-risk. Many customers are looking to stay with older releases, but to do so at lower costs. And they are using “ring fence” strategies to modernize components of the application portfolio with newer, more bite-size solutions from other vendors.

I invited Scott Hays and Frank Reneke of Rimini Street to present on what they are seeing in the market. They do a nice job summarizing the vast differences in the choices SAP and Oracle customers are facing. ECC customers are looking at a 2027 wall and increased pressure to migrate to S/4HANA. Oracle has more of a “rolling 10 year window” and gives customers a bit more breathing room but they mostly get support in a portal-led, self-service model even at the premium maintenance prices they are paying. SAP is encouraging moves to its hyperscaler partner clouds, Oracle to its OCI. Both have their own lock-in considerations.

They also do a nice job presenting Rimini’s independent support value proposition and impressive record – over 5,500 clients since inception where they say they have delivered $8 billion in savings. How Rimini has moved from just level 4 Product support to level 2 and 3 application management services. How their support has plenty more automation and AI. How they are better positioned to support interoperability across heterogeneous vendors.

Many more nuances covered in this 45 minute episode. Very nicely done.  

Burning Platform: Workday’s Rapidly Expanding Ecosystem

For the 119th episode of Burning Platform, we host Matt Brandt, Senior Vice President, Global Partners at Workday. He is a very articulate West Point graduate with a long tenure in various roles at Workday.

I wrote recently about Workday’s Innovation Summit and how they are spreading their wings in multiple directions. Not surprisingly, Matt presented there an expansive view of how Workday’s ecosystem is evolving and I invited him to elaborate below.

“If you look at Workday, a roughly $7.5 billion dollar revenue company, we have had a relatively small services partner ecosystem (about 50 firms globally). We've always been known for prioritizing the quality of our service relationships over the quantity of our relationships.”

That is rapidly changing.

“As Workday transitions from an application company to a platform company, the needs of our partner ecosystem changes. And so that's what my organization is charged with - transitioning how the partner ecosystem will support the company as it transforms into a platform company.”

“We have operations in every theater globally and we operate in just about every industry globally. Instead of piece mealing this market by market and partner by partner, we've taken a really simple approach…if we focus on 3 things - building, growing and delivering, then long term we will have great outcomes for our partners, and for our customers. And then ultimately, for Workday. That’s how we've chosen to communicate with our partners, and align the investments that we're both making in our respective businesses”

He drills into examples of innovations from partners like Huron, Accenture and KPMG specific to the healthcare vertical. I particularly liked his description of Kainos, a partner in Ireland (but widely represented across the EU) which works on multiple dimensions with Workday. They have built new applications on the Extend platform and “they have influenced hundreds of sales opportunities and they're one of our best deployment partners”

When asked about new vectors, he cites Insperity, a Texas based PEO (professional employer organization). And ‘there are more opportunities like that, than we have time for. I'm not sure what the future will look like. But I think whatever it looks like it's going to be pretty exciting.”

We will just have to bring him back every few months to describe new frontiers he keeps exploring, In the meantime, enjoy this fast-paced State of the Ecosystem conversation.

Retire at 75. Start planning to retire from age 35.

I recently interviewed Chip Conley, author of “Learning to love Midlife”. He defines midlife as ages “35 to 75”. Watch the episode – he explains his own experience as a “modern elder” around much younger Airbnb founders and execs. Overall he has a very positive view on life and the interaction between various generations in the workplace.

HR executives are starting to realize they need to “Redefine retirement” as I wrote here. Margaret and I been interviewing what I call multi-dimensional financial advisers who broadly help you with investment, multi-year tax, estate, insurance and other planning as you age. Ideally these are advisers who can handle multi-year tax scenarios, not just file annual returns. They call themselves “retirement advisers” and many of them are fiduciaries.

I think you should start that evaluation process at 35 and rinse and repeat the process through Chip’s broad definition of mid-life.  

Our evaluation of potential advisers been a humbling process (we are about 75% done). It’s like trying to solve Rubik’s Cube. There are more than 43 quintillion possible combinations for that cube.

In some ways Retirement planning is even more complex like solving an ever-changing, multi-dimensional hypercube. Markets swing wildly as does your portfolio. Politicians keep changing social security and private retirement rules. Wall Street keeps taking an ever bigger bite out of your investments. Insurance companies get you one way or another.

No wonder you get wildly divergent recommendations:

• Some will tell you to apply for social security at 62. Get as much as you can before (if) the fund runs out or you pass away early. Others tell you each year you delay your benefit increases by 5% to 8% but it maxes out at the age of 70. So start then, but they don’t always factor that increases your income tax exposure by pushing you into a higher tax bracket since the IRS requires you to take Requirement Minimum Distributions starting at age 73. Uncle Sam wants the deferred taxes along with their accrued gains.
• Most will tell you to convert your tax-deferred funds to Roth IRAs and take the tax bite now before marginal tax rates go up in 2026. They did not know of the work around we applied. We refinanced the house on a 10 year mortgage and took out immediate tax-free cash and are paying the mortgage from annual withdrawals and paying taxes on those tax deferred amounts.
• No surprise, one of the advisers told us to pay off the mortgage. I asked him why? It is at a ridiculously attractive rate of 2.4%. He said their numbers say otherwise. “When you become a client, we will show you the calcs.” 😊
• Our investments are currently fragmented across several managers. I did not realize how fragmented till an adviser ran our portfolio through their algorithms and pointed out we own Alphabet stock in 17 funds, Apple in 11 and so on. I thought we were diversified but fund managers move in tandem with their colleagues and negate the diversification.
• Couple of advisers told us stocks rarely fall in a Presidential election year. Couple on the other hand showed us we had too much exposure to equities. That was timely, we sold a bunch before the recent decline.  
• Most advisers pointed out all the hidden fees and conflict of interests at most funds. As one adviser said, try and avoid anything that “comes with a prospectus”.
• The other problem with institutions which hold most of our retirement funds is their limitations on diversification across asset classes. Try to find many which will allow you to invest in real estate, gold, Bitcoin etc. Unless it is with one of their own or partner funds which come with the dreaded “prospectus”
• Most of the advisers told us to sell our life insurance policies. They were so right. We asked the insurance company for a rate card till age 99. Such a deal! Wish we had cut them off a decade ago. There is an arbitrage market for selling your coverage, but apparently those buyers like policies of terminally ill insured so they only have to pay premiums for a couple of years and collect the coverage. Apparently, we are too healthy to qualify! We plan to let our policies lapse.
• I mentioned insurance companies don’t lose. Save on the life insurance policies, but pay for umbrella insurance. We asked our auto insurance company – after asking us 10 questions they still would not disclose the max umbrella coverage they offer. They wanted to know about our daughter’s car even though the umbrella policy did not apply. We went with another provider.
• One of the main reasons I keep working is we want to leave behind a chunk for the kids. Our estate planning is not complex, multi-generational. Even there we have got conflicting advice. We have heard about “Ladybird”, "pour-over" and other deeds.

