deal architect

The Real Deal: Jason Prater on Manufacturers, Mobility, and the Internet of Things

This continues a series of columns from practitioners I respect. The category "Real Deal" describes them well.

This time it is Jason Prater who leads product and platform development teams, from design to deployment at Plex Systems, the manufacturing cloud vendor.

Here he writes about dramatic changes sensors, wearables and cloud computing are bringing to the shop floor.

Twenty years ago, it was hard for people to picture a manufacturing shop floor lined with PCs. But it happened. More and more manufacturers began to rely on desktop computers because they wanted to access data on the manufacturing process.

Today, it’s hard for people to picture a manufacturing shop floor with no PCs. But it’s going to happen. And it won’t take 20 years, or even 10.

The way technology is going, manufacturers will soon be able to leverage the Internet of Things and wearable devices to get the rich data they need at any stage of the manufacturing process.

This isn’t just a matter of wanting to get rid of big, bulky, crash-prone computers. This is the dawn of an age of “always-on” communication between man and machine. The result? Leaner, more cost-effective manufacturing.

How can a manufacturing operation thrive on data yet not have a single computer on the shop floor? This may sound far-fetched. But it’s clear that this is where we’re headed.

For example, machines are already becoming smarter (and maybe even smarter than us). We use smart refrigerators, smart thermostats, and smart smoke alarms, and we’re used to it. This is all part of a trend called the Internet of Things in which machines are talking to us, and amongst themselves, in ways that help them run better.

So, yes, the machines are already talking behind our backs. But are manufacturers talking to the machines? We at PLEX recently ran a study to answer this and other questions.

Among the manufacturers we surveyed, 48% already use sensors and 80% say they incorporate consumer mobile devices into their manufacturing operations. Some 27% use low-power Bluetooth—a technology that’s still catching on.

Manufacturers are clearly eager to let their employees communicate with machines in real time. The changes on the shop floor will be obvious, and radical.

Between mobility and the Internet of Things, I’m convinced that the PC will basically disappear from the shop floor within the next five years. Why? Manufacturers won’t need them. Instead, they’ll rely on computers that will be hidden in tablets, phones, wearables, and smart tools and machines.

What does this all mean for the forward-thinking manufacturer?

Your first order of business is to gather, store, and analyze as much data as possible. We have a customer that’s storing sound recordings of the rattles and creaks in the cars they produce. If they can identify trends in the pitches of these noises, they may be able to start predicting problems.

Another PLEX customer—a major manufacturer of large diesel engines—is using sensors to stream data back and forth to each of their custom engines. This way, maintenance staff can know instantly that an engine was built to particular specifications to meet the needs of a specific client. This information helps them deliver more tailored service.

You can’t accomplish any of this if you’re collecting data manually. It’s absolutely imperative that manufacturers tap into the Internet of Things and let their machines talk to each other. It’s equally important to move ERP systems to the cloud so that they can freely exchange data with machines.

Here’s a stat that may blow your mind: more than 50% of the traffic in the PLEX manufacturing cloud is already machine-to-machine. Yeah, it’s safe to say that our customers are way ahead of the curve.

Of course, gathering and analyzing data is just one part of the equation. How will people interact with this data on a day-to-day basis?

Get ready to see lots of your employees walking around with Google Glass and other wearables. Rather than sitting down at a computer to get the results of the latest quality check or download a report on whether machines are running, they’ll just get alerts and real-time updates on their glasses.

Think of what this really means. Less time at a computer means more time at a shop floor. Frequent updates delivered to your body allow for faster responses, earlier intervention, greater efficiency, and less waste. Who wouldn’t want that?

But this doesn’t stop at the four walls of your factory, or even at the borders of your country. If you’re taking your operations global (as so many manufacturers are), you need to gather equally rich data from all facilities. And when you close a plant in Thailand and open one in Brazil, you need to be able to stop and start the data collection process with the ease of flipping a switch.

You can’t do that with on-premise ERP—but you can with cloud-based manufacturing solutions. So, as your machines continue to chat, and as you look for ways to crunch the data they generate, the cloud will become Command Central for the global manufacturing enterprise.

SAP Customer Paths

To me, the most enjoyable part of writing a book is the initial research/interviews phase. In the last few weeks working on the sequel to SAP Nation, I have had  invigorating conversations with several professionals in SAP world and beyond. Scary smart folks who understand the complexities of launching next-gen enterprise software like S4/HANA and those of related customer base migrations.  

In parallel, I did a CIO.com webinar on customer strategies, soon after SapphireNow. Register here if you would like to listen to the recording.

