deal architect

Outsourcers need better performers, not marketers

My friend Phil Fersht laments outsourcers are poor marketers. Marketing is easy if you are delivering standout solutions to customers.

Amazon does not need brag too much because most customers have seen it has a track record of price reductions. It has averaged 2-3 reductions in AWS pricing – every year! So different from the typical outsourcer who locks customers at pricing for 5 years and makes  every excuse in the book to not pass along productivity improvements.

Kaggle does not need to brag much because large companies like GE and Merck know they can challenge its crowds of highly qualified professionals to tackle complex analytical problems. So different from the typical outsourcer who hires young, trains them for months, then sells busloads of that as their alternative.

It’s tough to market when you are chasing after software vendors as your major value proposition. Lord knows how many outsourcers have asked me “Who will be the next SAP?” Then hate to hear me  say Workday or Netsuite because they have commoditized application support and upgrade services.

It’s is tough to market when your customers are telling their peers they are cutting back on outsourcing. At the InformationWeek conference today, CapitalOne presented on how they have gone from 75% outsourced to 75% insourced. In one of his first moves, GM CIO Randy Mott asked for several hundred HP EDS staff to be rebadged back.

So, here’s a simple suggestion. Focus on customer value and differentiated services and continuous improvement and as a bonus, Phil will find even your marketing has also improved!

A feel good story gets better

On Friday, I wrote about Suvir Mirchandani, a 14 year old who has analyzed  how the  government can save in printing costs. Tongue in cheek, I called him Deal Architect Jr, because of the $ 400 million savings potential his analysis showed. Readers have congratulated me thinking he is my son (he is not – we have two very accomplished kids of our own), and shared news coverage of him (including a CNN interview). I also learned his brother, Rishi and he are classical pianists and good at other fields.

This morning I got a tweet from an Australian TV reporter asking to interview Suvir. I reached out to his father, Prakash. It turns out we are related. No slouch himself, he teaches Operations Research at the Katz School at U. of Pittsburgh and has a Ph.D from MIT. He told me interview requests were coming in from around the world – BBC, Fox etc. Nice to see media cover a young prodigy but he is back to focus on school and not doing more interviews. That’s even more impressive

Given the boys interest in academic, musical and other pursuits, I told their dad  they were “young Polymaths”. I asked him if I could ship them a copy of The New Polymath.

Hope it inspires them to continue to pursue excellence in a wide range of interests! May global media continue to write about their accomplishments as they grow.

We need more feel good stories like this.

IT needs to lead – not just align with – business

Dr James Cash of Harvard Business School had a great talk last week at the Oracle Industry Connect event. Among other things he said IT should be involved in strategic planning at companies,  not just try to be “aligned with business”. He said he was surprised so many retailers do not list Amazon as one of their primary competitors, still  focused on their brick and mortar peers.

A CIO recently told me “with the primacy of tech as business driver, the traditional biz skillsets are increasingly irrelevant.  I've been arguing for years that CIOs should be tapped to replace CEOs.”

Fighting words but good to see a feisty, more strategic CIO

Dr, Cash added he categorized IT spend as “that which allows companies to stay in business” versus “that which assumes we will continue to stay in business”

I think my colleagues in analyst/media world need to increasingly focus on that distinction. Most of us are focused on the latter and even worse take  a tiny segment of that – storage, accounting software, BPO etc – and hype it up with Magic Quadrants and talk about doom and gloom if companies don’t have the latest and greatest in that narrow category. Seriously, each of us needs to use Dr Cash’s filter for systems “which allows companies to stay in business”

A world without electrons and molecules

We had a power outage yesterday afternoon, so my wife and I escaped to a movie. And as we enjoyed The Grand Budapest Hotel, I thought about comments John Hofmeister, CEO of Citizens for Affordable Energy and former President of Shell Oil Company made at the Utilities industry track at Oracle Industry Connect last week.

He pointed out the oil and gas and the public utility industries rank dead last in popularity compared to Hollywood and Silicon Valley in particular. His question was “where would they be without our fuel and electrons?” He lamented politicians, public policy and even industry executives (for safety lapses and getting away from the common consumer by divesting retail operations) for a state where these critical industries get little respect.

His rant deserves public debate.

The energy sector is capital intensive and complex. It will always be high-risk. My time in the 80s in the oil patch in Texas, Saudi, Netherlands taught me that in spades. Interviewing Statoil for my recent book, it was fascinating to hear about the elaborate systems that support their operations in the hostile waters of the North Sea. And how complex it is to evolve those same high standards now to shale exploration in N. America, oil drilling off Brazil and CO2 injection in gas fields in Algeria.