I could go on. Like I said it was a humbling but timely exercise. Now multiply that over the rest of the US.

The numbers at stake across all of us ginormous. You hear in the media all the time that inequality keeps getting worse. It is if you compare King Charles or Elon Musk to the average Joe. What they don’t tell you is some research I have done for an unfinished book. The retirement assets of Americans (most in the middle class) – IRAs, 401ks, etc. were valued at $38 trillion at the end of 2023. There is even more in pension funds and other retirement vehicles.

Our real estate is worth $47.5 trillion. That does not include jewelry, heirlooms and other personal assets

In 2022, 92% of US households had at least 1 car.  22% had 3. Most of our real estate and vehicles are financed, but the net value of the assets are still significant

We are talking real money! No wonder politicians and Wall Street salivate at our pool of money.

There is a third group which also cannot wait to get its hand on these funds. They are export addicted countries like China, India, Germany and others. For decades they have run trade surpluses with the US and we have been chumps to dent our middle class that way. Unfortunately we have too many academics, economists and policy makers who cling to the notion of “free trade”. Hello it’s free trade when it is bi-directional,  not when we keep running trade deficits year after year.  We have a strong middle class – use access to that demographic as a bargaining tool.

Wish we had started the process at 35 and gone through a detailed review every few years.  

We all have unique portfolios and goals. Too many people just park their savings. You should be actively managing it. Start early in life, be willing to move fiduciaries. Keep them honest. And work with them to keep the politicians and Wall Street (to include banks and insurance) companies and our trade policy makers honest.

Burning Platform: Reframing the Concept of Aging

For the 118th episode of Burning Platform, we host Chip Conley,  author of “Learning to love Midlife” and a founder of MEA (Modern Elder Academy). He defines midlife broadly as “from 35 to 75”. The common word association for midlife is “crisis” and he says that is a shame because life actually gets better with age.  

He was an owner/operator of a chain of boutique hotels. After selling them he joined the much younger founders and execs at Airbnb in the formative stages of its explosive growth. They called him a ‘modern elder” – “as curious as he is wise”.

Building on those experiences, he started MEA – Modern Elder Academy which is dedicated to “reframing the concept of aging” and helps professionals get ‘unstuck” in their careers.  “We have been around now for over six years, we've had 5000 People from 48 countries come to our Baja campus to go through our week long programs, and we now have a new campus in Santa Fe”

He walks through 12 nuggets from his book including the one below

“If you're a 63 year old man like me, and you hear that the average man in the United States dies at age 74, you might think I have 11 years left. But the truth is the average age of 74 includes everybody who might have died at age 10, 20, 30 or 50. So if you've gotten to 63, number one, you're in good shape, you will live longer than 74 as a man. Number two, depending on your socio economic background, the more educated you are, the more prosperous you are, the healthier you are, the longer you will live.”

It is a very optimistic perspective on the core of our workforce which falls into his definition of midlife “from 35 to 75”

We then talk about the bookends of the range. The aging or recently retired worker and how they are a relatively untapped talent resource. Next, we discuss the other end and the perception that they are entitled, disloyal workers

Lots of great thoughts about all 5 generations of employees in today’s workplace. HR folks in particular will benefit from what his thoughts on “reframing the concept of aging”

Workday: “Unleash the Beast”

The Workday Innovation Summit last week ended with a very nice sit-down dinner. I was intrigued by the Synchronicity Strings Trio playing the violin, viola and cello. Trio?  I checked their site, and they offer quartets, duos and solos as well to fit in with the size of the venue and the subtlety you want for the music to not drown out table conversation. I thought it was a fitting recap to a couple of days where it was all about exploring new verticals, new AI use cases, new channels and new geographies – a new sense of flexibility to react to a rapidly changing world. As Doug Robinson, Co-President, (and superb MC for the Summit) put it in a side conversation with me, Workday has been “opening our aperture”. He was too polite to say it, but the goal of the Summit was also to widen the horizons of the analysts in the audience.

Matt Brandt, SVP Global Partners expressed the broader focus in his own poignant way. His military training has disciplined him to present 3 and only 3 bullets on any topic. But he broke with tradition and presented 4 pillars for his vision of the next-gen ecosystem– Connect, Compose, Built on Workday and Embed. I am interviewing him for a Burning Platform episode this week and you will hear more about these definitions.

However, the most change was evident from the commentary by Carl Eschenbach, the new CEO (Aneel Bhusri has moved to the Executive Chairman role). While being respectful of the culture and momentum he has inherited, he talked about how in his 16 months, they have brought in a new CMO, CFO and CIO. They also have new go to market leaders in Europe and APJ and new execs around services, revenue and sales operations. They have also promoted plenty from within including the new Chief Product Officer, Dave Somers. Many CEOs use their first year to do a “world tour” and learn the organization. It is impressive to see how Carl, helped by his years on the Workday board, has hit the ground running.

I was especially impressed by how many young execs led sessions including Athena Karp, CEO of HiredScore, recently acquired by Workday, Shane Luke who presented on their version of LLMs and other AI technology and by Ryan Basilio on outbound integration via its Extend Platform. Not just young, all incredibly smart and articulate.

I heard about countries and verticals I have not heard about in previous Summits – Japan, Federal Government, CPQ and Subscription billing for the services sector and more.

