deal architect

Who killed Moore’s Law?

With infrastructure-as-a-service enjoying a price war of sorts thanks to Amazon’s continuous  price improvements, there is talk that Moore’s Law has given way to Bezos’s Law.  Call it what you want but we have have had a deeper disease in our industry for a while now as I wrote in a complete chapter in The New Polymath five years ago

“The reality is that while the technology industry proudly talks about Moore ’ s Law, the majority of the industry has not been subject to it for decades. Most technology investment these days is not in hardware but in software and services — costs that are more closely tied to labor economics, not trends in transistor design and scale manufacturing. In telcos, pricing
has often been driven by regulatory influence and, in many countries, monopolistic positioning.”

“At least Intel benefited us all by “ killing its own children ” and unleashing generation after generation of chips. Most other tech companies pay lip service to new products — managers of their incumbent products undermine the new ones. The industry has validated over and over the “ Innovator’s Dilemma ” that Clayton Christensen made famous. He pointed out the phenomenon where many large, successful companies are turned off by the initially poor economics of disruptive technologies (even those from their own labs) and so they fight them. They pamper their older children, and allow them to kill their younger siblings.”

“The technology industry is replete with examples:
- IBM announced “ On - Demand ” services in 2001 in response to growing customer clamor that IT had become too fixed an expense. But it isn ’ t IBM but cloud computing vendors, which we discuss in Chapter 18 , that are delivering small, bite - size, variable units of technology procurement and provisioning.
- Major telcos such as Verizon, AT & T, and Sprint sued Vonage, claiming prior art around VoIP dating back to the 1990s. But in spite of claiming prior art, they were not very interested in, and then not very successful at, offering VoIP to their customers. In fact, many have fought providers
like Skype from offering VoIP on their mobile networks.
- Accenture (in a predecessor entity, Arthur Andersen) pioneered a software development center in the Philippines in the mid - 1980s. It did not scale that low - cost pool for years and did so years later only in response to the global delivery model that firms from India and younger U.S. companies, such as Cognizant (see Chapter 6 ), showcased to Western customers.
- SAP and Oracle are both years late in offering Software - as - a - Service (SaaS). In fact, it could be said that Larry Ellison, CEO of Oracle, smartly invested in two SaaS start - ups — salesforce.com and NetSuite — because he realized starting them as projects within Oracle would not generate much success.”

Rather than emulating Bezos I see many vendors try to explain why the AWS model is flawed. No retail customer wants to be on (competitor)  Amazon’s infrastructure. No auditor will sign off on Amazon’s inadequate data location transparency. Amazon’s data centers do not use clean fuel. And on and on.

So, improve on Amazon’s model, and even charge more for that. But not 10X, and like Amazon be prepared to pass along improvements several times  a year.

Let’s not reminisce about Moore’s Law or idly talk about Bezos' Law. Let’s all strive to deliver to them.

Tempting Fate?

As part of their new UX project named after the tony NYC neighborhood,  Infor hosted analysts at the Gramercy Park Hotel. Huge room (by NYC standards), access to the park nearby (one of the few private parks in the city), lovely Rose Bar, lots of nice touches, including elevators which appear to date back to opening day in 1925.

Past Fall, Microsoft  similarly hosted analysts at a Seattle institution, Edgewater Inn. Nice lakeside views, similar old school touches.

Both hotels have also been famous for hosting celebrities. Gramercy was home to John F. Kennedy for weeks. Leonardo DiCaprio, Bob Dylan, Madonna and others have walked the corridors. Edgewater hosted the Beatles and Led Zeppelin among others.

Both also have had their history of gossip. At the Edgewater it is rumored as someone put it politely someone “brought stuff from the lake into the room, and threw stuff from the room into the lake”. Gramercy was the site of a famous suicide and other stuff which has been discreetly kept under covers.

So, I am going are these vendors tempting analysts to break out and do something really risque? While some have rock star and politician egos, best I tell most analysts are only guilty of snarky tweets.

But then I am usually snoring by 10 pm so what do I know?

Of Cloud Vendors and Roofers

We recently had our roof redone. Should have had it done years ago. Instead we periodically had it patched with new shingles. Cosmetics instead of real work. The thought of days and weeks of workers and cost estimates that reflected the market after our various hurricanes were gating factors.

Then in the last year I noticed several neighbors get new roofs. Impressively the work was getting done in 1 or  2 days. Roofers were using conveyors to ship all the materials up and all the debris down. They were using vacuums, nail guns, magnetic sweepers and digital cameras. Lots of technology to expedite the work and make it nice and tidy – see my blog post here on the tech. And the cost estimates were far less than what we expected.

The bids we invited were even better. Impressive warranties  - 30+ years against 130 mph winds. Better energy efficiency.  Between the  roofer and the inspector we have over 90 photos of the work which should now qualify us for annual home insurance discounts. The ROI keeps getting better.