Rimini Street is sponsoring a complimentary 30 minute consultation with me for a handful of SAP customer executives.  It’s meant to be a confidential and independent session and I will also share a preview of the research on the sequel I am working on. Request a session here.

Celebrating vendor AR

Analyst relations at vendors is never an easy job. Sitting between big egos of analysts and just as big egos of their executives is always uncomfortable. They are supposed to be mind readers: “Why did he write this?” or even more “why did she not write about this?”

In recent years, the analyst landscape has changed so much – newer firms (by definition, smaller), bloggers, new media. The communication modes have changed – press releases used to work just fine. Their products have become so much more complex. AR communication is exponentially more difficult than it was a decade ago.

The toughest job they have is often to mask the inefficiencies of their back offices. Most vendors try to sell efficiency and innovation to clients but the expression “shoe maker’s children” applies in spades in many of them. AR folks often run circles to play travel agent, contract negotiator and debt collector on behalf of analysts.

So, I have been impressed as I wrote recently that even mired with tactical stuff, many are showing creativity in analyst summits. Hopefully, that fun planning is a fair trade for the press releases they have been forced to abandon

So, on behalf of vendor executives and my big-ego colleagues, here’s a hat tip to my AR friends.

PS – next time, I talk to you please let me know if you used this to get a raise!

The Real Deal: José Duarte on Digital Disruption in the Service Economy

This continues a series of columns from practitioners I respect. The category "Real Deal" describes them well.

This time it is José Duarte, CEO of Unit4.  José developed most of his professional career at SAP where he held multiple leadership roles, including President of the EMEA & India region as well as President of the Latin America region. 

Under his leadership, UNIT4 has developed an expansive view of the service-centric economy as I posted here. Here he writes about trends in that economy which he knows extremely well having previously served as President Global Services for SAP.

The Service-centric economy is big and growing rapidly. An eclectic range of companies like Airbnb, Netflix, Amazon, Zappos, and Starbucks epitomize the digital revolution having risen above competitors through digital customer engagement and business model innovations. Their success depends on delivering flawless service, and flawless service depends on people. Their people therefore need infrastructure that helps them perform with excellence. In order to do that, today’s workforce has huge expectations for application simplicity driven by familiar and intuitive consumer applications. At the same time business has become increasingly complex. This creates a gap that service organizations strive to close. Their attempts to close this gap is driving significant churn in the enterprise software market.

Changing business models clash with increased pressure from a new breed of workers for simpler, more intuitive systems and applications. The root cause of this disconnect is that traditional business software/ERP was designed with manufacturing and products in mind, not people. As such, the service organizations driving our economy are making software concessions that result in four fundamental problems:

1. Extremely high costs of owning and maintaining software.

2. Radical slow-down in business execution

3. Bad experience for employees due to laborious processes and the inability to work smart.

4. Severe effects of business disruption, due to costly, complex and slow work needed to update systems to ongoing business change. This impacts both the organization and its customers.

The bottom line is that systems used at work hamper the ability to work smart and prevent organizations from delivering exceptional (sometimes even acceptable) customer service. The systems are clunky, slow and do not reflect the changeable reality of the business. Service organizations are looking for alternatives.

What will today’s digital disruption mean for service organizations in the future?

Service-centric businesses need to provide their people with an environment they can flourish in. To develop new ways of working based on the digital realities of people’s everyday lives. Today that means a digital workplace that delivers a tailored, intuitive user experience – based on simple, relevant and complete access to the information needed and the tasks to be done.

• Simple: Enterprise software designed to meet specific requirements of service organizations and their people. It’s time for a smarter approach that frees people from laborious administrative processes, removes unnecessary work, and lets them focus on what really matters: delivering great service.

• Relevant: Unlike their peers in product-focused businesses, those in service organizations deal with much more complex information. There are also more types of users, each needing different types of information in order to perform well and make their specific contribution to success. They need to be saved from the overwhelming array of unfiltered data and be presented with what they really need at the moment they need it. In addition, since change is a constant, information can only be truly relevant if it is a current and correct reflection of the business reality at that moment.

• Complete: Success in a service environment is not created in isolation. Systems need to support, motivate and connect people, so that they can collaborate quickly and easily, to gain the full picture that they need to be effective.

The road to digital enlightenment & great customer service

Along with a new digital mindset, enterprise software designed for service delivery is essential. Organizations can simplify user experience by digitizing and automating business processes, liberating people from tasks that provide little or no value to the business. By applying advanced analytics and intelligence, systems can streamline information, eliminate the majority of manual steps related to business processes as well as eliminating some business processes altogether.

The churn we’re seeing in the enterprise software market is driven by organizations looking for digital enlightenment. There is a better way. We’re moving towards a world where enterprise applications ‘drive’ themselves and take initiative, leaving people to focus on the things that people do best.