Aneel Bhusri made a cameo appearance and in a q&a contrasted “We had this advantage with the emergence of cloud (computing) and we could wipe the slate clean in terms of starting a company. I think it is different with AI. I think the incumbents, whether its Google or Microsoft or Amazon or Workday, or Salesforce, we have that huge data advantage”

He is absolutely right, even machines at large vendors like SAP and Oracle cannot be trained by the majority of their customer data since it is locked up in their on-prem applications in data centers they cannot access. However, most of the data of the cloud vendors applies to the SG&A portion of a customer’s P&L – accounting, hcm, procurement, call center data. There is a much bigger and higher payback opportunity with COGS and Revenue line items but that operational and customer data is unique to industries and countries. The best way to access that data is to build  transaction processing capabilities which generate that data.

Which is why I hope Workday continues to recruit unique domain expertise and build applications which reflect vertical depth and unique localizations for countries. There was talk during the Summit about becoming a “Platform company”. A platform is essential for customer and partner extensions but Workday’s key differentiators are that it is respected as an application vendor (you won’t believe how many customers over the years have told me they wished Workday would extend applications to their industry or country). And one which is culturally fun and easy to work with. It would be a shame to lose those unique advantages.

Fortuitously, the application competition is currently weak or distracted by the AI noise and not building modern transaction capability. SAP has formidable vertical and global strengths but the majority of their management focus in on preserving their ERP franchise - moving the ECC customer base to S/4HANA. Oracle is fixated on moving up the hyperscaler ladder away from its distant positioning behind AWS, Azure, Alibaba and Google. Besides, it spent tens of billions on Retek, Primavera and many other vertical plays earlier in the century and more recently with Cerner but those reflect business processes from a different generation of corporations. It had an opportunity to localize NetSuite for so many emerging countries and has not done so. Infor verticals still position Baan, Lawson and Intentia functionality it acquired  – again decades-old processes. Salesforce has plenty of application assets but they compete for management attention needed to yield better from the nearly $50 billion it spent on tools like Slack, Tableau and Mulesoft. Lots of vendors talk about being focused on the services economy but when you ask them about the exciting trend of “servitization” – post-sales monitoring, maintenance and outcome based subscription contracts in aviation, mining, shipping and many other asset intensive sectors – they will beg off “ we are not into manufacturing”. Manufacturing? They would have to invest in digital twins, IoT, field service, more sophisticated CPQ and other functionality but that would additionally make them more competitive in their incumbent markets.

Workday has a massive opportunity to bring contemporary functionality and architecture to so many markets. A couple of times, Carl hedged and said their biggest challenge is prioritization. He is right, of course, but many of these markets are attracting new players like Zoho which could end up with a huge headstart. The risk is Workday will continue with its core finance and HCM focus in primarily English-speaking counties and try and merely “spray paint” vertical and country localizations.

Which brings me to us analysts also widening our horizons. We have to accept part of the blame that after 25 years of cloud applications, 75% of the country/industry grid is blank when it comes to cloud application choice (and as a result we have shockingly limited AI trainable data in the enterprise compared to the consumer web). Paul Greenberg recently interviewed me about how analysts should also be evolving with changing markets. Watch our conversation here. Unfortunately, we are still imprisoned in market categories like ERP and CRM we helped define at Gartner in the 90s and ossified tools like Magic Quadrants and Waves. We should be leading vendors and customers into edge applications, high-growth economies and high-impact AI use cases.

Rapidly and dramatically.

Talking of analysts, he is not considered one, but I want to call out “Silent James” who calls himself a “visual notetaker”. He created 8 session illustrations during the Summit. It is fascinating how he listens, synthesizes, then colorfully and real-time summarizes key themes from each session – “your ideas become productive art”.  As Paul and I had discussed, modern analysts create plenty of video and social media content, we advise, we write blogs and books. We are a far cry from how my content was delivered as a Gartner analyst. Yet, few of us have James’ unique skills. We need to keep evolving, not just in the markets we define but also in how we present our perspectives to the market.   

Net-net – the time is opportune for Workday to spread its wings. It has an enviable choice of new markets to develop. It is truly an exciting time for Carl and the Workday family.

Time to “unleash the beast”

Burning Platform: Workday Verticals – The Evolution of Service Based Organizations

For the 117th episode of Burning Platform, we host Patrice Cappello, Managing Director of the Professional and Business Services vertical at Workday.

She has been focused on deploying technology to drive business outcomes in this sector for 25 years. She is a true student of the industry, having seen it evolve over time.

We start with a discussion on our wide service-based economy and Workday’s target markets in that sector. This includes organizations where people are driving the revenue: management & IT consulting, accounting, marketing services, business process outsourcing, and staffing firms among others.

We discuss the Workday feature set for this vertical. The professional services automation (PSA) category is well-trodden and covers project management and accounting, resource management, time sheet analysis among other functionality. Their services-focused configure price quote (CPQ) capabilities increasingly differentiate Workday from other PSA vendors.

She talks about how her customers are using Workday Extend to solve for unique business challenges. One company enhanced their “proposal engines” by facilitating inclusion of CVs of proposed staffing. It is common in the sector to shuffle proposed staff rather than keep them on the bench and that often takes plenty of manual effort to revise proposals.

She covers the launch of their Professional and Business Services Innovation Awards (last year the awards were announced at their Rising user conference), and discusses one of the winners, CrossVue, which created individual dashboards for billable workers.   

We discuss, of course, AI and how Workday is developing use cases specific to her vertical, especially those related to resource management. As she says they are bringing “all the dimensions of data that they have to factor in to put together a perfect team for delivery for a customer.”

Very nicely done in 25 minutes by a seasoned veteran of the sector.

Analyst Cam: CDF Corp – A well-managed IFS upgrade path

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

One of our major research focus areas is Applications Modernization and Migrations. As I wrote here “After 25 years of cloud applications, it is shocking how many customers are stuck with client/server and even mainframe applications. We look at why this is so, and the massive opportunity to automate and streamline migrations.”

I have been especially focused on a series of tools which can help automate various steps – code conversion, data conversion etc. – that are common in SAP migrations from the on-prem ECC to the more modern S/4HANA product.

To get a 360 degree view on the topic I am inviting customers and partners across various vendors to describe their upgrade and migration experiences

I was pleased to host Alex Ivkocik,  CIO at CDF Corp to discuss his recent experience moving to the IFS Cloud 23R1 version.

