deal architect

Burning Platform: More on the Trump 2.0 Economy

For the 130th episode of Burning Platform, we host a repeat guest, Bill Hewitt. Founder, Windmill Hill Advisors. He is a 30 year veteran of the software industry, having held senior roles at companies like IBM, Hyperion and Peoplesoft. For the past 20 years, he has been a 7 time CEO, and currently works with Private Equity sponsors to improve portfolio company performance.

This time, however, we touch on the fast shaping economy in the second Trump administration. Couple of weeks ago we had a similar conversation with another software industry veteran, John Wookey.

We aim to keep the discussion un-political and focus more on business opportunities and risks.

We broadly cover 3 themes

• Nationalism vs. Globalism and the effects on global trade
• DOGE and how it can apply to business, and
• How immigration policies impact business growth

Bill discusses how over the course of a century the US has evolved from a domestic economy to global supply chains. However these supply chains have brought logistical challenges and costs across oceans and the pendulum is swinging again. I point out the US is the largest consumer economy in the world with 800 billionaires but even more importantly 25 million millionaires and a strong middle class. It makes a lot of business sense to make close to this large demand. Especially given the opportunity to avoid post-COVID supply chain issues and the fact that the US can offer plentiful cheap, clean natural gas fuel.

Bill points out he is on the board of two companies in Canada. “There's a fairly significant anti American sentiment among the politicians and the media. Business owners on the other hand tend to take a longer term view, because they have to. They're not swayed by the media”

We also discuss that next-gen manufacturing, logistics, farms etc. will be heavily automated with robots, sensors. autonomous vehicles and AI. We have still-active execs like Jeff Bezos, Elon Musk, Tim Cook, Marc Zuckerberg and others who have shown the art of the possible in warehouses, plants, space, data centers in the recent past. As I say “They can help. If you want to build here, we'll bring them in and help you make sure your concerns (about talent shortages) go away.”

We next discuss DOGE and efficiency in government. Bill says “All Elon Musk is saying is we are spending way too much money. Most companies, do that - based on where they are in their stage of growth, are they organized the right way? Do they  have the right mix of skills and talent? You have to analyze that on a frequent basis. If you don't, you become Xerox, you become Kodak, you become a company that stops looking at the market and the forces that are affecting you. We are $36 trillion in debt. We are spending at a rate that's unsustainable.”

and

“What are the core essential things that we need to satisfy the taxpayers who are providing this funding to the government? What are the social programs that we need to keep a contract between the government and the taxpayer, and what do we have left over to make sure that we are able to spread our message of freedom and democracy, because that's been a key tenet of our Republic for so long.”

I point out Elon is uniquely qualified to assess efficiency opportunities. During a visit to the SpaceX Boca Chica, TX facility I heard a startling factoid. They were lowering the cost of getting a payload into orbit down from $10,000 per pound during the NASA Space Shuttle days to about $9 per pound. Musk had shown similar adeptness when he significantly trimmed Twitter staffing after he acquired it.

We next turn to immigration. Bill goes “what immigration does is help fill in the gaps of our national construct. Because if we tried to satisfy our appetite with local labor every family would have need to have six kids. And it's a real fallacy to say, well, immigrants only do the low skilled work, because we know we have brilliant scientists, doctors, computer scientists, people in every walk of life that are immigrants, that contribute to our economy.”

He adds “We need people who want to be here, people who want to be part of our nation and part of that national identity, are enthusiastic about contributing to the economy versus taking from the economy. And finally, gratitude for everything that this country can provide, versus saying, no, the beliefs that I bring with me are the most important thing, and so I'm going to try and rebuild those here. You have to be part of this national identity in order to be a long term contributor to the economy”

I add color with my own journey as a talent based immigrant to the US – the long process it took for me to become a citizen, but how that vetting was so important and the time allowed for better assimilation into what Bill calls the “national identity”. I add we need to dust off and update that “process” to restore confidence in our immigration policies.

We cover plenty more ground in around half an hour. It was a real joy to watch Bill calmly discuss the state of the economy while Wall Street and the world are reacting so emotionally to Trump.

I am going to invite other business executives to provide similar perspectives on the Trump 2.0 economy in future episodes.

A time to reap, a time to sow

I have had the good fortune (or curse) to survive several recessions and market meltdowns over my career – Black Monday in 1987, Dot.com bubble burst in early 2000s, the housing bubble in 2008, COVID crash in 2020 and many more. 

While none of them were fun, I have noticed a common pattern – most of our industry tends to turn cautious and retrench when actually it is a great time to catch up on missed and upcoming opportunities. And with lowered Wall Street expectations there is often a window of opportunity to invest more in R&D, data centers and other assets to grow your footprint.

As we look at the current Wall Street meltdown and signs of recession, let's look at opportunities we missed in the last five years, and what is plausible in the next five.

A look at the recent past

Look at how many applications you would have struggled to sell in 2020, but you could have sold since to hundreds of customers if only you or you partners had developed them 

Think of how much had changed in daily life thanks to COVID, Ukraine war and massive digital transformations – telemedicine in healthcare, product delivery and returns in retail, mobile banking, real estate virtual open houses and digital paperwork, EV charging and billing, CPQ for Industrials which bundle product, monitoring, spare parts, financing and other elements. And many more

Going beyond the western world you could sell even more if you had localized for India, Cambodia, UAE, Kenya, Nigeria, Brazil and so many other markets which are growing much quicker than western economies. Just look at places hyperscalers have recently opened data centers as starting points.

These opportunities are still open. Not only will you be building unique transactional capability, you will be building domain expertise and operational data which will also allow you to develop unique AI use cases.

A look at the coming future

While the Trump 2.0 economy is a bit bumpy. it provides a great landscape to run scenarios. His tariffs will lead to make and hire more in the US. In the first 2 months, in spite of all the noise, it has already picked up commitments for $1.7 trillion from MNCs like Honda, TSMC, Apple and others. These will be next gen facilities – lots of automation – AI, robotics, sensors, exoskeletons, GPS etc. and AI savvy workers . Many changes coming to fintech, defense, pharma, mining, space, agribusiness and other sectors.

Don’t just think Agentic AI, look at occupations as verticals and convergence with humanoid robots, UAVs, drones etc. Solutions you could put together with a new breed of partners. Don’t just think Agentic AI for SG&A functions, think of CoS line items and partnering with customers for unique vertical operational data. Look at the AI use cases some of the leading Wall Street firms are dreaming up, filing patents for and even having their CEOs actively involved in the visioning.

Trump 2.0 is also turning the world upside down. In the US, growth will be regional as states compete to attract MNC investments. Ukraine, Israel, the Middle East, Greenland? No need to speculate – most vendors have a long way to go to catch up to even SAP’s 60 or so country localizations. 

Also rethink ecosystems. Some SIs are starting to use LLMs to bring efficiencies to their own DevOps, testing, data conversion etc. Time to demand more from them so they move away from their addiction to the "school bus" model. Need more partners with product design, logistics, shop floor and vertical operations domain expertise. New more partners in non-English, non-Western markets. Also think anew of customers as "partners" for their domain expertise and even for licensing of their operational data to anonymize and train your models.

Sridhar Vembu of Zoho recently tweeted a perspective on what is ailing the software job market – “AI is not taking away jobs (not yet anyway)” he says. I agree with him - software talent is not the constraint. Unique domain expertise and data is what’s scarce.

This is no time to retrench. It’s time to think much bigger and very differently than we have in previous slowdowns 

Analyst Cam: ZohoDay25 - The Back Story

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

My favorite vendor event is the Analyst Summit. In our recent fiction mystery, The AI Analyst, a character describes them

“Those (analyst) briefings have become extremely complex. About a decade ago, Workday pioneered an Analyst Day where it encouraged analysts to tweet. It was an electric environment as management took loads of questions and analysts live tweeted the exchanges. Soon after this, many vendors adopted the same approach. An Indian vendor, Zoho, had taken it to a new level as they flew selected analysts for a week-long trip to its HQ and to its CEO’S farm in South India. It was meant to showcase the firm’s culture and how it was a family to its employees and provided for schools, hospitals, and other facilities.”

