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More New Renaissance

on the innovation blog

Adobe Marketing Cloud

The answer is blowing in the wind

Consumer Reports Top Products at CES

Disney’s MyMagic+

Dynamic pricing comes to retail

The UAE as technology/innovation hub

The Detroit Auto Show: the buzz is back

Orlando’s Creative Village

Excuse me, Maestro

The numbers are in

SAP’s Total 2012 Non-IFRS Revenue EU 16.3 billion

Revenue from “New” products introduced in last 5 years

HANA	392
Mobile	222
Cloud	456	(incl Ariba)
NEW	1070

So, roughly 6.5% of revenues from “new” products. Compare this to over 60% in case of Apple.

For all the noise that has been coming out of SAP, and particularly its fan base, for the last few years, that is tiny, wouldn’t you say?

Don’t even bother arguing whether Ariba should be classified as cloud revenue.

I am glad I have myself an iPhone 5

Amazon: The Phantom Menace

The MIT Technology Review suggests Amazon is jumping into the advertising game to compete against Google and Facebook. Certainly plausible – advertisers would love to get access to consumer data which drives its recommendation engine.

What’s interesting is how many markets I hear Amazon is about to jump into.

Grocery chains are worried that as Amazon optimizes same day delivery it will get into their turf. Third party logistics (3PLs) have long feared Amazon’s distribution and logistics. Cable companies and telcos worry about Amazon as a streaming content player, since it already offers its Prime customers access to complimentary movies. Every retail category watches Amazon’s prices. Book publishers have a love/hate relationship with Amazon – it is a major channel, and potentially a major competitor with its own Kindle Direct Publishing. Most outsourcers pooh pooh Amazon as competition, but most customers use Amazon Web Services as a competitive benchmark. 

Personally, I hope Jeff Bezos stays away from most of these markets and pleas to buy everything from Best Buy to more robotics companies (it owns Kiva). I would hate to see Amazon too distracted. But I would love to see it continue as a phantom competitor and keep many an industry honest.

The Most Reliable of Innovation Sources: The Calendar

Last year I cataloged my major sources of innovation stories. We all have our favorites. Valley watchers focus on local startups. Apple and SAP fanboys hype up every burp in each of their cafeterias. Others like to scan academic papers and work at campus labs. I myself like to see what non-tech companies are doing to embed technology in their products and services.

While all those sources will continue to be a substantive stream for New Florence and my books, I am struck by how much more reliable the “calendar” is. January brings CES, the Detroit Auto Show, Davos, the President's State of the Union speech, many years the Super Bowl. It brings the local Gasparilla festival, and every few years the Presidential Inauguration.  Each of these events allows a chance to catalog innovative persons, places and products. 

Other months of the year are just as full – over the last 6 years, I have built my own calendar to keep an eye for events as they approach. Even days like St. Patrick’s viewed over a few years allow you to see how tech evolves our social life, life in Ireland etc.

The other nice thing : In a world of predictable IT overruns and severely delayed vendor product releases, many of these events reflect fiendishly complex projects with thousands of moving parts which somehow come together and impress. The fact that many depend on volunteers rather than expensive consultants and contractors makes them even more impressive.

I like to sit down with event organizers like Scott Schenker of SAP even with his nervous eye that something – a security breach, a misconfigured wi-fi router, a drunk attendee – may cause an incident. There is a certain pride in the exhaustion you see in Jennifer Donner Smith of NetSuite, as she comes home from a 2-3 week global events tour.

Sprint hit home with me when it ran commercials about Roadies running the world

SAP cloudwashes its image

Watching the playoffs this weekend, I chuckled when I saw SAP is the NFL’s Official Cloud Software Solutions provider.

Not sure how much it cost SAP but they are clearly eager to be considered “cloudy”. Since the revenues show a tiny cloud profile (prelim 2012 results show cloud revenues at EU 270 m in IFRS, and EU 342 in non-IFRS.  In each case about 2% of total revenues), they clearly have to raise their cloud marketing profile.

And to put out clear-as-mud statements like below to claim cloud revenue is at a run rate of EU 850 million.

The growth rate in new and upsell subscription billings relates to SAP cloud applications business (excluding Ariba); the annual revenue run rate includes Ariba (before any future growth) and is derived from the total revenue of SAP's two cloud segments.