He sets the stage describing CDF’s industrial and consumer goods packaging products and his surround third-party applications around the core IFS functionality. He then describes IFS’s legacy versions and planned future path including a promise to keep the application “evergreen” with more frequent, smaller updates instead of typically more traumatic major releases.

I particularly enjoyed his broader commentary on his upgrade philosophy and approach – how he negotiated with his management and broader organization a 3 year upgrade cycle, how he minimizes functional scope changes during such upgrades (he does praise the fact that IFS is expanding the core to incorporate country localizations, AI, IoT etc) and why he likes the “one throat to choke” project management approach around upgrades. He discusses several other upgrade “best practices” he has developed through his career.

We also spend some time on the hype around “moving to the cloud” and how he nets it out to “show me the money”.

A goldmine of upgrade guidance in around 25 minutes. As a bonus, he also spends time around assyst and Poka, two products IFS has acquired and is in the process of integrating.

Two decades of Deal Architect

‘Tis the season for all kinds of corporate and personal, federal and state, annual and quarterly tax returns, and in the midst of all the paperwork I came across the seal on the left and realized Deal Architect is no longer a teenager😊

It gave me a chance to reflect on an amazing 20 years as an analyst, adviser and author. The industry has been very kind to us, and in turn as my accountant never fails to remind me, we have been fairly generous back to plenty of folks. I have had a front row seat to momentous events which have shaped our industry – most of them positively. As I told Paul Greenberg recently on his video channel, he and I are the new generation analyst constantly experimenting with new ways to comment on the industry.

As part of the anniversary, I will be reminiscing about 9 things (in no particular order) I am especially proud of and represent our wide body of work

New Florence. New Renaissance. innovation blog.

This has been a poor cousin to my Deal Architect blog, which lots more people follow. But as an early blogger on enterprise technology, I saw nobody had established any rules and that I could write about everything which made me go “aha’ around how we work, live and play. Someone once complimented me “you can make even a brown paper bag sound interesting”. That made me look up how the humble item has evolved since Margaret Knight won a patent for her bag machine in 1871. Nearly 7,000 posts have covered cleantech, nanotech, space and innovation from Estonia. Kenya and countless places you don’t often associate with innovation. It has also allowed me to run a guest column where over 200 colleagues have written about their hobbies and passions. Importantly, it has made me intensely curious about anyone, anything or anywhere doing something unique.

Enterprise Buyer Guidance

Short-burst, high-impact projects – that I don’t talk much about publicly to protect client details. They have evolved every few years – from due diligence projects and visits of offshore campuses of Indian, E. European and other vendors to early SaaS evaluations and negotiations to automation strategies. Most of our assistance helps raise innovation expectations and reduces risk in projects

Analyst Cam and Burning platform videos

We have recorded and shared on our YouTube channel over 500 video episodes since the COVID lockdowns began in early 2020. Most have been in the Analyst Cam series which allow vendors to present on their verticals, geographies, new product releases in 20-25 minutes and Burning Platform which allows for strategy conversations with tech executives, banter with fellow analysts, new book conversations with authors in a slightly longer format.

9 Books and counting

2 books with the large NYC publisher, John Wiley, 4 under the Deal Architect imprint and 3 developed and marketed for C level tech executives have allowed us to cover a wide range of topics and establish a signature case study-heavy style. Across the 9 books, we have showcased over 200 case studies. As I like to say “if a book has more than 10% of my voice, I have failed”. It is a chance to get to know and showcase incredibly innovative people, products and places - and give them a megaphone.

West Coast on the East Coast and other Instagram galleries

This is another offshoot of COVID. During the (light) lockdowns in Florida, Margaret and I started to do plenty of day trips up and down the West Coast of Florida. Each location was captured in a 10 photo Instagram gallery. As travel has opened up, the galleries have captured photos from international trips, vendor events, book launches. Over 360 galleries of 10 images each.  Lots of memories and exposure to much more innovation

Deal Architect blog

Over 6,000 posts, this blog has mapped major trends in information technology. It is my analyst voice – hard hitting at times, entertaining at others. Every year our research agenda evolves. Here is this year’s.  I have shared my front row perspectives on how offshoring, then cloud computing, then automation broadly took off and matured and am now cataloging the Gen AI excitement.  The blog has highlighted the ascent of China and India and many other rapidly growing economies. Increasingly it has allowed me to embed the videos above with some commentary. You will be amazed how many people continue to consume short form written content.

Blog sponsors

Our blogs have vendor sponsors. For that they get a menu of services – regular market updates, coverage of their events, presentations at Sales Kick offs and other internal events, and more. As I tell them – our door is always open for conversation, so long as the topic is not unethical or illegal😊 One of my proudest deliverables from this has been to help shape the vendor Analyst Summit format. Workday set the tone for the industry in 2010. Since then, vendors like Zoho have raised the bar for such gatherings to a whole new level. To be clear, our role in shaping the formats has been tiny compared to that of creative vendor AR folks like Angela Barbato at Workday and Sandy Lo at Zoho.

Global network

I already had a large network from my global assignments at PwC, from over thousands of client calls and meetings at Gartner and VC world from my startup, IQ4hire. Through our regular posts on LinkedIn, Facebook, Twitter, YouTube, Instagram, Amazon Author page, Enterprise Irregulars and other channels our social networks have exploded. I will be honest I try to limit time on social networks to an hour a day. I would rather make time for an in-person cup of sweet iced tea anytime.  

New Frontiers   

Over the last few months I have started a few new projects I hope to announce later this year. My Jiminy Cricket is always haranguing me to narrow focus to high margin projects. I don’t think he has ever read my book, The New Polymath. I do listen to him every so often and especially to my wife who is always reminding me to be grateful.

So, let me end with a note of gratitude to

• So many clients, so many followers
• So many executives, analysts, authors and friends I can turn to for advice
• The helicopter crew which flew me down to safer altitude when I had a stroke while presenting in Vail, CO in 2010 and to the many doctors and my FitBit who have helped me recover and keep me going
• Southwest, Marriott, Apple, T-Mobile, Zoom and others who have made staying connected so much easier
• So many who keep inspiring me. As I like to say “This is the best time to be alive”
• And especially my family – for putting up with my relentless travel and for my constant laptop or tablet companion even when we are on vacation

Here’s to the next chapter of Deal Architect!