The book also describes an Analyst Summit at the Inn at Spanish Bay in Northern California.

While I publish my perspective from such events on LI, X, Instagram and my blogs, I like to invite vendors to present on the prep and summary of the sessions and the hospitality. Zoho always takes me up on that opportunity

Mira Natrajan, part of the Corporate Communications team presents below on ZohoDay25 held recently at the Horseshoe Bay Resort in Texas Hill Country. It fits in with Zoho's corporate preference for secondary and tertiary towns and focus on rural revival.

She covers the unique branding Zoho’s amazing creative team conjures for each event (see more about the creative team here), details of the history and campus of the facility, the sessions and social agenda, the demographics of the audience, summary of some of the key sessions and contrasts this event to those in previous years.

Very nicely done in about 35 minutes.

Analyst Cam: Service Performance Insight - State of the Professional Services Market

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

Dave Hofferberth is founder of Service Performance Insight. SPI is a global research and consulting firm helping PSOs improve productivity and profitability. Since developing the PS Maturity Model™ in 2007, SPI has become the industry authority, with over 50,000 organizations leveraging its insights to drive service excellence.

He presents below a summary of results from his firm’s 18th annual Professional Services Maturity Benchmark. He also kindly shared with me the 259 page report which is chockful of detailed data. You can buy a copy here.

I love that he has an expansive definition of “professional services". His firm tracks metrics across 7 categories of firms

• IT Consulting
• Management Consulting
• Services within SaaS vendors
• Services within Software vendors
• Architecture & Engineering
• Agencies
• Other PS organizations

His surveys measure firms across 5  organziational“pillars” and places them in 5 levels of maturity. Only 5% of the 403 firms surveyed this year qualified for the highest level.

I particularly liked his summarization of 2024 results into high level sector trends like “revenue growth dropped to 4.6%, down from 7.8% in 2023 and well below the five-year average of 8.7%.” and recommendations for 2025 like “Deploy AI with Purpose” and “Recalibrate the Workforce Model”

He is very generous with his findings in the presentation below but as you can imagine he has a goldmine of data from each year’s survey of hundreds of firms. Reach out to him to tap into his vast knowledge of the sector - he has been covering it for 27 years.

Very nicely done in about 30 minutes.

Burning Platform: The Trump 2.0 Economy

For the 129th episode of Burning Platform, we host a repeat guest, John Wookey who is a long time veteran of enterprise software world. This time, however, we touch on the fast shaping economy in the second Trump administration.

We aim to keep the discussion un-political and focus more on business opportunities and risks.

I start off by pointing out Washington, DC has not seen this level of intensity since Newt Gingrich launched his 100 day Contract with America as Speaker of the House in 1994. And Trump is setting an even more blistering pace.

We discuss DOGE – Department of Government Efficiency. Presidents Clinton and Obama had attempted to tackle waste in our Federal Bureaucracy. Differently this time we are trying it with someone from the private sector – Elon Musk and a group of 100 young whiz kids. We discuss how Elon is taking a high-tech sector “fail faster” approach – ok to make mistakes, don’t sacrifice speed. I use a quote I learned very early in my Price Waterhouse career “Better to be approximately correct than to be precisely wrong”

We discuss if DOGE principles can be applied to the private sector and to state and local government. John thinks the private sector in some ways is ahead of the Feds and cites his experiences at Oracle and Salesforce with CEOs Larry Ellison and Marc Benioff assisted by executives like Safra Catz and Jim Cavalieri. He is less certain about its applicability at the State and Local government level. We discuss the significant differences between California and Florida which would influence any such attempts (I did not mention it in our conversation but a significant portion of Trump’s cabinet is from Florida and that could improve chances of success there. The state is running budget surpluses today but that can quickly turn south)

We next turn to tariffs. Neither of us is thrilled with them but I point out I hope foreign MNCs get around them by “making and hiring” in the US. Our states will have a feeding frenzy to attract MNCs who show an interest. John says he is proud his preferred car brand, Subaru, has a plant in Indiana. (BMW has one in S Carolina, Hyundai in Alabama, Totota and Daimler have them across several states). And COVID taught states like Texas and Florida to refresh their relocation value propositions.

I point out the new plants and warehouses they build will not have circa year 2010 designs – they will be heavily automated with robotics, AI etc. That allows us to segue into a discussion on our talent and education. John laments as a country we have had too much focus on white collar education. We discuss Mike Rowe and his crusade to make blue collar and trade jobs more attractive to our young,

We discuss a concern of mine that our utilities could become a road block to the resurgence of plants and distribution centers here – especially as they are already struggling to keep up with AI data center and EV charging demand.

We also discuss immigration reform (the need for legal compliance and immigrant assimilation into society, balanced with the need for speed), automation in construction and farming, and several other topics. At the speed at which Trump is moving, we did not get to discuss his idea for a “Gold Card” investor visa.

Still, we cover plenty of ground in 50 minutes. It was a real joy to host John with his pragmatic views on most things in life. I am going to invite other business executives to provide similar perspectives on the Trump 2.0 economy in future episodes.

DOBE – Department of Business Effectiveness

I am encouraged by Elon Musk’s start on his DOGE initiative. While many nitpick, he is helping President Trump deliver to my first ask in this post I wrote last August about my 10 expectations for POTUS 47. It is just a start and I agree with Mr. Wonderful – Kevin O’Leary that the DOGE team should increase the speed and volume of these cuts. He says they should “cut, cut, cut, cut, cut” while the president has a “24-month mandate” between his Nov. 2024 election victory and the 2026 midterms.

We have $36 trillion in national debt. Speed is critical. Fail faster, I say – don’t fall into analysis paralysis.

I am also a fan of Trump’s tariffs as they help deliver to my second ask in August. I wrote “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.”

Tariffs also help deliver to my first ask in the revenues they raise. Trump has talked about an External Revenue Service and shrinking the Internal Revenue Service. I am ok with having MNCs from our trading partners pay for access to our market – the largest in the world. It should motivate them to make and hire more in the US.

And I increasingly listen directly to businesspeople, and much less to the noise from media (mainstream and social), about how they will navigate the impact of both. I am already seeing companies apply DOGE principles to their own costs. In our own small business in the last year we have found it fairly easy to consolidate and cut costs in financial services, especially insurance and brokerage and in telecoms. Over two decades, our advisory business has helped many companies shrink their technology costs.

Additionally, if our trading partners are going to make and hire a lot more here, we need our talent, real estate, utilities, automation, construction and logistics sectors to be turbocharged.

I think every company, big and small, should launch their own DOBE initiative and every state and local government should start becoming responsive to those needs. There are all kinds of new revenue and expense optimization opportunities and they are evolving every day given the frenetic speed at which the Trump team is moving.

You don’t have to like the folks in DC, just take advantage of the opportunities and solve the challenges they are opening up.

Analyst Cam: Hypercard.ai by Customertimes

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

Jim Goldfinger, 40 year CRM veteran and his colleagues have built an innovation platform that sits on top of public and private AI tools and content for what he calls, “putting a saddle on a wild horse”.

His presentation below describes how sales teams, investors, recruiters and many other professionals can easily leverage the power of multiple language models for their proposals, projects, portfolios etc.

It allows for emulating the best practices of experienced resources across the enterprise through a template driven, project oriented application. It facilitates efficiency for veterans and accelerates proficiency for newcomers.

Nicely done in about 20 minutes

 

Cowbell and Application Vendors

I was chuckling to myself as I was watching SAP’s "Unleashed" presentation last week. I kept getting flashbacks of the SNL skit from the 2000 “More Cowbell” featuring Christopher Walken, Will Ferrell, Jimmy Fallon and others (see video below). It was recently featured as one of the top 10 skits over the 50 years of the show.

As a subtle part of a song, a cowbell can add a nice cadence. However, it can quickly get annoying – even hilarious as it does with Ferrell’s energetic playing.

