deal architect

The CFO office – inconsistent tech innovation

I did a couple of (un-enjoyable) years to start my career at Price Waterhouse. I audited accounting processes at several companies and government agencies. 3 decades later I am still surprised how inconsistently many of those processes have evolved.

Accounts Payable

In 1990, Michael Hammer wrote his seminal article “Don’t automate, obliterate” where he described how Mazda needed only 5 AP employees while Ford needed 400. He described what is called “Evaluated Receipts Settlement” – pay upon receipt of goods, tackle inaccuracies later in cycle. Today with scanning and matching technology, it is surprising how paper intensive the process still is. Instead of using Big Data based forensics most companies still have petty AP policies. So what if the IRS says no receipts needed under $ 75, our suppliers better document every single dime they charge us. BTW talking about receipts, the travel world has become almost completely digitized (see my note on a recent cashless trip to NYC which in past required raiding the ATM machine) but the T&E process at many companies is still awfully paper intensive/

Budgeting

One of my first research notes at Gartner in 1995 was titled “Budgeting: The painful ritual”. 20 years later most companies still use spreadsheets and make basic adjustments to previous actual and estimates. It is still a hugely political process to agree on budgets. Even the large forecast misses during the last recession have not done much to shake this ritual. Even the ability to develop econometric models using newer analytics has not reshaped the process much.

Assets

On the flip side, I have been impressed to see many asset intensive industries use sensors and tags to allow for better predictive maintenance and asset tracking. Of course for many, it is still about glorified depreciation accounting.

Billing and Receivables

While billing has become more complex with an explosion on SKUs, assortments, configurations, and as tax calculations and shipping options proliferate, you can see the warts as they struggle to adjust to subscription revenues, tax holidays, currency conversations  and other adjustments. With many government agencies and utilities it is painful to see how poorly their receivables are handled as they struggle to accept recurring credit card charges, as they accept disputes etc

A growing number of companies are looking at cloud based financial options. This is healthy, especially if they can get away from the economic burden of their legacy ERP provided accounting,  but that automation needs to be supplemented with the obliteration part. Ironically, their auditors are often the barrier – they worry about cloud based security, controls, SLAs – without benchmarking against the status quo which is pretty bad.

And talking about auditors it is surprising how little sampling and forensics have evolved in that profession since I was a young pup. I am just glad I did not have to continue auditing accounting processes beyond the initial required couple of years I had to endure.

The Back Office is crowding out the Front Office

McKinsey has some examples of what it calls digital optimization of the back office

“At Starbucks, one of the leaders in customer-experience innovation, just 35 of 100 active IT projects in 2013 were focused on customer- or partner-facing initiatives. One-third of these projects were devoted to improving efficiency and productivity away from the retail stores, and one-third focused on improving resilience and security. In manufacturing, P&G collaborated with the Los Alamos National Laboratory to create statistical methods to streamline processes and increase uptime at its factories, saving more than $1 billion a year.”

Problem is in most enterprises the “back office” is much more basic back office – it is made up inefficient data centers, overpriced ERP and related outsourcing, onerous IT, procurement, hr and accounting processes. And yet in the name of compliance and controls, enterprises cannot let go.

I spoke recently to an oil company executive who was describing the huge potential of sensors and other technology in the field,  but the funding will need to come from beating down their on premise ERP spend which the accountants are likely to fight. In the session with CIOs last week when I presented at UC Irvine, similar scenarios came up. Back office IT is crowding out front office IT in many environments

But try telling that to consultants affiliated with accounting firms, analysts with legacy IT roots, vendors with vested interests who continue to assure customers their back office is best in class. Even though it is nowhere as elaborate as what McKinsey calls back office.

Social world and real world

Over the last few weeks I have had plenty of opportunity to talk to CIOs and other tech executives.

I have polled several for a project, I presented to several at an event last week in Irvine, CA, I have talked to several at industry events like at NetSuite SuiteWorld and Oracle Industry Connect.

It has been a good reminder how different the conversations with them are compared to those in the social world. The social world is about whose IPO is getting delayed, SAP’s layoffs, who’s sleeping with who. The practitioner world is about value from IT, innovation projects etc.

Many of the CIOs I presented to last week are SAP customers. I did not hear a word about individual executive personalities or about layoffs. On the other hand there was plenty of conversation on how to manage  the spend, two tier ERP, how to staff innovation projects around SAP etc.

I have worried for a while about the chasm between the social and the practitioner world. Last few weeks have me more convinced where I need to spend more time.

NetSuite–all growed up

I have heard Zach Nelson, CEO of NetSuite present for years now. He is nothing if not persistent. He has often talked about CRM without integration to transaction processing systems is clearly inadequate. As omnichannel becomes a burning topic in retail, banking and many other sectors, his ability to offer point of sale, order management and other functionality to support brick and mortar, web and mobile customer facing activities shows the market acceptance of his broader definition.

He likes to remind Bill McDermott of SAP every few months he is still waiting for the 99 mph fastball Bill had threatened via his cloud Business ByDesign product. As NetSuite crosses a milestone $ 500 m in annual revenue, while SAP continues to reorganize and “evolve” its definition of cloud offerings, Zach’s taunt is more apt.

Some analysts in the audience wish Zach was not so feisty.

I liked the fact he let his customers tell his story at SuiteWorld today

Roddy McKaig, CIO of $ 5 billion+ Shaw, the world’s largest carpet manufacturer, described his initial reluctance to consider a cloud solution as they opened a large plant in China and how NetSuite has quickly become now their ERP solution in 11  Asian and Australian subsidiaries. One of several “two tier ERP” examples NetSuite can showcase.