Analyst Cam: Integrity Resource Management – “Phase 0” in an SAP ECC to S/4HANA Migration

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

One of our major research focus areas is Applications Modernization and Migrations. As I wrote here “After 25 years of cloud applications, it is shocking how many customers are stuck with client/server and even mainframe applications. We look at why this is so, and the massive opportunity to automate and streamline migrations."

I have been cataloging a series of tools which can help automate various steps – code conversion, data conversion etc – that are common in any SAP migration from the on-prem ECC to the more modern S/4HANA product.

I was introduced to Sana Asher who represents Integrity Resource Management. She walked me through a 12-week advisory project she calls “Phase 0” which helps answer a number of licensing, level of effort, payback questions that most SAP ECC customers struggle with about a migration to S/4HANA even as they face a 2027 SAP de-support possibility.

She says it works best for a relatively straightforward ECC implementation for a company with revenues between $500 million and $3 billion. Of course, there are few “straightforward” ERP implementations, but I like the fact that they are not being overly ambitious and have lined up a series of partners and tools to better define the licensing issues and the likely level of migration effort.

Listen to her crisp presentation made in under 20 minutes.   

"Being an Analyst (and Vendor AR) in a Chaotic Time"

Paul Greenberg invited me to one of his video channels to “analyze the industry analyst market” especially in a time of so much change.

Watch the whole conversation below. We cover a lot of ground:

• The history and evolution of industry analysts
• Where analysts have done well
• Where analysts are not leading the market: I share examples around 3 areas – vertical edge applications that have become viable in the last few years, localization in a dramatically changing global landscape, high payback Gen AI use cases
• How IT analysts compare to geopolitical advisers and energy and other vertical analysts who are handling even more volatile landscapes
• How vendor AR needs to itself evolve – get a balance between influence and intelligence they should expect from analysts
• Why vendor AR needs to evolve beyond 30 year old market categories and the “institutional” analysts  

As Paul mentions we could have gone much longer. If we had, I would have worked in a few more comments

• I talk about the massive impact Gartner had in the 90s, and I should have also mentioned how influential they were in highlighting the Y2K challenge, including doing briefings for the US Congress.
• People say Gartner is $6 bn in revenue - 7X as large as when I was there in the late 90s, ergo it is even more of the 800 lb gorilla in the sector. Not really. It has consolidated the market – made 25+ acquisitions since. As we have seen with vendors like IBM and Oracle, past acquisitions are not a good indicator of contemporary relevance unless you invest heavily in changing markets and new products
• I should have mentioned a fourth dimension where analysts need to step up - accelerating customer migration to new architectures and covering automation in such migrations. It is shocking after 25 years of cloud computing how many customers are stuck with on-prem and custom developed applications.
• I highlighted some of the strategy firms in the 80s like Nolan Norton and Index and the Big 8 accounting firms which were influential in technology decisions. I should have pointed out today’s influencers include strategy firms like McKinsey, Bain and BCG, VC firms which are funding new market categories and many more new players
• In the section about globalization, he mentions how NetSuite was a leader in localizing for several countries. That momentum has slowed down just when it needs to accelerate. Localization covers the UX to include scripts (right to left, double byte characters), tax, sustainability and other compliance, local support and partners etc. SAP towers over other application vendors with its slate of countries supported, regional user groups and on many other metrics.
• Paul asked me somewhat rhetorically how analysts can change and lead. I say that was rhetorical because no one told him, me and others to start writing blogs or books, generate tons of video and social media content over the last two decades. But we did, and we should not need reminders to lean into new areas given the massive changes and turmoil we live in. No industry or geography is unchanged. There are plenty of market signals that analysts and vendor AR need to evolve – rapidly and dramatically.

Analyst Cam: smartShift: All about SAP custom code

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

One of our major research focus areas is Applications Modernization and Migrations. As I wrote here “After 25 years of cloud applications, it is shocking how many customers are stuck with client/server and even mainframe applications. We look at why this is so, and the massive opportunity to automate and streamline migrations.”

Derek Oats, CEO of smartShift, presents below on the challenge of the massive amount of custom code in the SAP ECC world and how they help customers analyze the code and automate conversion to S/4HANA.

“Our claim to fame is we really are the only Intelligent Automation Engine for SAP custom code. So we take the ECC custom code, feed it through our engine, and it spits out high quality working code for the S/4 environment. Plain and simple.”

They have 14 patents to their name. That did not happen overnight. They have been in business for two decades. And have delivered over 3 billion lines of remediated code “going all the way back to Unicode conversions way back in the day.”

I particularly liked the other use cases they help with, Code analysis is critical to decide what custom code can be safely retired (he says they often see 40 to 45% decommissioning) and which can be parameterized (manually) in ECC. It also gets customers closer to the goal of “clean core” that SAP has been emphasizing,

Next is dual maintenance – they work with several large, multi-national companies and their projects have roadmaps where they continue to long depend on the old, while migrating to the new. As he says “the freeze period” where users cannot access needed functionality is lethal to companies, so it is critical to facilitate, as they do, daily, weekly or other regular retrofits between the two worlds.

We discuss their business model and partnerships with other tool vendors like SNP and Tricentis which are automating data conversion, testing and other phases of a migration.

We also discuss how SIs are adjusting to this world of much more automation. It challenges their traditional business model of hand to hand combat. As he says “we're able to help the partner potentially re-allocate some of those manual resources to higher margin for them and higher innovation deliverables for the customer. Also the partners are starting to see us directly involved in the circle of advisory with the customers.”  

It's impressive to see the scale and level of accuracy at which they can deliver at least one critical part of a migration to S/4HANA. As we discuss after thousands of these projects, and now with LLMs, RPA and other tools, there is finally optimism we can automate and similarly de-risk many more phases of the migration.

BTW SAP is leading the enterprise world in such complex migrations, and the automation companies like smartShift can deliver are also urgently needed around other vendors

High-octane half an hour conversation!

Analyst Cam: Amazing "Off the Beaten Path" Global Experiences

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

One of our research focus areas is Re-globalization. As I wrote here “MNCs are rebalancing their country portfolios, there are new emerging Tiger countries growing at rapid pace, hyperscalers have made DevOps a global competency – and all this opens up new opportunities for software vendors and service providers, many of which have mostly focused on English speaking countries and back office functions.”