Application vendors have a similar distraction. I have an acronym for it -“PAID” for Platform, Analytics, Infrastructure and Databases. Customers pay them for business functionality, and appreciate PAID as an underlying element. But vendors often get carried away and focus a lot more on PAID. Some of you have heard me say it is the equivalent of going to a Michelin Star restaurant and instead of being served a gourmet meal with a personal visit with the chef, you are shown to a buffet of ingredients and told to grill them yourselves.

SAP last week featured its Business Data Cloud and partnership with Databricks and the Joule agent builder. Both nice for a product demo, but does that deserve the moniker of “Unleashed” from the world’s largest enterprise application vendor and a kickoff from the CEO to a global audience? I shudder at the thought of SAP going back to a phase not long ago where HANA became an obsession for the company, and applications an afterthought.

Not just picking on SAP. If you look at Salesforce, their biggest acquisitions have been Slack, Tableau, Mulesoft – tools, not applications. I have called Oracle and Microsoft enterprise application “underachievers” – you should buy databases and hyperscaler infrastructure capacity from them, not domain expertise in form of business applications.

I cannot tell you how many application vendor execs say they want to become “platform vendors”. No wonder so many industries and geographies have so little choice in applications. I saw that in the 1980s when I had to custom build for clients functionality for multiple spouses in the HCM software sold in Saudi Arabia and when we tried to do oilfield cost allocations using a GL in the Netherlands. Even today, you cannot find many vendors who would support those and countless other needs.

Three decades after cloud applications started to show up in the enterprise, 75% of the 2x2 grid of applications by industry and geography is still pretty empty. Similarly, you can find plenty of AI use cases for SG&A, back office functions, but not a whole bunch in the COGS, operational areas. Vendors just do not have the relevant domain expertise or sufficient relevant data to train their machines.

Tone down the cowbell and PAID, folks. If we don’t build business functionality, customers will custom develop it. Many already have. We appear hellbent on shrinking our addressable market.

SAP Unleashed: Big Fish, Small Pond?

I am looking forward to hearing Christian Klein tomorrow as he presents on “SAP Business Unleashed”. In many ways, in his 5 years as CEO he has already unleashed SAP growth especially in stock market valuation. It now stands at over $350 billion, more than twice what it was when he was appointed co-CEO. It has the largest market cap of German publicly traded companies.

While that is impressive, technology market leadership has decisively shifted away from enterprise application vendors (not just SAP) to the Magnificent Seven as I wrote here. Microsoft alone is valued at $3 trillion, and just its data center capex will be more than double SAP’s revenues.

As I start my research for SAP Nation 5.0, I will be doing my usual 360 degree set of interviews with customers, partners, competitors and fellow analysts. I hope to learn more about how SAP plans to unleash even more growth in a dramatically changing world. Christian is sharing the session with several other speakers so won’t have much time, but hope to hear more from SAP over the next few months.

I am encouraged that David Lowson of Capgemini thinks SAP is already looking ahead to 2030.

“I’m pretty confident that SAP's growth and increasing cloud revenues are secure for the next few years. The move to RISE and BTP, and their acceptance in large programs, is driving that. Many large clients have committed to RISE journeys that will last several years of growth. I really think that SAP is using this period of comparative calm to think about what’s next and actually focusing on 2030, not just the end of Q1 2025. “

I would like to see a bit more urgency than 2030 given all the changes we are likely to see in business and in technology and particularly if it wants its market cap to rocket to hyperscaler levels.

Clean Core in ERP – too small a focus?

SAP has been very focused the last few years on migrating on- prem ECC customers to S/4HANA in the cloud with hyperscalers. And there it has been pushing a “clean core” message. While that makes for less custom code and facilitates IT hygiene, it narrows the functional scope to mostly accounting and inventory processes, and encourages customers to “ring fence” S/4 with even more functional specialists than they have in the past. SAP’s own presence in many non-ERP categories has suffered. I was at Paul Greenberg and Brent Leary’s IRL25 conference in Atlanta recently. They used it to announce the award winners in Paul’s CRM Watchlist. That’s not just Paul’s view of the CRM vendor space. He polled 27 analysts for input. I must have been one of the few that nominated SAP for some of the awards. There were 21 categories of awards (16 at the company level and 5 at the executive level and their assistants). Salesforce dominated the company awards, Zoho the executive ones. SAP didn't even make finalist for a single category! Its leadership is similarly challenged in HCM, EAM and many other market categories.

Trump and China impact on business

Trump’s tariffs should lead many MNCs to make and hire more in the US. These are likely to be next-gen manufacturing, logistics etc. with a lot more automation than in the past. His immigration policies will similarly lead to changes in farming, construction, other sectors. His thoughts about crypto, Greenland and Mars should impact fintech, space, mining and other sectors. China’s expansion plans are as ambitious. How is SAP preparing for changes in various verticals? SAP has historically been a leader when it comes to industry depth but many of the industry thought leaders that I had helped profile in “Business as Unusual with SAP” have moved on. I am also seeing a lot more momentum of newer players like Palantir and C3.ai and established ones like Salesforce and ServiceNow when it comes to operational experience in several verticals

The coming blend of agentic AI and humanoid robotics

In our new (fiction mystery) book, The AI Analyst, Polestar is a next-gen vendor which combines agentic AI with humanoid robots, drones, UAVs etc. Not just a software or silicon focus. Polestar also has an expansive definition of its verticals as each of the 800+ occupations the Bureau of Labor Statistics tracks. Their solutions automate limbs, eyesight and other human faculties, not just cognitive skills. Salesforce, Workday and others have already started introducing their agents to customer care, HR and other back office functions. Nobody is thinking yet like Polestar at the micro-vertical, occupational level where productivity and ROI will be pretty easy to quantify. Will SAP?

A rapidly shrinking world

SAP has led the enterprise world in localizing for 60+ countries for changing taxes, payment protocols, customs and other nuances. However, they have had sales and product leadership changes in the last year. And players like Zoho are rapidly growing data center and customer presence especially in fast growing BRICS, Middle East, ASEAN, Africa and other markets. They are selling way above their positioning as a SME focused vendor in those markets at far more competitive economics than Western vendors. Last week at a Zoho event, I heard a Dubai-based company glowingly describe their rollout of Zoho Expense for T&E management across 70+ business units in 50+ countries.

In SAP Nation 3.0  in 2019, I had invoked the US’s westward expansion in the 1800s. The rallying cry used the term “Manifest Destiny” to do so. Trump is now setting the country's visions on Mars and elsewhere as a continuation using the same term. In that book, I had described several markets SAP had missed in that decade. I had also said SAP needed its own Manifest Destiny rallying cry. I hope Christian does that over the next few months. I look forward to cataloging a much more ambitious SAP in Nation 5.0.

Analyst Cam: ElevatIQ – a new breed of analyst firm

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

With the research on industry analysts and AR for our recent fiction book, The AI Analyst, I have been inviting a number of players from that world to present on how they see their position evolving. Sam Gupta presents on his boutique firm, ElevatIQ and how they navigate the fragmented market for technology advice and research.

He describes the changing market and the role the traditional analyst firms (like Gartner), strategy consulting firms (like McKinsey) and consulting arms of SIs (like Accenture) play – their strengths and their conflicts.

He then describes two dimensions his firm focuses on – solutions driven by size of buying enterprise and by micro-verticals. Needless to say, “Vinnie Vertical” especially likes the second focus.

As they grow, they will find opportunities to also segment the market by global region with solutions reflective of changing compliance requirements and regional nuances. Similarly, they will find opportunities to go into vertical edge applications, not just look at the market from the lens of categories like ERP and CRM which have been around for decades.

As Patrick Brennan, the analyst in our fiction mystery tells his colleagues “You guys are very good analysts. But you are mostly horizontal—you cover back office silos. The next opportunity calls for us to be orthogonal—by which I mean we have to be verticalized, globalized, and rearchitected for a world of applications that will be more analytical than transactional.” There are so many market niches for firms like Sam’s will get to explore.