But even that is still only 5% of revenues.

The sad thing is SAP has already spent years and billions in development dollars with BYD and in SuccessFactors acquisition dollars. And as Rick Sherlund at Nomura says internal justification for more cloud investment is tricky

We believe that there may be some conflict internally over the appropriate level of investment in the newly acquired SaaS businesses, having to balance its own margin targets against the desire to spend aggressively from its SaaS properties.

In contrast, the NFL sponsorship looks cheap. As would a Super Bowl ad, even at $ 3.5 million for a 30 second slot.

Think of the millions who would learn SAP is a cloud leader :)

What’s mine is mine. What’s yours is mine also.

We all know how aggressive tech companies can be in enforcing all kinds of even minor patents. What is less discussed is the tendency of many to only grudgingly give credit to technologies they may themselves be embedding in their products and services.

Verizon has been running commercials where it shows firefighter applications and the voice over says they are the work of “Verizon innovators”. The headset being used is a Golden-I from Kopin. Turns out smaller integrators around the world are also developing similar applications like this for police work by Ikanos Consulting out of Nottinghamshire, UK.  Not sure they would want to be called “Verizon innovators”.

When Microsoft introduced its very successful Kinect for the XBox, Adafruit Industries announced OpenKinect, a contest with a $3,000 bounty. Microsoft did not take kindly to that and announced it would “work closely with law enforcement and product safety groups to keep Kinect tamper-resistant”. It quickly backed off, though. It had licensed the sensor technology from PrimeSense, an Israeli company (that I had blogged about here). Microsoft’s reaction “OpenKinect was not a hack, but the new code is not supported and people should use the Kinect as intended, with the Xbox only.”

While smaller firms like  PrimeSense or Kopin on Ikanos may say they benefit from the exposure Verizon or Microsoft  indirectly provide them,  bigger vendors are a bit more forthcoming.

While IBM basked in the media attention to Watson after it beat the Jeopardy! champs, Yahoo reminded the world it also deserved a fair amount of credit:

IBM’s Watson depends on 200 million pages of content and 500 gigabytes of preprocessed information to answer the Jeopardy! questions. That huge catalog of documents had to be indexed so that Watson could answer questions within the 3-second time limit. On a single computer, generating that large catalog and index would take a lot of time, but dividing the work onto many computers makes it much faster. Apache Hadoop is the industry standard framework for processing large amounts of data on many computers in parallel. By using Hadoop MapReduce, Watson’s development team was able to easily and reliably run their application on a large number of computers. For the last 5 years, since the start of Hadoop, Yahoo! has been the primary contributor.

I could go on.

With our complex global supply chains, we all know many piece parts go into a final product. But it is jarring when vendors pretend we don’t know that. It has gotten to the point that when a large vendor announces something breakthrough, it is my cue to go dig into the smaller vendors who provide the critical components and profile them on New Florence. Yes, PrimeSense and Golden-I are both there, as are many others.

The Other Innovator’s Dilemma

I like to believe, somewhat naively, my innovation case studies and talks inspire everyone. Reading this GE Innovation Barometer report, it becomes clear that innovation stories also cause anxiety and stress.

I guess I have had several clues myself. Brian Sommer reviewing The New Polymath said: “When you read his book, you should feel humbled as you read of so many great things, great ideas, etc. so many others are discovering, learning and creating.”

Dennis Howlett periodically laments my innovation tales “exhaust peeps like me who are trying our best to  get peeps to go from point A to point B as  a stepping stone to your point C/D.”

I get howls when I benchmark our telcos against those in Korea or Japan. They are much smaller countries,  is the repartee. But their cities are not and that is where most bandwidth is needed/consumed worldwide.

When I compare IBM or HP’s data centers against the much more efficient ones that Amazon and Google run, or when I compare SAP’s revenues from new products to Apple’s the protests are you cannot compare  enterprise tech to consumer tech.

When I compare enterprise tech to each other – like Salesforce’s internal  application management staffing to that of Infosys or Wipro’s as they support enterprise apps or when I compare Workday’s in background upgrades to the months in-premise apps take, I get other protests.

Yes, innovation does cause stress and anxiety in the laggards.