I have had a MNC career myself (and have a family full of global nomads) so it is exciting to see a very different world emerging. My wife and I are part of a social group called “Uncommon Travelers” who present once a month on their recent trips. We recently had a chance to listen to Ken and Shirley Gould who are embarking on a journey which will put them over the 150 country mark. They presented on 18 of their most exotic places and experiences across 5 decades of independent travel – they avoid packaged tours and endure, even enjoy, unusual cuisine, funky hotels and extreme weather.  

I invited Ken to present on 10 for this channel.

Put yourself in their shoes and mull on the sheer effort it takes to get there and experience each. Then listen in awe to his endless curiosity and positive feelings for every place they visit. These are true global ambassadors – modern day Marco Polos  exploring the brave new world we are seeing emerge.

He covers so much ground in half an hour. I have invited them to come back and present on a few more experiences. They could easily present on another hundred.  

Burning Platform: The massively changing World of Work

For the 116th episode of Burning Platform, we host Jason Corsello and Thomas Otter, partners at Acadian Ventures which focuses on investments in the rapidly changing World of Work  

It is a wide ranging conversation and they start by explaining their investment thesis and why they chose that market category. As Jason explains “Thomas and I have been operators in the HCM space for decades now. I thought, there's an interesting opportunity to create something specialized, where entrepreneurs want to come to us, because we have that knowledge of market, and other VCs want to co-invest with us, because we do something different from them. A lot of them are more generalist investors.”

They go through the many dimensions of how, where, when and why work is changing and how regulations are evolving to keep up. Jason summarizes “it's a very huge market (3.3 billion global workers) that's very broken. And we think that technology can be an equalizer at making work better for workers. And in doing so, making workforces way more efficient and ultimately, way more profitable. It's a pretty simple equation.”

In addition, their fund brings another significant differentiation – a global perspective. They are a young fund and they already have investments in startups in 13 countries and are constantly scouring the world . We discuss how hyperscalers and mobile telcos have democratized technology talent around the globe. As Thomas nicely summarizes “talent is distributed equally but opportunity isn't.” We elaborate on how the cost of global expansion also has dropped dramatically with digital channels,  yet remains largely unexplored.

Starting around 28.02, we spend a fair amount of time on Gen AI from a HR perspective. Thomas explains 4 AI  angles for the fund

We then discuss the Air Canada bereavement fare chatbot incident and data plagiarism and the OpenAI/New York Times lawsuit and impact on how it will affect AI rollout across the industry

Jason summarizes it well “there's a lot of similarity between how AI will play out as we have seen with SAAS. We didn't have any sort of governance or data privacy; everyone was kind of doing it uniquely. And then something meaningful happened halfway through the 20 year SaaS journey. SOC 2 set the rules for all of the things that are very important in the SAAS world today but it took us 10 years to get there. I think something similar will eventually emerge in the AI world. But it will take a period of iteration and trial and failure and big flameouts. We will eventually get to a point with industry standards, regulation, whatever you want to call it, that will drive the industry forward.”

Great conversation with two pros (and good friends) who are the top of their game

 

Burning Platform: Strategic Insights on Zoho Finance & Operations Platform

For the 115th episode of Burning Platform, we host Sivaramakrishnan "Siva" Iswaran, who heads the Finance and Operations Suite at Zoho globally

At the recent ZohoDay24 event, I saw Siva present on Financial and Operational capabilities they have been investing in. Much of that was under NDA so I invited him to present below a shorter version. He showcases Zoho’s growing ambitions across several dimensions: localization for many fast growing countries, its growing ecosystem, expanding beyond its SME focus to the Enterprise Market and eCommerce, Payments and other financial services which are allowing them to branch into many verticals.

Zoho has been growing core accounting capabilities since 2011 when it introduced its Books product. Today in addition it has Expenses, Billing, integration with Contracts, Subscriptions, Inventory, Payroll,  Practice Management for services firms and other capabilities in its growing portfolio – see complete listing here He adds their platform allows for even more breadth by being customizable, extensible, automatable and increasingly AI-powered.

Starting at 11.44, he talks about their global footprint even as many other vendors are retrenching. He talks about eInvoicing in India, Saudi, Mexico, corporate tax support in UAE and other localizations.

At 15.30, he presents on the exploding ecosystem around Zoho – see image below

At 18.27 he talks about plans for the Enterprise Market and candidly acknowledges the very different approach they will need to deliver to a much larger scale, to the segment’s expectations of “solutions”, their comfort with a direct sales model etc.

I especially liked the section starting at 21.50 where he talks about global disruptions around financial services to include Payments, eCommerce and Credit. He highlights alternate payment “rails” like UPI maturing to challenge the Visa/Mastercard duopoly and their eye popping economics and about Zoho’s plans for a Unified Payment Solution. He discusses ONDC - Open Network for Digital Commerce - in India which is aimed to challenge proprietary eCommerce players and also include ride-share, food deliveries and other services.  He also discusses OCEN – Open Credit Enabled Network - which enables micro-loans and other lending markets.

Around 41.00 I ask him when the extremely ambitious vision will start to be publicly fleshed out.  As if that is not challenging enough, I also talk to him about opportunities in “servitization” in capital intensive sectors that are moving to long-term, outcome-based business models.  

Is Zoho biting off too much? As he discusses, they are used to low margins, they are adapting their SME focused digital channel to very different enterprise selling, and I have written plenty about their unique culture, their curiosity and willingness to continually experiment.  

As I tell him at the end, I look forward to hosting him every few months to get an update on many of these initiatives. It is already a fascinating conversation and future ones will be even more so as they share their product and market expansion. 

 

Analyst Cam: CXO Connect – Certifying CIOs

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 Barbara Dossetter. Managing Director, Delivery at CXO Connect in Singapore.

I have worked with Barbara on a couple of projects and recently connected with her about the Global CIO Certification work they are doing. The initiative is still early in its evolution. However it is commendable, The CIO role is so critical, yet there is little formal education on how to become one and the role evolves faster than most other C level roles.