He did not mention it, but Sam is also very active in podcast circles and social media. Its another aspect many boutique firms like his have introduced to the analyst market.

Nicely done in about half an hour.

Burning Platform: CEOs and AI

For the 128th episode of Burning Platform, we host Dion Hinchcliffe, a repeat guest, now at Futurum Group. He summarizes results from a survey of CEOs and their perspectives on AI investments and related operating and change management models and practices

The survey conducted jointly with the management consulting firm, Kearney, built from over 30,000 data points from 213 CEOs (including in depth interviews with 20) across industries. The executive report is available for download by registering here.

Lots of interesting insights from Dion in the video below including this observation about governance

Dion and I cover wide ground beyond just the results of the survey. We discuss the need for use cases from operational areas – Cost of Goods sold, not just SG&A on the income statement. We discuss the impact of AI and worries of job losses. We discuss data breaches as folks try to beg, borrow or steal proprietary data like seismic data related to oil fields and molecular data related to pharmaceuticals (btw the theme of “who put our oil under their sand” is one of the many twists in our new fiction mystery, The AI Analyst. )

Very nicely done in 30 minutes.

Fact or Fiction?: Next-gen tech vendors, buyers, analysts and AR

Our thriller, The AI Analyst has this disclaimer

This story is a work of fiction. References to real people, events, physical establishments, organizations, and locations are utilized only to provide an illusion of authenticity and are used fictitiously. All other characters and incidents portrayed in this book are fictitious and are not to be construed as real.

Having said that, characters in the book like Barry Roman, Patrick Brennan and Tony Batista and their companies Polestar, Oxford Research and Sheldon Freres are composites and derivatives of many real-life people and organizations and they provide a glimpse at next-gen technology actors.

On the New Florence blog, I have excerpted sections from the book which show they are

Next-gen vendors
Polestar is a next-gen tech vendor which combines agentic AI with humanoid robots, drones, UAVs etc. Not just a software or silicon focus. Polestar also has an expansive definition of its verticals as each of the 800+ occupations the Bureau of Labor Statistics tracks. Read more about Polestar here

Next-gen buyers
Sheldon Freres is a next-gen buyer which knows how to monetize its mountains of unique vertical industry data . The tensions and shifts in economics between buyers and vendors of technology are brought out quite vividly in the book – read more here

Next-gen analysts and AR
Oxford Research doesn’t just produce “Golden Circles” (their version of Magic Quadrants) which a copilot called Curmudgeon helps generate. They also have labs which test products and their security vulnerabilities. Their focus is not just IT, but energy and other STEM disciplines and they have a global reach. The book also describes next-gen Analyst Relations. Read more here

Also, Sam Gupta interviewed me for his video channel here  and I mentioned readers should not just view our book as merely as a fiction mystery (which it most certainly is) but also as a vision of our fast changing technology sector.

A conversation with Satya

Satya Nadella of Microsoft has been in the press quite a bit recently with his comments that we have moved to the age of digital agents and they will cause the end of SaaS and broadly other business applications, which he says essentially only provide skin deep services front-ending databases – create, replace, update, delete (CRUD)

Whenever I hear “end of” or “death of” something, it triggers for me two other thought leaders:

• In 1989, Francis Fukuyama, then deputy director of the State Department's Policy Planning Staff predicted the fall of Communism and the world beyond in an article titled “The end of history”. He was mocked by world leaders like Margaret Thatcher and history has certainly not ended with Hamas and Latin gangs causing chaos and Putin and Xi among others having evolved a new form of capitalistic communism
• In 2003, Nicholas Carr stirred up our industry with his Harvard Business Review article “IT doesn’t matter” and a book similarly titled. He was similarly mocked and the reality is CIOs have become even more strategic with large digital transformations, security challenges, and now with management of hyperscaler clouds and with massive AI budgets.

In their defense, both Fukuyuma and Carr were pointing to inflection points, not “endings”. So I would read Satya with a similar lens – he is pointing to a transition point, not a wall we are about to crash into.

And Satya is only pointing to the obvious. As I wrote in From BOPS to FAANG to the Magnificent Seven enterprise application vendors and their services partners have gradually but precipitously slipped in market leadership over the last 3 decades.

Satya has certainly earned the right to opine on the trajectory of the industry. Watch this fascinating conversation with Bill Gurley and Brad Gerstner. Satya has taken the Azure cloud business from $1 to 66 billion in revenues. He has added $3 trillion to Microsoft’s market cap. His early investment in OpenAI was brilliant. He is humble enough to talk of the “winner’s curse” where competitors can sneak up, duplicate success in a heartbeat. But the really intimidating part for his competitors is towards the end when they talk about model scaling and over 60 data centers across the globe and massive capex spend of nearly $70 billion in 2025. No wonder Satya mostly names his Mag 7 compatriots (he alludes to the Mag 8 to include OpenAI) like Elon, Jensen, Sam and Mark in his comments, not any of the application vendor execs.

I have met Satya a couple of times, and would love the opportunity to take the conversation further with more of an application and business use case perspective : who would train the new world of agents, where would the training data be sourced from, where are we going to provision the humongous energy needed to run power hungry GPUs and data centers etc.

Here are 5 areas I would love to discuss with him given the changes the new US administration is likely to bring to the global economy, and based on research we did for the fiction book we have just released, The AI Analyst

• Tariffs will likely lead to more manufacturing, varied logistics and related robotics and sensors in the US. Immigration changes will lead to more automation opportunities in farming, construction and other sectors. Healthcare is going to see plenty of scrutiny. There is already a debate on H-1B visas and impact on IT outsourcing. Most of the agents today in the markets are back office and IT-centric, and mostly Western economy focused. How are they going to help in operational areas on the shop floor, the operating room, the fields etc.? How are they going to be able to help with the exotic taxes, payment protocols, customs and other compliance requirements being dreamt up by BRICS and other fast growing economies?
• Polestar, the AI/Automation company in our book whose CEO, Barry Roman disappears, is a next-gen tech vendor which combines agentic AI with humanoid robots, drones, UAVs etc. Not just a software focus. Polestar has an expansive definition of its verticals as each of the 800+ occupations the Bureau of Labor Statistics tracks. Their solutions automate limbs, eyesight and other human faculties, not just cognitive skills. They sell solutions including warehouse bots and GPUs “as a service” but are very flexible in allowing customers to scale their use up or down. Is he seeing tech vendors who can come close with the unique domain expertise and faculties needed for each of these occupations? That unique worker productivity is where the buyer ROI is acutely seeking.
• The book also has a next-gen technology buyer in a NYC financial institution, Sheldon Freres which knows how to monetize its mountains of unique vertical industry data. The tensions and shifts in economics between buyers and vendors of technology are brought out quite vividly in the book. As Patrick Brennan, the analyst character summarizes “Given how expensive GPUs and good AI talent is likely to be for the next few years, enterprises will prioritize unique products and market-insight projects, like drug discovery, mineral insights, product design advantages, trading patterns, etc. Smart customers will protect that data for themselves, train their own large language models, or LLMs, and commercialize that data asset. Vendors will continue to generate proposals, job descriptions, demand forecasts, etc. with their AI—clearly useful stuff, but not deserving significant premium pricing. We need to be associated with the first group of customers, the smart ones.” How are vendors going to adjust to a coming marketplace where their customers have the monopoly on deep domain specific training data and want to be compensated for it?
• How are we going to source energy for our massive inference, quantum and other computing while monitoring our emissions? Our utilities have barely been able to keep up with growing EV demand. Even in Germany which has invested trillions over 50 years on wind and solar, renewables barely meet half of their total energy needs. Where does he see next-gen nuclear in the mix? What about carbon capture and hydrogen harvesting? Do we need a new breed of utilities which are as ambitious about capex spend as the Mag 7 have become? At this point our utilities appear to be a major bottleneck and their infrastructure is incredibly dated.
• Technology buyers are also going to be consulting with a new breed of analysts like Patrick. His firm, Oxford Research doesn’t just produce “Golden Circles” (their version of Magic Quadrants) which a copilot called Curmudgeon helps generate. They also have labs which test products and their security vulnerabilities. Their focus is not just IT, but energy and other STEM disciplines and they have a global reach. As Patrick tells his colleagues at an Oxford offsite “COVID, the Ukraine war, climate change, and massive digital transformations have made many vertical edge applications viable—telemedicine and personalized medicine in healthcare, EV battery management and billing in utilities, intelligent returns and reverse logistics around eCommerce, direct-to-consumer and related last-mile, small-lot logistics in consumer sectors, CPQ for industrials to handle complex outcome-based pricing which bundles products’ spare parts, all kinds of monitoring and maintenance services . . . the list is virtually endless.” The conversation around AI is increasingly going to be with much savvier business executives, not just about technology speeds and feeds. As Tom Siebel of C3.ai recently said “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.” And to my knowledge, even Tom does not have anywhere near the depth of vertical capabilities I describe above.