And I thought I was so much like a CIO who keeps patching legacy on-premise systems. Why did I hesitate to call my friendly “cloud” roofer? I knew he offered warranties in the form of SLAs and annual cost caps, but still I hesitated.

It’s because I remembered the costs of the last roof, post hurricane. I remembered how disruptive and expensive it was.

Cloud vendors are doing themselves a disservice by going in with service partners who remind the CIO of the last “roofing job”. They need a newer ecosystem of partners who use automation for the migration, the integration, the testing – the roofers who use conveyors and digital cameras. They need roofers who are done in 2 days. Partners who treat it as a repeatable, predictable job not treat it as a work of art.

Then watch CIOs talk to their peer neighbors and start making the move one after another. And watch the neighborhood start to shine.

Infor: It’s a vertical world after all

Charles Phillips, CEO of Infor, is a sharp dresser. His lean frame and his attention to detail (he has designed his own shirt collars since he was young) certainly help. At dinner he politely explained to a few curious analysts his sartorial style. And yes, that has helped him in the sales process with executives of several well known fashion brands around the globe.

Of course, his clothes could not by themselves helped Infor sell large software deals to these companies. Infor has long had unique apparel and footwear functionality such as dimensional support (style, color, size, other configurations unique to that market) via its Intentia products. Add to that contemporary functionality to support omni-channel requirements and agility in the supply chain needed for faster fashion turns and cloud technology it has invested in.  Add the design aesthetic of its in-house agency, Hook & Loop which clearly clicks with fashion executives. Add industry savvy executives it has recruited and the mix is a winning formula.

At its Innovation Summit in New York this week we heard variations of that formula applied to several industries – what they call “last mile” discussions in those sectors. They leverage assets Infor has acquired, newer ones it has developed, talent it has recruited and partners like Cerner in healthcare and Ciber around non-profits.

Take the US healthcare sector. While much of the attention has gone to the Obamacare rollout, the industry is  in massive turmoil. Providers are acquiring each other, they are moving into payer turf and vice versa, private equity is investing in the sector. Infor is leveraging hospital functionality and customers it acquired via Lawson Software, recruited a Chief Medical Information Officer and plenty of other healthcare professionals, and is developing new functionality as the sector comes under significant financial scrutiny and for patient safety and clinical transformation. Hook & Loop showed off  UI aimed at new ways of looking at patient data.

Charles told us about a dealer network functionality – covering aspects of field service, leasing, complex asset management - it has been developing for Caterpillar. This should be attractive to a number of other companies with similar networks around complex equipment like Deere, Komatsu etc. That one has a feel of a custom developed solution, and I asked Charles if that was of interest. His response – they generally develop or acquire new functionality which is leveragable  across hundreds of customers.

Often that means cutting across industry lines which share some common traits. So, their recent PeopleAnswers acquisition has traction in labor intensive industries such as retail, healthcare and hospitality.

At other times, it means customizing components to industries. So Hook & Loop is looking at beacon and proximity sensor impact on retail, and wearable technology for sectors with field service needs

Often it means a vertical focus is really a congregation of many micro-verticals. So the government focused section of the day talked about federal, state and local agencies. But it also talked about educational institutions, libraries (such as that at the Vatican) and science labs (large ones like CERN and Lawrence Livermore)

The day also had plenty of sessions on ION, the Infor middleware, its mobile, social and other technologies, its growing reliance on Amazon Web Services as its cloud infrastructure and other architectural elements of the Infor stack. While other analysts focused on the portfolio rationalization the new management has accomplished – go forward focus on M3, S3, LN & Syteline - and some fretted about Infor’s heavy debt load, I kept getting reminded of the “Small World” ride at Disney World.

Just substitute regional costumes with aprons, hard hats, mannequins and other industry-specific accoutrements.  Infor is skillfully leveraging its wide portfolio of technology, people, partners and customer assets to go the “last mile” in many sectors. 

More global innovation

Innovation from around the globe'

iElevation – Nepal

A museum or a library? – Mexico

Technology on the ICE Train – Germany

Shipping ice cream globally – US, China

Big Data of Long Lives – Italy, Greece, Japan

Nokia alumni ecosystem - Finland

The return to the glory days of Pan Am – Singapore, UAE

Researching the Honeybee demise – Australia

Gov.uk – UK

It’s a small world after all

Innovation from around the globe

Wagenstandanzeiger – a beauty of data visualization - Germany

Daring New Buildings – Azerbaijan

Microsoft and the Sochi Olympics – Russia

Video Analytics Capital – Macau

World Design Capital – S. Africa

Innovation is GREAT – UK

SeaOrbiter – France

Advanced Persistent Threat – Tibet

The Invisible Bike Helmet – Sweden

Plex –a nuanced version of 2 Tier ERP

The concept of 2 (or 3) Tier ERP is certainly not new. Platinum (now Epicor), J. D Edwards (now Oracle), and more recently NetSuite have for decades gone to large, typically multi-national companies and convinced them to adopt their software in plants and smaller subsidiaries while continuing with a D&B or SAP at HQ and larger geographies.