She starts with “first principles”: CIOs are decisions makers – they make good decisions, with limited information, often in stressful situations. There is no single template for a CIO – they vary from one organization to the next. The role needs several soft skills. Nobody gets certified for just showing up for the course. They constantly revisit modules (they have 16 now) because the tech sector is so dynamic. CIOs need to "speak truth to power". Each of the modules links with others – because the CIO job is not siloed.

She then quickly walks through each of the 16 modules – image of 8 below   

Next, she walks the experience of the early delegates, how they are scored by many executives, how they are coached and how they are certified. There are no “participation trophies”.

Very nicely done in about 25 minutes

Redesigning "Retirement"

I have no immediate plans to retire  – I committed to a 5 year extension at Deal Architect last year, but various recent data points have made me think more of the many dimensions of aging workers and retirement

I enjoyed the HBR article with the image on left – Redesigning Retirement. It does a good job explaining why so many are not retiring and others are willing to return from retirement. We are living longer, need purpose in our lives, inflation has eaten away savings etc etc. Many are like Margaret and me – we would like to leave behind a decent chunk for our kids, or at least not burden them as we age.

What the article does not explore fully is why corporations and employers in general are not taking advantage of this experienced, disciplined talent pool. It is the next big opportunity/challenge for HCM professionals.

The article suggests expanding DEI focus. I partially agree. Even as a brown immigrant, I am a bit of a DEI cynic. My view is many DEI programs end up becoming virtue signaling exercises, diminish competence as a talent criterion and do not adequately monitor its impact on customers, products and employee morale. But I find DEI especially troubling because today it focuses too much on race and gender and very little on age. Ageism is real in most employers and if we are going to redesign retirement, we need to revisit our perceptions of aging employees.

We also need to redefine retirement funding.

Our politicians think of Social Security, Medicare etc. as “their pools of money”. They want to privatize it, reduce benefits etc. My push back is that is “our money” – look at your annual Social Security statement and it shows the huge lifetime payments your employers and you have made over your career. I will happily take that lump sum back with accrued interest. Fat chance they will go that route. In fact, they are counting on you passing away after a few years of benefits so they can reallocate funds to waste in faraway places and pet causes.

The state of social security makes for depressing reading. Thanks to the realities of the “population pyramid” only 3 workers - it has been shrinking for years - are paying into the Social Security fund for every one who benefits. And politicians make it even more dire. 40% of social security recipients are taxed by the Feds on their benefits because they supposedly make  “substantial income” from their interest, dividends or other income sources. Don’t laugh but the folks in DC define “substantial income” as $25,000 a year! In contrast, the average monthly social security benefit last year was only $1767.  

Or how complicated they have made private retirement funding. My wife and I have recently had some financial adviser meetings and it is mind-boggling how much long term tax planning you have to factor. Very few aging employees know about nuances like converting traditional IRAs and 401K funds to Roth IRAs before tax brackets and income adjustments revert to punitive pre-2017 levels in 2026. Or the concept of the “solo 401K" which we availed at Deal Architect. It allows for larger tax free contributions but came with a major restriction. We had to keep our employee count to 2. Made us depend more on contractors rather than create full-time jobs. There is a laundry list of acronyms like RMD - Required Minimum Distributions - which make our tech jargon sound simple in contrast.

And even our financial institutions who are custodians of trillions in private retirement funds behave as if it’s their “money”. Try to invest in real estate, a venture fund or Bitcoin from your retirement account. Just try - you will get all kinds of reasons why they are not allowed to be part of your diversified portfolio, at least with them. Or shake your head at how analog the process of transferring money from one institution to another can be – lots of printed papers and checks via snail mail. Many of these institutions are DEI activists in companies they invest in. Ironically, even while their major customer pool is aging workers, their version of DEI does not push for age as a diversity metric.

It’s time to respect our elders – they have spent their lives building our modern institutions. They deserve much better treatment in their golden years beyond a goodbye party. Whether they want to continue to work or decide to go fishing or play golf.

Aging workforces, compensation and benefits re-imagination, and mining "retired" talent pools should be big opportunity for the HCM community not just for wealth managers, financial advisers and politicians.

Burning Platform: Raising the bar for Analyst Summits

For the 114th episode of Burning Platform we host Sandra Lo, Global Corporate Communications Head at Zoho and Mariana Nino, Manager of their new McAllen, TX office, which represents their ethos of global expansion in many growing markets but also encouraging rural renewal in each.

They discuss the packed agenda and complex logistics of assembling 200 analysts, customer and company executives from around the globe to their analyst summit, ZohoDay24 in the Rio Grande Valley, at the US/Mexico border.

As I have written before the analyst day is my favorite vendor event. And vendors have become increasingly creative with the format, location, participants etc. since Workday pioneered the concept in 2010.

Zoho had taken a small group of analysts to HQ in Chennai last year. And that week required incredible planning and I thought that would stand as a high watermark for a long time, but this session came close because it had 8 times more analysts and 3 times more customer executives to coordinate and a wide set of social events.

Several folks have posted on sessions (see the 16 page agenda of panels, sessions, 1:1 meetings and social events here) and I shared live from the event and I am starting to gradually interview several Zoho and customer execs. Be sure to catch many of those.

This session with Sandy and Mariana focused more on the intricate planning, the coordination with local vendors over a wide swath of real estate, travel into 3 local airports and a lot more.

It is particularly interesting to listen to them talk about why they picked the sites for activities outside the convention center.

Some of the experiences they describe include

• Mariachis at the Opening Ceremony at the Oval Park
• The historic Spanish mansion and the path for migratory birds and butterflies at Quinta Mazatlan
• The spectacular BBQ, music and dance at The Grove in Rio Grande citrus country
• The visit to the SpaceX launch facility in Boca Chica – the "Gateway to Mars"

Watch the 40 minute video in awe - then take a nap. You will be exhausted when you listen to how much they packed in!

Definitely raised the bar once again for Analyst Summits!

SAP Version of Application Modernization and Migration

I don’t know who inspired who but I am pleased to see SAP talk more about one of our major research focus areas this year – Application Modernization and Migration. As I discuss here “After 25 years of cloud applications, it is shocking how many customers are stuck with client/server and even mainframe applications.”