Would love to get Satya’s perspective on the coming changes in our industry from his perch. I loved his demeanor in the Bill and Brad show. It was an unusually long session but he came across so comfortable, confident and articulate. A true industry leader.

Analyst Cam: Aera Technology - The AI for Decision Automation

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

Fred Laluyaux, President and CEO of Aera Technology, presents on the Aera Decision Cloud™

How many personal decisions do you make in a day? According to this article in the Harvard Business Review the average adult makes 33,000 to 35,000 decisions each day. Many of them are what it calls “autopilot” decisions. It encourages daily journaling to interrupt such decisions and to “live our lives more intentionally.”

Could you extrapolate that to an enterprise and its millions of daily decisions – some “autopilot”, some relatively simple yes/no, others much more complex which require interaction with a chain of other processes or groups?

That is Aera’s mission - digitizing, augmenting, and automating enterprise decision making. It aims to become a virtual member of your team, a digital analyst – delivering well-researched and informed business recommendations, and going even further and taking action autonomously to execute them once a decision has been made.

Fred, who has spent three decades “in the world of data analytics, applications. ERP, BI and of course, AI”, at Anaplan, Business Objects, SAP and elsewhere spends 40 minutes talking about the Decision Intelligence branch of the AI science. He talks about relatively simple decisions which can be processed using traditional CPUs, and others way more complex requiring GPUs. He talks about finance processes which are used only periodically over the course of a year compared to one at Unilever where they use daily ingestion of retail store sourced SKU data to drive demand forecasts. He talks about big swings in companies which went from inventory shortages during COVID to surplus inventories. The customer examples he provides are complex, global ones.

I was particularly fascinated by the platform feature of a Control Room where all kinds of decisions can be tracked and continually improved. You can ask questions like “Is there a bottleneck somewhere? Is the quality of data degrading? Is the quality of the algorithm increasing? Why? Why are people rejecting some recommendations? They may have a very good reason to do so.”

With the volume of decision data the platform is accumulating, you can vary blends of man and machine in next-best actions.

Very nicely done. Using the lexicon of the HBR article it would allow employees and groups to “live their corporate lives more intentionally.”

Burning Platform: Analyst Relations at Startup and Scaleup vendors

For the 127th episode of Burning Platform, we host Robin Schaffer of Schaffer AR. She guides  smaller vendors – especially Startups and Scaleups - on navigating the world of Industry Analysts

In a fast moving conversation, we discuss

• How little the average entrepreneur at a small vendor knows about the Analyst world, even the larger firms like Gartner.
• How to use analysts for competitive and market intelligence. not just for influence
• The “pay for play” perception around analysts
• How she helps her clients navigate the explosion of boutique analyst firms
• The wide range of formats analyst content is distributed in these days – reports, books, videos, podcasts etc.
• Why the time is right for the Analyst firms to reengineer the “hellish” RFI process they make vendors endure for their research reports when they should be relying more on the countless signals they themselves get from their clients.
• Her thoughts on my new book, The AI Analyst. She was one of a select group who received an Advance Preview copy.

We conclude with the observation that we pay too much attention to dots on quadrants – when they reflect merely the tip of the iceberg – and forget that it is the result of thousands of interactions between humans.

Very nicely done in a little over half an hour.

Fiction and the Future of our Sector

‘Tis the season for forecasts for 2025. I have never been a fan of one year forecasts. Few trends mature in that short an interval. However, most of my books look further ahead. Our new book, The AI Analyst, is a fiction mystery, but in many ways, it looks at the future of technology vendors, buyers and analysts especially against the backdrop of the current wave of AI. I will come back to that in a minute.

For this thriller, my co-author, Kimberly and I took pains to create fictional characters which in each case are composites of 4-5 real people we know. Given that, one of the most heartening comments we have received is “by the book’s conclusion, there are a good dozen of (characters) that the reader knows on some essential level and actually cares about” Watch this interview with Paul Greenberg on the back story of the book and how it required an intense focus on human emotion in terrifying, joyful, and humorous scenes. I also shared with him my belief that products and places are also great story tellers and we have plenty of each in the book.

We wanted the book to be entertaining to a wide audience and think we have hit that goal. We are grateful for the early reviews people have been posting on Amazon, Goodreads, other book sites and in direct feedback from those who read advance copies.

A long-time tech executive commented “It's an intriguing mystery, but I'm really impressed with how well the authors captured the tech industry. The billionaire personalities, the corporate culture, the personnel drama and how evolving technology keeps moving the pieces around.” Another industry veteran said. “The vivid characters, the corporate dynamics, and the portrayal of evolving technology were spot on. It's a page-turner that I couldn't put down, and I appreciated the mix of humor and drama.“

Many liked the coverage of analyst world. As one commented “it shines a light on the activities and dynamics of technology analysts – an interesting and impactful milieu which most people are unfamiliar with. These analysts/consultants work closely with technology producers to evolve the markets, hone the offerings, inform the public, provide a feedback loop to industry, and much more. One of them, whom the title refers to, is central to attempting to solve the mystery.” A long-time PR practitioner observed “At the heart of it is the analyst – that unique individual who sits in the eye of the hurricane, making sense of what is real and what is not.” An Analyst Relations coach commented “I Inhaled it in about 2 days. So fun to see our industry up in lights.” A CIO wrote “Most of us use analysts work without any understanding of their world. In this enjoyable read the author conveys a deep understanding of the analyst’s universe against a rich and entertaining mystery.” An Analyst commented "I can't wait for the movie adaptation, as I'm sure there is a script in there somewhere! "

Others like all the AI and other automation technology – copilots, digital agents, robots, drones, GPUs and LLMs - we have in the book. There are also sections on ethics of AI, impact of automation on jobs and other AI angles. As a former Gartner analyst commented “The story both educates you on what the AI age brings in terms of benefits and peril. Concealed in a thriller format is a primer on AI and the tech industry, where you can be entertained and learn at the same time.” A 30-year vendor veteran observed “This was my second fiction book on AI, but the first one (I read) was before the breakout of ChatGPT. Now this stuff is real. With the amount of money flowing through the AI space, it's not a stretch to imagine the eccentricities, maneuvers, and clandestine tactics of the various players.”

Some like the many sidebars. As one commented “woven into the text are themes of urban blight, ecological disaster, robotics and other automation, criminality on all levels, vying generations, California vs. Florida as places to dwell or flee from, and many other glistening strands.” Still others like the coverage of Western China, the rituals of an Indian wedding and other strands.

Others like the Silicon Valley settings in the book – Pebble Beach, Half Moon Bay, the wildfire, the Winchester Mystery House and many others. As one said “As a native Californian who spent 35 years living in the Bay Area, in Palo Alto and Woodside, working at Stanford, SRI and IFTF, this was a fun read. I enjoyed the story, in between a ton of memories, memes and tropes”. Another said “As a former Silicon Valley-ite myself, I love the characters in this book. I feel like I was in the room with some of these people during some of these events.” Another said “There are plenty of insider nuggets about the rarified world of the upper echelons of the Bay Area and its tech industry denizens woven into a great page turner.” Others love the museums, restaurants and other settings on the other side of the country in the Tampa Bay area.