When I wrote a case study about BP in The New Polymath, I took heat for being nice to an “evil company”. The case study had focused on a small innovative team with a decade of innovations in their refineries, pipelines, and tankers. This team had nothing to do with the Gulf Oil spill – in fact they had introduced satellite imagery, robotic wave runners and other technology to the salvage effort. But as John suggests it’s much easier to just blame folks  relatively unpopular industry.

So, we shrug our shoulders at scenarios like BP lays out it in its recent ad below (click to enlarge). But that does not make it right. As we watched the movie in air conditioned comfort yesterday and came home to restored power, John’s words ran very true for me.

Flat world creativity

Innovation from around the globe

Immarsat’s Satellites  - UK

EV Car dispensing machine – China

Chef robots – Portugal

Powering agriculture – Uganda

The pot at the end of the rainbow – Ireland

Google “Climate Change” View – Canada

Precision Farming – Kansas, US

Santa’s Data Centers – Finland, Norway

High-tech ski home - Japan

Deal Architect, Jr.

Suvir Mirchandani, clearly from the more gifted side of my family tree, is only 14 and has this $ 400 million savings proposal for the Feds. Thanks to Joe McKendrick for pointer.

“The printing-related expenditure that is budgeted in 2014 for U.S. Federal agencies is $1.8 billion. Even though printing expenditure has been decreasing in recent years, it continues to be high and a small percentage decrease in printing expenditure due to a font change could result in substantial monetary savings. A sample of five publically available documents produced by various federal agencies is analyzed and the cost savings arising from a change in font type are estimated. To make the comparison, fonts that were found to be efficient in a previous study and those recommended by the government are used. The results are then extrapolated to state and local governments. Assumptions are made based on public data to make these assessments. A sensitivity analysis is completed with respect to assumptions that have the most uncertainty. The analysis predicts that the Government’s annual savings by switching to Garamond are likely to be about $234 million with worst-case savings of $62 million and best-case savings of $394 million. Indirect benefits arising from a less detrimental impact on the environment due to lower ink production and disposal volumes are not included in these estimates. Times New Roman is not as efficient as Garamond, and the third federally-recommended font, Century Gothic, is actually worse on average than the fonts used in the sample documents.”

CX – an opportunity for every industry

Most of the sessions at Oracle’s Industry Connect event in Boston this week were organized in vertical tracks. One  of the few cross-industry sessions in the Grand Ballroom was a panel on Customer Experiences, hosted by Mike Webster, SVP at Oracle, that I was invited to be part of. The diversity of executives on the panel was a good reminder how every industry is working with rapidly changing customer bases and their expectations.

As the weatherman forecast snow outside the hotel, Penni McLean Conner, Chief Customer Officer of Northeast Utilities calmly announced the number of  homes which were out of power that morning in their service area. It is a closely watched metric in this never ending winter and has taught the utility how to better keep its customers informed of outages and related resolutions. Beyond that, the utility customer experience has to be viewed against a rapidly evolving environment of smart meters, Nest thermostats, EV charging at home, even consumers selling solar and wind generated power back to the grid.

Gwen O'Keefe, Chief Medical Informatics Officer at Group Health Cooperative described the healthcare consumer who (at least in the US) will have unprecedented choice in providers and insurance options. It is a market where the line between payers and providers is rapidly blurring. It is also a sector which will go through many bumps in the road as the Healthcare.gov experience has shown and as growing number of consumers use their FitBits and other “self-quantification” technology.

Steve Hunter, CIO of Stage Stores, described the diversity of customer experiences and expectations across the company’s 5 brands and 900 stores. Retailers are adjusting to customer expectations on growing ecommerce units and under huge pressure to homogenize omni-channel experiences.

Chris Hall, CIO of 2Degrees provided the point of view of a privately held mobile operator in relatively small market, New Zealand in a world of global competitors like Vodafone. 2Degrees targets small businesses like itself and differentiates itself from the majors on customer service.

My role was to provide perspectives from other industries. Some of my points:

a) we would to remiss as we think about CX to not leverage design thinking which has revolutionized architecture, electronics, furniture in the last couple of decades. Jony Ive of Apple, design firms like IDEO, newer designers of wearable technology like Hadi Amit and many others are showing even inanimate objects can inspire all kinds of human emotion, and customer touching processes should do the same.

b) Mark Hurd, President of Oracle, in his keynote had highlighted that consumer spending on technology now matches that of enterprises. This tech- and design-savvy customer expects similar in aesthetics, ergonomics and experiences at companies he/she deals with. And is prepared to reward companies when they deliver. The ever busy Apple store, the long lines to tour the Burj-Khalifa in Dubai are examples of that.