I saw yesterday this fast-paced webinar on RISE with SAP. 5 customers – Nestle, Inchcape, Mahindra, Versuni and Lexmark provide their perspectives. So do q&a sessions with ASUG and McKinsey execs. And short pitches from a variety of SAP executives. You can register and watch the replay here

You hear about retirement of countless data centers and other on-premise infrastructure in the move to the cloud, global availability 24/7, mind boggling eCommerce numbers and other benefits of digital transformations to modern apps and infrastructure. You also hear about SAP methods and incentives to offset some of the customer costs in such massive migrations.

First the good news. SAP is way ahead of other vendors in migrating customers from legacy ECC to their S/4HANA product. By our estimate about 40% of maintenance paying ECC customers (some run ECC but self-maintain or use third party maintenance) have moved partially or fully to some form of S/4 deployment (private cloud, RISE etc.) This is significantly higher than PeopleSoft, JDE, EBS customers who have moved to Oracle Fusion. Ditto with Infor, Unit4, IFS and other customers moving to their modern versions.

SAP has managed to do so partly with stick (a 2027 support deadline for ECC) and partly with carrots like a well-packaged RISE with hyperscaler support, credits and incentives. Other vendors have more of a “don’t rock the boat” attitude – “we can live with profitable legacy maintenance revenues.”

However, after 9 years of S/4HANA, the early adopters and risk-takers are accounted for. That leaves a lot of more pragmatic (even cynical) and laggard customers. I  have heard CIOs say they would “rather retire than go through another massive ERP project”. They have PTSD from their version of the Bataan Death March. I have myself told people “I am not that proud I was one of the Gartner analysts who popularized the ERP term in the 90s. ERP is not an easy sell anymore" Still the other vendors can learn plenty from what SAP has done in the last few years.

Some things SAP and other vendors will have to empathize with and emphasize going forward:

1. Recognize that some companies will want to stay with legacy ERP and move to cheaper self- maintenance or third party maintenance. - no point guilting them about technical debt or recruiting challenges or compliance risks of staying with a legacy environment. You cannot win them all.
2. We need honest to goodness analysis of savings from retiring and consolidating legacy data centers and other infrastructure and people skills – DBAs, BASIS, systems management etc. There is also a challenge in asset-intensive customers – they are very comfortable with a CapEx model. They want more efficiency in their IT assets but not necessarily in a multi-year Opex format.
3. SAP emphasizes the advantages of a “clean core” and the need to retire ECC customizations. As someone explained to me “you have to think like an empty nester. You don’t need 5 bedrooms anymore. Move into a modern. “smart” 3 bedroom house instead.” To do that you need to clean out, throw away, have garage sales, donate boxes and boxes of stuff. However, “clean core” in the enterprise is a moving target. When we coined the ERP term in the 90s, we expected it to cover at least 60 to 70% of an enterprise. Today in many industries, ECC is only 10-15% of the total enterprise functionality. Many ECC customers have adopted what I have defined as a “ring fence” strategy. Some customers have 30, 50, 70 surround cloud applications around their ERP. We need tools and talent to quickly identify which customizations can be retired – ideally by converting them into S/4 parameters – or converted using automation to more modern BTP.  As for the surround cloud applications. SAP would love to sell them Ariba, SuccessFactors and other cloud functionality, but those licensing and migration costs need to be clearly quantified. It definitely complicates the S/4 migration discussion
4. A competitive hyperscaler proposal. Early adopters are sharing stories of how cloud adoption sounds wonderful on a GB and MIPS basis for seasonal, spiky demand, However, it becomes a massive fixed cost on a 24/7/365/5 year contract. Hyperscalers need to view this is an entry point, even a loss leader, to a customer’s wider enterprise landscape beyond S/4. There are many more workloads and many more data assets to access for their AI ambitions.
5. We need to automate more of the actual migrations. They have been too labor intensive – expensive, inconsistent quality and with other negative outcomes from use of large teams. Every migration has predictable phases – parameter configuration, data conversion, code conversion, integration to surround applications, testing, training etc. Each one of these can be automated. SIs have done hundreds of each and can use modern LLMs to rapidly come up first drafts on test plans, code etc. They can use RPA and other tools to automate other tasks. But SAP and other vendors need to encourage an ecosystem of tooling vendors and push SIs into using them.

Deal Architect will be helping customers on an advisory basis with many of these steps. But it would be nice for other software vendors to step up and do this at scale. And not just keep snarking about SAP project failures – time to adopt many good things SAP has been doing. Even better – claim it as your own. Call RISE and “clean core” something else. I won't tell. 😊  

Burning Platform: Software Trends in Asia-Pacific

For the 113th episode of Burning Platform we host Gibu Mathew, VP and GM, Asia Pacific for Zoho. Like many other Zoho executives he boasts career longevity and a product development start in the company, He now has a field role in an important global location, Singapore.

One of our research agenda focus areas for 2024 is Re-globalization : “MNCs are rebalancing their country portfolios, there are new emerging Tiger countries growing at rapid pace, hyperscalers have made DevOps a global competency – and all this opens up new opportunities for software vendors and service providers, many of which have mostly focused on English speaking countries and back office functions”

I have previously interviewed Zoho regional leaders in the Middle East and Africa, in Latin America and in Europe (see here and here). So, I was excited to spend some time with Gibu at the recent ZohoDay event and I invited him to record the session below.

He makes several striking points

While most vendors include China, India, Japan, Australia, New Zealand in their definition of Asia Pac, Gibu’s territory is more focused on SE Asia, particularly the ASEAN countries and a few others like S. Korea, Sri Lanka and Nepal. Zoho does very well in these fast growing economies. Other executives focus on the other large markets.

Of course, with so many countries come the complexities of multiple languages, scripts, currencies and regulations. We discuss how Zoho internally prioritizes investments across so many applications, their platform and customizations unique to countries and his personal lobbying style within Zoho to ensure his regional customers are catered to.  

He discusses how local economies are encouraging digitalization, especially in the SME sector.  He discusses collaboration with agencies like IMDA in Singapore and DEVCON in the Philippines.  

We discuss the advantages of being based in Singapore. The diverse talent pool, the impressive travel hub, the business friendly government, their incentives to do business with the region and a city state which redefines itself every few years with a changing globe are some of its unique characteristics.

It is a fascinating 25 minute conversation – as you can imagine we are talking about a wide range of markets - massive countries like Indonesia to tiny but affluent ones like Brunei.