Long and short, the book is very close to real life. And we believe it is also a harbinger of big changes we see coming to our industry.

Polestar, the AI/Automation company whose CEO, Barry Roman disappears, is a next-gen tech vendor which combines agentic AI with humanoid robots. Not just a software focus. Polestar has an expansive definition of its verticals as each of the 800+ occupations the Bureau of Labor Statistics tracks. Their solutions automate limbs, eyesight and other human faculties, not just cognitive skills. They sell solutions including warehouse bots and GPUs “as a service” but are very flexible in allowing customers to scale their use up or down. Lots of other interesting twists we bring out about the company and many of its executives.

Similarly, Oxford Research is a next-gen analyst firm. Patrick Brennan, their lead analyst is embedded in the FBI search for the missing Barry. Oxford doesn’t just produce “Golden Circles” (their version of Magic Quadrants) which a copilot called Curmudgeon helps generate. They also have labs which test products and their security vulnerabilities. Their focus is not just IT, but energy and other STEM disciplines and they have a global reach. As Patrick tells his colleagues at an Oxford offsite ““You heard from Tucker and Martha last night about how Gartner and others became dominant forces in our industry, but also how the time is right for a disruptor—and that could be us. Correction—it should be us. COVID, the Ukraine war, climate change, and massive digital transformations have made many vertical edge applications viable—telemedicine and personalized medicine in healthcare, EV battery management and billing in utilities, intelligent returns and reverse logistics around eCommerce, direct-to-consumer and related last-mile, small-lot logistics in consumer sectors, CPQ for industrials to handle complex outcome-based pricing which bundles products’ spare parts, all kinds of monitoring and maintenance services . . . the list is virtually endless.”

The book also has a next-gen technology buyer in a NYC financial institution, Sheldon Freres which knows how to monetize its mountains of unique vertical industry data in our age of AI. The tensions and shifts in economics between buyers and vendors of technology are brought out quite vividly in the book. As Patrick summarizes “Given how expensive GPUs and good AI talent is likely to be for the next few years, enterprises will prioritize unique products and market-insight projects, like drug discovery, mineral insights, product design advantages, trading patterns, etc. Smart customers will protect that data for themselves, train their own large language models, or LLMs, and commercialize that data asset. Vendors will continue to generate proposals, job descriptions, demand forecasts, etc. with their AI—clearly useful stuff, but not deserving significant premium pricing. We need to be associated with the first group of customers, the smart ones.”

As I do with all my books, I will be sharing excerpts over the next few weeks. Being a mystery, I don’t want to spill the plot so the excerpts will be short. I am of course biased but I would recommend you not wait for that drip feed of excerpts. Read the book now along with plenty of 2025 forecasts that are showing up from many of my colleagues. The automation we describe is going to be especially interesting with the incoming US administration. Tariffs will likely lead to more manufacturing, varied logistics and related robotics and sensors in the US. Immigration changes will lead to more automation opportunities in farming, construction and other sectors. Healthcare is going to see plenty of scrutiny. There is already a debate on H-1B visas and impact on IT outsourcing. A vendor like Polestar is going to thrive in that changing vertical environment.

The book is not a 2025 forecast, but it is definitely a perspective on the massive changes coming to our sector. You will see them from the eyes of characters which are fictional but you will likely recognize. As one commenter said about one of the Polestar executives “I really enjoyed the story, but sad you made the marketing guy such a buffoon. But I’ve met Chad :-)”

The book is available in eBook and print via various Amazon country sites – click on the badge on top left to get to the US book page. It will soon be available in other book channels. It should also be a fun reading assignment for group events such as Sales Kickoffs and executive retreats – contact us directly for bulk discounts.

2024 in Review

People have very different definitions of a successful year. Mine revolves around brand new projects and experiences. 2024 in many ways was even more varied than previous years.

A new genre of book for me - a fictional AI mystery, The AI Analyst which is being released this week, exposure to lots of copilots, digital agents and humanoid robots, crossing the Atlantic on water after hundreds of times by air, time in the one of the counties in Ireland I had never been to - the stunningly beautiful Donegal, first visit to Portugal and the Azores, a visit to the SpaceX Starbase in Boca Chica, TX, surviving three close calls with hurricanes and much more.

Plenty of video conversations on a wide range of topics

Analyst Cam episodes
Burning Platform episodes

I failed in one resolution - I had hoped to sleep more nights at home, but business and other travel continued relentlessly. That's not all bad, my series of nearly 50 Instagram galleries with 10 photos each from various trip showcases that.

Instagram galleries

I have a feeling 2025 will be even more varied. President Trump will make sure of that😊

My research for the fiction book also gave me ideas of next-gen technology vendors, buyers and analyst firms. I will be discussing some of that with Paul Greenberg on his Talking Headless episode this week, and in some upcoming posts.

Here's to more collaboration with each of you in 2025. In the meantime, Merry Christmas!

Selling is just the Beginning

My memory is a bit fuzzy since this happened when I was a young pup at PwC in the mid-80s. At an annual conference, kind of a Sales Kickoff (SKO), the theme was on the lines of “Selling is only the Beginning’. PwC was recovering from a botched project which had led to litigation and negative media. The elders emphasized the importance of tight project management, clear scope definition in proposals and other hygiene. Delivering on what we promise is as important as selling, a few of them said.

I remember that event even 4 decades later as I wonder if corporations today periodically push their red button and remind all their staff that selling is an on-going process.

I say that as I read some of the travel “elite member” communities I am part of on Facebook. These are by definition the top 5% of the customers of the airlines, hotels, cruise lines etc. This time of the year most members are scurrying to re-qualify for their status for next year. People are pleading for help given how complex (and stingy) the loyalty programs have become. The comments expose you to the bizarre algorithms which guide how status and benefits are doled out, and how few staff at the point of service understand the things these “elite” members have been promised, the audits and other rude behavior these members are often exposed to. Trust me, some of these “loyal” customers are like me. If a vendor regularly annoys me I put them in the doghouse for a quarter or two and don’t spend a dime with them. And I let them know how much business they lost.

Unfortunately we are seeing something similar happen in enterprise technology. SaaS is 20+ years old and by my estimate less than 15% of enterprise application functionality has moved to that format. First-gen cloud vendors are busy trying to sell GenAI when customers want to see Moore’s Law in action and a broader set of functionalities so they can simplify their solution portfolios. On-prem vendors are pushing their more recent (and often immature) cloud solutions with a gun to their customer’s head – an end of life deadline to their on-prem solutions, and with hefty costs with little automation of the migration to the cloud. As for service providers, they continue with labor intensive delivery even as the most promising GenAI use case for many CIOs is developer productivity

My reminiscing about the 80s also reminds me how difficult it used to be to sell packaged applications. The buy v build decision was heavily weighted in favor of custom building. We have come a long way since, but unfortunately, I am seeing the pendulum swing back slowly but steadily. CIOs are back to internal developer staffing with GenAI enabled productivity and the ability to custom build vertical and geographic extensions their vendors have neglected for too long. And to do so at a fraction of the cost of buying, implementing and maintaining a bought solution. And many are unafraid to tell their vendor salesperson, like I do with my travel vendors, they are in the doghouse and lost out on $$$ of opportunities.

The first quarter of the year is a time for many tech companies to host their SKOs. I hope this time vendors arrange for at least a couple of sessions, if not the entire event, focused on the possibility that they are killing the goose that lays their golden eggs. Not to rain on their parade, but I would be happy to lead a session or two for them. And I promise to be entertaining by sharing plenty of humorous anecdotes (some of which made it into the book) we heard as part of our research for the fiction book we have just released, The AI Analyst.

Our fiction thriller: The AI Analyst

You may have read one of our innovation centric books – The New Polymath, The New Technology Elite or Silicon Collar

Or thought leadership books we have helped tech executives write – Business as Unusual with SAP, The Digital Enterprise or Moment of Service

Or one of 3 in the SAP Nation series

Our 10th one is a different genre – it is a mystery with an AI angle. Also differently, it is a collaboration with a lady co-author.