SAP Nation–the “nightmare scenario”

When I wrote SAP Nation, I built several economic models on the size of the economy. In the book, I presented one which runs about $ 200 bn a year. The most expensive model showed close to $ 400 bn a year if you included end user time and cost allocations, amortization/writeoffs and a few other elements. $ 200 bn was scary enough and I used that in the book.

But after Sapphire last week, I am beginning to worry that S4HANA may actually accelerate the SAP customer spend, and even by my narrower definition push SAP Nation to $ 400 bn a year.

SAP kept talking “simplify” – the un-customizing, data cleansing and other prep without much discussion of automated tools. So that will be labor intensive, as will integration and testing.

How labor intensive? Brian Sommer paints a vivid picture as he walked along the partner booths last week.  He documented slogans at over 15 services firms all of which claim “simple”. His summary “I was, simply, overwhelmed with the unanimity of scores of service firms all focused on simplicity.”

Trust me, they may claim to have automation, but their business model is labor driven. That “simplicity “will substantially raise labor costs in SAP Nation.

I told someone a few months ago, my book will have been a complete waste if SAP customers continue to spend $ 200 bn a year, or another trillion by 2019. Amazingly, with S4HANA they may get there by 2017.

Except they won’t.

The good news is I have presented to many SAP customer audiences since the book came out – including a CIO.com webinar today.  More and more SAP customers are trying out the 12 strategies in the book – third party maintenance, ring fencing with clouds, changing hosting/apps management vendors etc.

What SAP and its partners should be doing, many customers are finally doing themselves. Simplifying.

The “Word-Bird”

On a flight last week, the captain announced “our flight path will take us over Winslow, AZ”. That prompted the gentleman next to me to blurt out about flat-bed Fords. For the next couple of hours we talked the Eagles, scenes from the Godfather and a bunch of other trivial pursuit which made my middle seat tolerable.

He also recommended I watch a documentary on the Eagles, which I did on Netflix over the weekend. Of course, you enjoy the Felder/Walsh solos at the end of Hotel California and Henley’s durable voice over so many decades, but I was repeatedly struck by Glenn Frey’s way with words.  What inspired lyrics for Life in the Fast Lane, Lyin’ Eyes and so many other hits.

Or maybe I especially focused on Frey because words have been acutely on my mind as I work on the S4HANA supplement. Additionally, in the last few days, I have received two specific pieces of input on word choices in SAP Nation.

I used the words “Freeze and Shrink” in the book to describe the move to third party maintenance by several SAP customers. Shrink was appropriate because they are getting support for much cheaper. But Freeze was probably too strong – many customers download a later release as part of their maintenance and upgrade later after they have moved to third party maintenance. Many also continue to buy surround modules from SAP – “innovating around the edges”, while getting the core maintenance for less.

I was also asked if the “Committed” category of customers in the book should not have been termed “Default”?  Are these customers passionately committed to SAP or are they staying with it because they do not see viable alternatives? I suspect many  are committed, but not voluntarily

Indeed, it reminded me of a SAP customer comment a few years ago when he described his predicament

“You can check out any time you like, but you can never leave”

I will need to work in some of Frey’s work into my S4HANA sequel.

NetSuite’s expanding ecosystem

I usually look to spend time with vendor and customer executives at user conferences, but at SuiteWorld last week, I found myself spending time and learning more about NetSuite’s growing application and services ecosystem.

The striking theme – while there were usual suspects mentioned like Autodesk, Deloitte, Kronos and Ultimate there were many, many much smaller ones. 70% of NetSuite deals involve at least one SuiteWorld Developer Network (SDN) partner with a SuiteApp.

As an example, CMO Fred Studer announced a series of partner awards in his keynote – yes Accenture was on it - but AltaPay caught my attention. A Danish company, AltaPay aggregates a broad range of global card and alternative payment methods into a single payment management solution for ecommerce merchants.

Capgemini came up a few times  during the week – in Zach Nelson’s keynote around projects at Domino’s and TGI Fridays, and in other conversations in other industries.

In a partner focused session, NetSuite presented a slide on the Distribution vertical. Recognize many of the partners?

When I asked how NetSuite finds them, I got a long sourcing list, including “we hear of some from prospects.”. The list has grown from 40 partners in 2009 to over 300 today even as NetSuite challenges these partners, involving a quality team based in Manila, to deliver “frictionless upgrades” twice a year.

At the expo hall, I signed copies of my book. As I was personalizing the autographs, I caught the names on the badges – an impressive range of micro-vertical and regional partners. At the airport and on my flight back I met more. Cognizant's booth was across the table where I signed the books and I talked to them why NetSuite is getting more attention compared to SAP and other partners. 