c) My interviews of several German companies for last book showed increased focus on mass customization of products as the antidote to commoditization, and that includes personalization of the customer interface.

d) Rich mobile apps are helping strengthen the brand connection for many companies. I cited how Home Depot’s app with specific location data on where items are has offset some customer complaints about the difficulty of finding available associates in its stores. Starbucks mobile app with its configurator has allowed its consumers to understand its products in rich detail and nutritional value on their own – something which makes the connection with the barista in the store even stronger.

e) Omni-channel CX harmonization is an opportunity not just for retail but for banking, telecommunications, government agencies and many other sectors

f) Too many UI designers are locked into a mouse and keyboard mindset. We should be inspired by auto designers who are experimenting with a variety of audio, haptic, eye tracking, heads up display and other other ways of communicating with the driver and passengers.

CX design is an exciting, challenging opportunity for every profit and non-profit entity. Kudos to Oracle for bringing together a panel which allowed for sharing a diverse range of CX opportunities and challenges.  

 

 

 

 

Oracle’s Middle Earth

In a recent blog post I discussed canine expert Cesar Millan’s view of a pack of  dogs – alpha, those in the middle, those at the back. He talks about a role for each.

Interestingly, in the IT world, lots of focus is going to the back office – especially cloud trends in Workday, Fusion etc. My books tend to look at “alpha” – innovative, strategic advantage, mostly custom IT investments. The recent one, The Digital Enterprise looked at transformative products, services, customer focus, business models in over 20 industries. 

The middle – vertical, operational systems - does not get much play in media world. Many vendors are focused on horizontal analytical, social, mobile technologies. At Oracle OpenWorld last Fall, I expressed disappointment there was so little focus on industry applications. And I was told – come to the Industry Connect event. It’s all about verticals.

So, here I am at the event in Boston, where Oracle has brought together customers from 6 verticals – Primavera representing project, resource intensive industries.

My schedule here includes sessions led by executives from Neiman Marcus, Best Buy, UPMC, Cardinal Health, NE Utilities, Bill and Melinda Gates Foundation, National Australia Bank, Hughes Telematics. Rare you can get so many industry perspectives in a packed couple of days.

Mark Hurd, President in his keynote presented some key metrics of Oracle’s industry investments – 21,000 employees,  10% of total R&D, 26 industry specific acquisitions in the last 5 years. And the payback – in the past 3 1/2 years, Oracle’s industry specific revenues have tripled. 

Why is subscription management so painful?

You would think as we have moved to everything-as-a-service, subscription management and admin would have become easier. Not so, it would  appear.

I get a renewal on my Spot Satellite messenger service. Cannot find the “do not renew” switch on my account so I send customer service a message. They comply – a bit too eagerly. Service is cut off weeks before the paid term ends.

I subscribe to 20-25 magazines at any given time as part of my sourcing for the innovation blog. I take advantage of special offers, discontinue some, renew others. All of them want to auto-renew to your credit card and make it painful to cut off. Many make getting to their digital versions difficult. Others have very different paper and digital versions. I try very hard to give them credit with links to exact article or photo page, but man do some make it tough.

Intuit which sells accounting software like Quickbooks to many small businesses would have the process down pat, you  would think. I buy some payroll and other renewals via Amazon (Intuit makes it cheaper to do so) and should be able just input a product key. Usually, it requires a call to their customer center and some amount of maneuvering. I tried to upgrade this week directly through their site and they have  debited our charge card three times leading me to again contact customer service.

World of Warcraft kept charging our card for 2 years after we cancelled. Amex would kindly refund each charge but the vendor refused to listen to me or Amex. Their system  just would not accept a cancellation.

Seriously, why is subscription management so difficult in our age of rapidly growing  Saas, PaaS and IaaS?

The Power of One

I have heard Dave Duffield of Workday say in all the companies he has started he has never felt as much customer unanimity than at Workday since all of them are all on the same release and have plenty to talk about at customer events. On-premise software in his past companies and those of many present competitors are on multiple releases, different database platforms, with different customizations, sunset schedules etc.

And Workday is no slouch with new releases at a blistering pace – 3 a year.

So it is a bit eye popping, David Clarke, VP of Technology Development  says that is actually not quick enough in a post where he talks about a move to a single codeline development

“For a SaaS vendor, completing features and then not delivering them to customers is akin to a manufacturer stockpiling inventory. It is not an efficient use of a valuable resource (in our case, development time), and it is indicative of a problematic supply chain (for us, just three releases of new features per year).”

Oh gasp - at that enhanced pace I expect Dave to start calling it the Power of Formula One!