Patrick Brennan is a technology industry analyst who knows the key players in Silicon Valley, what they're working on and with whom. His former boss and longtime mentor, Barry Roman, charismatic billionaire CEO of Polestar, a major AI/automation firm, is missing. Patrick offers to use his industry knowledge and history with Barry to assist FBI and local detectives on the case. The investigative team quickly finds that Barry has as many enemies as friends. Suspects include his estranged wife, a disgruntled former executive, Chinese intelligence, the Mob, and many more.

Amazon today opened pre-ordering for the eBook version of the book – click on the badge on left to read more about the plot and to order. The book will be released next week in time for your holiday enjoyment and for Santa's deliveries . It will be available across other digital and paper channels in the next few weeks.

I had shared advance copies with a fairly diverse group of your peers. The early reviews have been varied and excellent.

"As a veteran of the tech industry, I was delighted to see the intrigue that has long been a part of our industry woven into this exciting thriller. It’s captivating for both those interested in technology as well as the twists and turns of every good story."

Bill Hewitt
6-time CEO and technology industry executive, advisor and investor

"Ooh! I got an early Holiday gift... an advance copy of Vinnie Mirchandani and Kimberly McDonald Baker's new book, The AI Analyst. It's about an industry analyst who solves a crime with his sharp as a tack analytical skills. Inhaled it in about 2 days. So fun to see our industry up in lights."

Robin Schaffer
Founder, Schaffer AR

"The book weaves an intriguing mystery through an accurate and insightful description of the past, present and future of the high-tech sector."

John Wookey
Long time enterprise software executive at Accenture, Oracle, Salesforce and SAP and adviser to a number of startups

"What a romp. What a re-education. As a native Californian who spent 35 years in the Bay Area, mostly living in Palo Alto and Woodside, working at Stanford, SRI and IFTF, this was a fun read. You reminded me of my daily drive up Redwood Gulch when you mentioned Bear Gulch, a favorite hiking area. I enjoyed the story, in between a ton of memories, memes and tropes. I'd highly recommend it to anyone who wants to learn about the future with AI, space mining, personal medicine, next gen foods....as well as current foods popular in Silicon Valley. What's your recommendation for great Indian take out? I'd also recommend this for anyone wanting to know how marketing works at a tech company -- all facets of marketing and sales with every acronym soup mentioned from MQL and SQLs. Or anyone who is an analyst wanting to know the latest and greatest analyst tools and processes. And, I loved being reminded of all facets of the Winchester Mystery House as well as Hindu wedding traditions. Lots of details that delighted. My only criticism is that few would use Kaiser for medical care -- maybe maternity, but not for trauma or any other specialty. Not when they could use UCSF, UC Davis, Stanford, or even Good Sam."

Lexy Martin
Long time Californian HRtech researcher

"A tale of digital heroism straight from tomorrow's headlines. Tech industry prophets, Silicon Valley wunderkind, overseas hackers, and today and yesterday's organized crime, motivated law enforcement combine in a mix of deftly portrayed characters. The story both educates you on what the AI age brings in terms of benefits and peril. Concealed in a thriller format is a primer on AI and the tech industry, where you can be entertained and learn at the same time."

Tim Tow
Former Gartner Analyst

"The plot is so close to real life! If we want to know how this world works, we have to step back and understand it. This gives us a good opportunity. I believe one day soon this is going to be a movie... can really feel it."

Judith O’Callaghan
Global ERP Advisory, Brisbane, Australia

"The book is an intriguing mystery that perfectly captures the nuances of the technology industry. The vivid characters, the corporate dynamics, and the portrayal of evolving technology were spot on. It's a page-turner that I couldn't put down, and I appreciated the mix of humor and drama. Well done."

Benjamin Beberness
Veteran utility and energy sector technology executive

As I have done with previous books, I will be regularly excerpting portions of the book on my 2 blogs and on Instagram. To not ruin the plot, I will be a bit more selective in what I share from this mystery. Still there is plenty to share about the wide range of global locales in the book, how Polestar is a next-gen vendor for the coming world of agentic AI and humanoid robots, how Oxford Research is a next-gen analyst firm with its labs, copilots and digital agents and with uber-smart and courageous analysts like Patrick Brennan and other tidbits from the over 300 pages which got left on the cutting table.

Analyst Cam: rtZen – Optimizing Finance Operations

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

Aiaz Kazi, an alum of SAP, Google, Bank of Santander and Tibco presents on his startup, rtZen and its functionality to provide visibility, intelligence, and automation to finance operations, with a particular focus on cash flow and multi-entity enterprises, likely a reflection of his time at a global bank.

In a half an hour, he covers positioning vis-a-vis ERP vendors and accounting specialists like Intuit, how AI is opening up new process change opportunities as move from "rear view" accounting to predictive and prescriptive roles and  he discusses one of his early customers.

He says the Z in the company is capitalized and stylized as “a currency as a hat tip to a future network play where I would have both payer and payee on rtZen”. However, his company is still pretty young and he is letting early customers drive early use cases.

Very crisply done. Look forward to having him back as he grows his customer base and use cases.

The Mother of all Disruptions

Two Wednesdays ago, I was getting some of my daily steps on the 14th deck of the Celebrity Ascent which had sailed from Barcelona. I greeted “good morning” to a gentleman passing me. He stopped and said “Not a good, but a great, morning”. I presumed he was a fellow Floridian as we were headed to Ft. Lauderdale and we started a quick conversation. He was actually from California and he poured out what exactly he thought about his Governor and his state. Over the next couple of days, I had many similar conversations with others we had met on the ship about the US elections. I would preface the conversations with a simple question "Are you glad or sad?" Most said glad about the election results, sad about the cruise ending.

I am a registered Independent and tend to have low expectations of politicians in Washington, DC. I had written this blog post My 10 asks of the next POTUS in early August and had been disappointed that neither candidate had focused much on policy matters. As it is now becoming clear, Kamala spent too much on celebrities and campaign cosmetics and Trump on rah rah rallies. Entertaining but content-light.

My 10 points had called for

• Reduce our National Debt which has spiraled in the last decade
• Deliver trade surpluses after decades of deficits
• Make us an energy innovator with next-gen nuclear, carbon capture etc
• Get serious about “affordable” healthcare and delver much better outcomes
• Tie immigration to our talent needs – we have a process which works but that we have ignored
• Take care of our aging baby boomers
• Quit spilling our young blood in faraway places
• Be fluent in STEM – our leaders need to celebrate and highlight the wide US STEM leadership
• Celebrate the nuclear family – I have a nuanced point of view on why we have created our distorted population pyramid
• Re-prioritize common sense – we have paid too much attention to activists and ideologues

Clearly, I have tall expectations which call for disruptors to divert the trajectory in each area. However, I figured I would mostly hear celebratory talk from Trump till he took office in late January.

So, I have been blown away by how quickly he is assembling his core team . I like many of them – Elon, Vance, Vivek, Burgum, Tulsi, RFK Jr, Rubio, Lutnick, Kristii, Hegseth,Wright. Many are youngish, entrepreneurial and importantly they are STEM savvy. They can clearly be disruptors. Match them to my 10 “asks”.

In response, I have also heard an equal and opposite reaction to them from many defending the status quo.

My career has thrived on disruption in the tech sector. I helped clients replace mainframe applications with client server flavors at PwC and Gartner. At Deal Architect I helped a number of clients with due diligence around offshore development in emerging economies around the world. I have helped clients move to cloud applications, evaluate hyperscalers replacing propriety data centers and outsourcers, evaluate benefits of automation from robotics to now Gen AI. I have seen global economies ebb and flow in my travels across 75 countries. I have seen verticals dramatically transform over the last few years, many with brand new competitors. It shows in the massive changes in vendor portfolio over the last two decades of Deal Architect and in our family budget – especially in telecoms, financial services, travel and retail.

Disruptors are by definition bulls in a china shop. They leave behind winners and losers. They inevitably face resistance to change. But life and business goes on, and usually gets better.