Plex Systems has offered this value proposition for a while now (it was born in 1995), but a large private equity capital infusion from Francisco Partners starting in 2012, a significant leadership, sales and  R&D expansion in the last year combined with a manufacturing renaissance in the US all make for a much fresher story and its tagline of “it’s what’s next”.

Plex’s focus is on the shop floor, which it correctly believes was neglected in most recent ERP deployments. It also has a tight definition of “tiered” industries it is focused on – auto, aerospace, food and beverage. In each its ideal customer is not a GM or a Grumman or a General Foods, but a supplier to them or a presence at some of their plants.

During a visit last week, Plex arranged for Dennis Hodges, the CIO and Ben Stewart, Director of Enterprise Applications at Inteva Products, one of their customers to join us. Inteva provides sunroof and door panel assemblies to a number of automakers. It is a spinoff from Delphi, and Dennis and Ben painted a stark contrast of life with SAP there versus life now with Plex. The SAP implementation ran out of funds and never really made it to the shop floor. The modules which did get implemented needed a heavy dose of support from TCS, CSC and HP/EDS with all the associated issues when multiple outsourcers are involved. Budget, speed and flexibility wise, Plex has been a huge improvement. (btw, Dennis Howlett interviewed Dennis Hodges and you can watch it here. See also my notes here from a shop floor mockup Plex had us participate in)

Both also described trends in global manufacturing. Escalating labor costs in China, India, E. Europe compared to lowered US wages after recent union concessions, increased automation in plants (reducing the labor cost footprint even more) and energy cost improvement in US (from fracking generated new hydrocarbons) versus weeks of ocean shipping time and cost are all helping a renewed focus on US manufacturing that Plex hopes to capitalize on. Plex also eyes an aging generation of QAD, Infor and other manufacturing sites ready for a refresh with cloud technologies.

I had a chance to meet an executive from Caterpillar last year and she described a similar scenario with Plex across several plants in Texas with SAP as its corporate ERP backbone. Jeni’s which makes premium ice cream (and is a breed of new artisanal food and craft beverage makers) also described their experiences.

While it has the feel of a startup with all the new talent, we heard about the sophisticated marketing science and tight focus (Plex has identified 36% of its customers belong to a micro-vertical called Fabricated Metal Processing) of a mature company. Other indications of a mature company: presence at 1,100 production lines in 400 customers, 40+TB of managed storage, 20% of code deleted based on review of functionality few customers were utilizing.

As I heard from several German and Japanese companies during my interviews for The Digital Enterprise, next-gen manufacturing is about agile robotics, wearable computers, mass customization, virtual reality training, IP enabled components and other technology leverage. Plex will need to keep up with this fast changing shop floor. But so will its competitors and many of them still carry the burden of on-premise costs and lack of agility. 

Let your customers do the talking

I get way too many PR pitches where I am offered to talk to an exec of  a vendor or one of its partner firms. When I ask instead to speak to some customers the answer is some variation of “they are not willing to go public”. Not sure about other market analysts, but for me that is a conversation killer.

Five years ago, I was less emphatic. But in three books since I have written over 50 long case studies and over 200 short ones. Customers have opened up and told me stuff where I have sometimes had to stop and ask “You sure you want to go public with that?”   And they discuss proprietary, strategic advantage technologies not just experiences with back office functionality.

I am also seeing much more vendor openness to allow conversations with customers. Last week, Plex Systems invited executives from Inteva to present to a few analysts. Beyond the presentation they stayed around for lunch and dinner and were available to comment on just about any topic with remarkable candor. In a previous meeting, Plex provided similar access to other customers like Caterpillar and Jeni’s Icecream.

At the Industry Connect event couple of weeks ago, Oracle invited me to join customers on a panel. There was plenty of interaction time before and after.  And I went to industry breakouts where customers were openly discussing industry challenges as in the world of retail omni-channel.

Workday is confident enough to invite prospects to its customer events. Not only do they trust their customers to say appropriate things, they allow analysts to field questions like “How would you compare Workday to Vendor X and Y?”

I told someone recently the world has changed dramatically. At Gartner, 15 years ago, it was tough to get customers to talk. These days consumer tech companies like Apple and Amazon are the toughest ones to get on the record. Customers are far more willing to share their experiences.  Let them do so.

Creativity around the planet

Innovation from around the world

Stadel Museum in the flesh – Germany

Design Capital – Las Vegas, US

Europe’s startup capitals – various

Services Outsourcing – Poland

Reimagining India – India

British Airways Digital Luggage Tag – UK

Manufacturing lessons from the Mittelstand – Germany

Florida Poly futuristic campus – US

TGCLabs Lean Innovations – France