So, what is GE supposed to do? Not sell innovative new products in countries like India, Malaysia, Mexico, Turkey and UAE where its Barometer finds executives believe “increased competition and accelerated pace  of technological advancement has a negative impact” on local economies?

Should I not profile the hundreds of innovators each year on New Florence and in my books and talks?

Of course not.

I long ago bought into the expression “A players hire A players and B players hire C players”.

I will continue to profile A players, and hope the Bs and Cs are inspired, not terrified, by them.

May the math and stat majors inherit the tech world

I started my career at PW as an accountant. I have a long since expired CPA certificate as memory. It was good business grounding for an MBA and   required experience back then before you could move into PW’s consulting arm.  But I was bored as hell and tried to get a job on Wall Street and a couple of firms looked at me for their early “quant” programs. I am sure they saw that I did not have a solid statistical grounding, even though my GMAT quantitative scores were in the top percentile. Fortunately, PW moved me into consulting and I spent the next decade implementing systems around the world, while staying pretty close to accounting colleagues.

So I have seen many an accountant influence software selections and implementations. Plenty of accounts payable feature/functions in RFPs, not as many focused on MRP. In the mid to late 90s at Gartner, I saw the Big 5 firms drive many ERP projects. Focus on GL and other financial modules, and years later if ever,  plant maintenance and warehousing focus. In the last decade, I have seen accountants apply complex interpretations of Sarbanes Oxley to processes, treat sustainability as an opportunity to focus on carbon accounting, not emission reduction. I have seen them use BI projects to primarily improve financial reporting. No wonder finance and other white collar, corporate functions have seen layers of automation in the last two decades.

I now see them salivate to use Big Data projects and things like ERP on HANA to make faster financial analysis and reporting.

Time to deemphasize their influence, and bring in the quants – math and stats majors. The big difference is math/stats majors love all kinds of puzzles – on the shop floor, in genomics, in climate forecasting, wherever. They don’t have green eyeshades to keep looking for financial scenarios. It is pretty clear that the highest payback  advanced analytics projects are happening in preventative maintenance, in social analytics, in sports– mostly out in the field, away from corporate functions.

Hal Varian, Chief Economist at Google, got it right a few years ago when he said “the sexy job in the next 10 years will be statisticians”.  You know Jeff Bezos at Amazon is surrounded by math majors, not accountants, when his annual shareholder letter starts with "Random forests, naïve Bayesian estimators, RESTful services, gossip protocols, eventual consistency, data sharding, anti-entropy, Byzantine quorum, erasure coding…”.

More corporate CIOs and yes, even CFOs need to make the same switch. My accounting colleagues still add plenty of control and compliance value, but as Wall Street found with me,  they do not often have the quantitative rigor or curiosity. We cannot let them influence IT as much as we did for the last couple of decades. 

CIOs and social networks

Vala Afshar, Chief Customer Officer at Enterasys Networks, a unit of Siemens Enterprise, lists who he considers the 50 most social CIOs on Twitter.

In a side conversation, I asked him if  tech sector CIOs dominated his list. You would presume they would be more technologically savvy, and also more prone to put on their marketing hats in social conversations. Surprisingly, he  says the most active are in Higher Education. The least  in Healthcare.

Those are interesting factoids, but most CIOs actively talk to their peers in their industry. In work I have done with many, I am always impressed they know warts, economics of vendors and products from conversations with peers. I have seen  a couple of outsourcers win deals because they agreed to move the entire project team from a peer company as soon as that was finished.  The CIO wanted to leverage that experience. In reverse, I see the competitive zeal when it comes to products and services their peers are working on, and trying to glean from vendors (and often me) of bits of that intelligence:)

So, given the informal channels, what do CIOs use social networks for? I asked Vala if they mostly use to share best practices, or also to vent in public.

His response “the larger the company size, the less noise and complaints (media training?).”

Of course, if the media training was socially savvy, it would coach the CIO that negative social sentiment gets more results than a private conversation with an account manager. Not all the time, but at strategic points.

It’s  good to see CIOs become more active on social networks. I would be hesitant to draw too much of a psychological profile of a CIO from his/her social mutterings given the other back channel conversations they have,  but it is a welcome set of signals in an ether filled with too much vendor and “influencer” noise.