I have learned to present pros and cons, logically not ideologically, when I invited to. It definitely helps that I have spent time with countless execs for books like “Business as Unusual”. I have learned from others talk about a ‘Fail Faster” culture. A CEO once told me “Never offer a Plan B. Burn the boats behind you.”

We are entering a phase of great disruption. Like most, I am anxious. But I am also excited.

loanDepot – Conversation with a “dream” Workday customer

In the technology world, we often narrowly define customer experience or CX as our reaction to software user experience or UX – how pretty, how intuitive etc. To me CX is much broader – how successful was the implementation, what does the customer tell peers when they are doing reference calls, how do they advise customers from other industries and countries, what enhancements do they prioritize from the vendor etc. I have written about many customers in over 200 case studies in our long-format content – especially our innovation focused books. Those take several conversations. It is rare after just one session that I tell an executive they are a “dream customer.”

I recently had a chance to spend about an hour at Workday Rising with Jennifer Edwards, SVP, Accounting Systems at loanDepot, based in Irvine, CA.  Rather than just a narrow view of their Workday project, Jennifer shared valuable insights into the mortgage financing sector. We discussed Workday’s Accounting Center, Prism Analytics, and the innovative Illuminate AI agents, as well as her interactions within the Workday community. I couldn't help but express, on two occasions, that she exemplified what it means to be a “dream customer” for Workday.

Here are some excerpts from our conversation

About loanDepot

loanDepot was founded in 2010, right after the subprime mortgage crisis. The founder, Anthony Hsieh saw an opportunity to start a new, digital mortgage lending experience to make the home buying and financing process more efficient and transparent with modern technologies. They built third-party integrations directly into the originations process to collect a borrower’s income, employment, and asset information to deliver a fast and hassle-free transaction experience.  That was revolutionary in a sector which used to be paper intensive. Since inception, they have funded more than $498 billion. Today, their nationwide team of 4,000 plus members assists more than 6,800 customers with mortgage originations transactions each month.

Her career in financial services, accounting and related systems

Jen started her career in auditing at KPMG, in the financial services sector in the Southern California area just before the 2008 crash. She got to see many troubled banks. She left KPMG after 7 years to join a regional bank as the head of their internal audit. That role expanded her exposure to systems, again on a timely basis, as companies were focusing on process automations, digital transformations, adopting cloud computing, etc. In her role, she reviewed process and controls around several new systems implementations. And loved the experience around the systems side of accounting. Since 2020, she has been involved in Workday (financials related) projects at loanDepot. She enjoys the financial services sector because of the macroeconomic lens it brings, and how it's so important for the health of the US economy.

The Workday product differentiation in their sector

in 2020, loanDepot decided to digitally transform their office of the CFO. They already had implemented Workday HCM and payroll. So Workday Financials, Accounting Center and Prism Analytics was the most logical, best-fitting solution as they facilitated the precision of the loan-level accounting at a low level of granularity and, importantly, did so at their large scale of volumes. They previously used an industry specific product but realized it could not easily scale to their exploding volumes.  Jen had joined loanDepot to help with the Workday Financials implementation and then stayed to run that team post-go-live in a new organizational format.

The Workday decision was made easier because Fannie Mae, who they sell a large volume of loans to, had been an early adopter of Workday’s Accounting Center and Prism (along with the financial modules). Accounting Center is designed for the systems accountant, a functional knowledge owner, to automate the rules that summarize operational data into resulting summarized journal entries. They use Prism for its attribute-rich reporting dimensionality from the resulting data sets and ingested complimentary operational data sets. Accounting Center is also helping them automate their fair value process and month-end gains and losses, as they ingest loans held for sale, and interest rate lock commitments.

Most ERP systems don’t make it easy to store attributes like associated loan officer, loan purpose or product, or property state. With Workday, they are ingesting more related operational data fields for a single transaction compared to what you can normally do in a ledger. The Workday differentiation will increase as they continue making enhancements to analytics and reports by leveraging new features that enable reporting on prism attributes within hierarchical formats.

Her Workday community participation

She is very active in the Workday community and participates in early design and partner groups, testing and giving feedback. She sits on the Financial Services Industry Vertical Customer Council, advocating for a collaborative approach to problem-solving with vendors (and like-minded customers). She conducts reference calls, often fielding inquiries from customers curious about their support models, particularly regarding how financial teams should collaborate with HCM and Payroll departments. Given the sensitive nature of the data involved, this collaboration can present challenges, especially for organizations that do not implement both areas concurrently. Her reference calls and industry presentations are not restricted to peers in her sector. She speaks at Rising and has been part of the Workday – Intelligent Finance Tour – and gets questions from people interested in Accounting Center outside of financial services.

Her relationship with Workday has allowed her to appreciate the company's unique culture, which she feels genuinely values its customers. Jennifer notes, “It’s been a joy to watch what the new CEO Carl Eschenbach has been doing for the company, and the fun that CMO Emma Chalwin is having.”

More Workday innovation

At Rising, Workday revealed several AI agents and the acquisition of Evisort, a contract intelligence tool. She particularly liked the natural language user interface where you can ask the system via your mobile phone to do specific tasks. She is also excited about the various Agents and is excited to see what financial related agents will be “next”. In a document intensive profession (accounting) and environment that is loanDepot, she looks forward to learning about use cases Evisort could offer them particularly around areas like leases, supplier contracts, and supplier invoices. Not so much for loanDepot which is a nationwide nonbank mortgage lender, but for broader banking, she would like to see Workday build out the banking core.  As well as offer, industry specific reporting packaged solutions for regulatory reporting requirements for the industry: for example- call reporting for banks and mortgage bankers financial reporting (MBFRF).

“Fail Faster” culture

Before our meeting, Workday had honored Dave Smoley with a lifetime customer appreciation award for his projects at Flextronics, Astra Zeneca and Apple. I mentioned to her I had written a case study of Flex’s risky decision to implement Workday as a global HCM system when Workday was still a tiny startup. I told her Dave had justified it as doable in Flex’s “fail faster” culture

Jen’s response was “That is a hugely important cultural thing that not all organizations do and I try to; loanDepot’s culture pushes me to lead by being daring in our pursuits and dynamic in our actions.  We use the data we have to make the best decisions we can, but we know we're human. We're not going to get it perfect every time.”

I look forward to conversations with other financial executives as Workday crosses the 2,000 customer mark who use their financial modules. Jen has set a benchmark for them to pack a lot of content into just one session.

Analyst Cam: Zoho – IoT launch

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

As we have covered over the last few years, Zoho has plenty of CRM and back office traction. However, its culture with founders like Sridhar Vembu (see this conversation around electrical engineering, molecular biology, global technology capabilities etc. )  and Tony Thomas (see this Burning Platform episode ) is even better suited for industrial, operational areas.

So I was pleased to host Jegan Ragavan, Global Product Head, who presented an overview and brief demo of their IoT offering. It has been in beta development for a couple of years and provides a glimpse of Zoho's focus on operational areas, particularly in asset intensive sectors. It also opens up opportunities for a broader range of CRM capabilities for field service, product configurators and other applications.

It is a rapid fire presentation as Jegan talks about the “low code, highly secure, enterprise scale platform that comes with hundreds of devices supported out of the box." It can process and store billions of data points and deliver AI powered analytics and predictive maintenance. It comes with inbuilt integrations with data streaming services as well as critical business applications (that Zoho already supports)”

He talks about applicability to “ manufacturing operations teams, maintenance teams, supply chain, logistics, quality, safety.”

He presents a demo around a fictional company called Zylker, which manufactures vehicles, turbines and other industrial equipment. He shows use cases around energy usage in smart buildings, emissions, shop floor visibility, anomaly detection, waste analysis and plenty more.

He then spends some time explaining a device-based pricing model for IoT, different from user-based pricing common for other Zoho applications.

Very nicely done in half an hour. I am really excited about this industrial vertical expansion by Zoho. Earlier this year Siva Iswaran had presented here on their plans around financial services

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!