In reverse, Vijay George who heads Innovation at the State of Texas Comptroller of Public Accounts, described how in effect NetSuite is their Tier 1 “shared service” for a number of state agencies and local governments across the state

When global companies and massive (and well run) government agencies start vindicating your message, maybe you can please those analysts and not be so feisty.

I sure hope Zach does not.

“Antivirus is dead”

Extract from The Digital Enterprise

There is a growing acceptance that most commercially available antivirus software cannot keep up with the speed and intensity of the attacker community. Also, if attackers are going to target an enterprise directly, they are likely to use a new technique that most antivirus products will miss. Consequently, at least some CIOs are reducing their firewall
and antivirus software spend and are shifting their resources to other security tactics. However, some executives continue to rely on traditional software products because industry regulations or customer contracts mandate their use.

But it’s one thing for an industry observer like me to say it, another for a major vendor of products to say that about their category. Brian Dye of Symantec tells the Wall Street Journal antivirus  is “dead” even though Norton and other antivirus tools are still their bread and butter.

He says

"If customers are shifting from protect to detect and respond, the growth is going to come from detect and respond,"

Shades of Steve Jobs when he said the post-PC era had arrived knowing well it would affect sales of the MacBook. And kudos to Apple for improving the MacBook and pricing it to keep it competitive even in the post-PC era.

Would it not be nice for on-premise software companies and single-tenant outsourcers and land line telcos and countless other vendors to make similar concessions? And to start selling next gen products and pricing the older ones at end of life levels?

Collapsing enterprise software time to market

We are still a long ways from where the Apple CEO shows off a new product and the supply chain and partners have long been working on it and several million units and related apps are delivered to customers within weeks. In enterprise world we still have way too much “vaporware” – product announcements followed by years of development then years of customer adoption.

But progress is being made. Most SaaS vendors have multiple releases a year and can migrate customer bases within days. I was pleased to hear Workday announce today it had developed its Recruiting product with 7 decent sized early adopter customers, and another 70 customers have announced they are adopting it, and Workday expects the majority of them to be live after 4-6 month implementations.

We still have a long way to go to the consumer delivery model both in terms of speed and unit volumes but good to see at least some progress.

Good luck to Vishal Sikka

No I am not reversing course on my decision to not write about SAP on this blog. That decision had nothing to do with any individual executive but with broader customer issues I believe SAP has been unwilling to address for a while now.

Having said that, I would be remiss to not wish Vishal Sikka good luck as he pursues new paths beyond SAP. He has always been polite to me, is admired by many within SAP and you have to tip your hat at someone who can invoke Hermann Hesse’s Siddhartha as he did in a recent post even with all the turbulence swirling around him.

The Jigsaw of Modern Marketing

Oracle invited me to its Marketing Cloud event in New York City this week. While it was showcasing its growing portfolio of assets like Eloqua, Vitrue, BlueKai, Responsys and Compendium, I was as impressed with the range of conversations the event allowed with a number of high-powered marketing executives and Oracle’s own thought leaders.

John Harrobin, Chief Marketing Officer, Verizon Enterprise Solutions touched on the data analysis and transition from traditional to digital ad spend they started back in 2009. He said they have seen a 50% decrease in cost per acquisition. Not just the impact on its own marketing budget, as an ISP it also impacts their product thinking. Maryssa Miller, Director of Digital Commerce, JetBlue Airways highlighted how their email campaigns promoting available “Even More Space” seats have become more timely and targeted with demonstrable revenue improvements . Later I put in a personal request for similar emails which highlight flights which offer their gradually rolling out but blazing fast ViaSat wifi.  Luci Rainey, Vice President, Acquisition and On-boarding, Comcast described the 40% increase they have seen in their email open rates.  Clay Stobaugh, Senior Vice President and Chief Marketing Officer, Wiley talked about his experience with Eloqua campaigns (as a Wiley author I spent a few minutes with him afterwards about marketing support authors can provide and would benefit from).

The conversations with Kevin Akeroyd, GM of the Oracle Marketing Cloud and Reggie Bradford, SVP of Product Development covered an even wider range of topics. The continuing role of agencies who in many ways play a bigger role than systems integrators when it comes to marketing technologies. The competitive landscape for Oracle in the space –particularly vis a vis Adobe, Salesforce and Microsoft . The growing opportunities for marketers for rationalization of omni-channel CX across in-person, web and mobile platforms. The complexity of social listening and sentiment analysis across borders and cultures. The growing importance of content marketing as B2B buyers do more of their research in self-service mode rather than wait for product details from salespeople.

I also had a short conversation with Judith Sim, Oracle’s CMO about how she is using all this new technology in-house and how it is improving sales field productivity. It should make for a very interesting story - I hope to have a much longer write up when I spend more time with her.

Of course, all this was in a savvy digital setting.

A few blocks away the billboards in Times Square and the major network studios are proof traditional advertising is not exactly dying. Indeed, the Wall Street Journal today profiled Laura Desmond one of the largest ad buyers in the world who explains why TV advertising continues to be resilient (with over 12X global spend compared to that on online video). If you talk to marketers at Coke and Colgate or Ikea they explain why cricket stadium sponsorships in India, storefront campaigns in Indonesia, radio and catalog marketing in other markets are not disappearing any time soon.

All this just makes for an exciting time for a modern marketer. So many channels to optimize, so many technologies to evaluate, so much customer and product data to crunch.