You have to like the mix of large and smaller partners, the regional and industry specific partner list NetSuite is growing. 

Measuring Simple

I ran into a Gartner colleague at an airport last week. He’s more of an infrastructure analyst but asked me about SAP Nation. Within 5 minutes of listening to me he said “sounds like cloud computing will collapse that large ecosystem”. So  I had to explain to him SAP’s data center and other cloud track record and their preferred path of everyone first moving to HANA.

Charlie Bess, ex EDS/HP, knows quite a bit about outsourcing. He was at his first Sapphire last week (at least in a long time) and commented:

One measurement to watch over-time is the mix and background of the attendees. If the utilization is truly becoming simple there will be less ‘facilitators’ and more people with money to spend and value to generate directly in the business.

It struck me what is BFO to Charlie and the Gartner analyst is not so to SAP and its partners. In his Sapphire keynote this week, Bernd Leukert made the move to S4/HANA sound so simple as he prefaced it with “so the only question remains how do I get there, right?”

SAP’’s track record with migrations to new releases is miserable and requires armies. Will the move to S4 be automated?  The thousands of partners and SAP support staff who watched him – Charlie’s  “facilitators”  - from their large booths on the Expo Hall and their seats sure hope not.

SAP glibly talks about removing customizations. Who will do the un-customizing? And why un-customize in many instances? For years now, SAP has focused on HANA and new acquisitions like SuccessFactors leaving customers to add their own functionality. As CLP, a showcase utility for SAP, told me in the last few years “Mobile enterprise application platform, predictive maintenance, emission management,work clearance, safety document management, and advanced analytics opportunities were awarded to other vendors. Fuel and commodity management functionality was custom developed.”

In fairness, as I write the S4/HANA sequel to SAP Nation over the next few weeks. I plan to read Leukert and Dr. Hasso Plattner’s upcoming book “The In-Memory Revolution” whose blurb says  it is about a “quantum leap it has facilitated in terms of simplicity, flexibility, and speed for new applications”.

However, I first wrote about Dr. Plattner’s passion for in-memory computing in The New Polymath in 2009. Since then his passion has grown even stronger. But in the same time frame, his customers have also spent over $ trillion as I documented in SAP Nation.

Quantum leap in simplicity?

I wish SAP executives had walked the halls of SapphireNow like Charlie did last week and looked at the ratio of “facilitators” to “customers”? That is an elegant, simple measure of whether SAP is truly becoming simple.

SAP’s “Bucket List”

At the recent White House Correspondent’s Dinner, President Obama joked

“People ask me, do you have a bucket list?' I say, well I have something that rhymes with bucket. Immigration executive action? "Bucket!" Stricter climate rules. "Bucket!"”

At Sapphire this week, SAP executives should have used the POTUS Bucket to good use

Bill McDermott could have said

“I know Vinnie says SAP and its partners have wasted another $ 100 billion of customer money in the six months since his book SAP Nation came out. Bucket! Please go visit the large partner booths in the expo hall – some of them are the largest on record. We are proud of our bloated ecosystem. Bucket!”

Bernd Leukert, instead of promising 25 industries will be part of S4/HANA in his  keynote, then nuancing it like a politician  in the press Q&A could have said

“Like Dr. Hasso Plattner announced in February industry functionality will come much later. Bucket!”

Dr. Plattner could have said

“Did I actually tell a journalist “If If this (S4/HANA) doesn’t work, we’re dead.”? Bucket. Let’s talk about more pleasant things like the Boardroom of the Future. Boardrooms deserve the best. Bucket!”

Instead, Karenann Terrel, CIO of WalMart stole the show when on stage she said

“I hope to see S4/HANA delivered in my lifetime. It’s on my bucket list.”

She’s clearly not a politician

Nelson keynote at SuiteWorld

After watching the underwhelming keynote this morning at SapphireNow, I had modest expectations of NetSuite CEO Zach Nelson’s keynote at SuiteWorld 

But I was pleased on several fronts:

a) Lots of customers

Zach wove in “large customers who are thinking small” – brands like HP, American Express, Dominos, TGIFridays, Billabong and “unicorns” – highly successful, fast growing. smaller customers – FitBit, Qlik, GoPro, Oakland As among others

b) Focus on Industry trends

Zach emphasized Omni-channel is not just a retail phenomenon. FitBit, on stage talked about how they sell through several B2C and B2B channels.

He also hinted at a future data aggregated offering citing how LinkedIn has aggregated resumes, and Facebook friends, and presented various metrics in the NetSuite cloud

c) A Touch of Charity

Always nice of a CEO to touch on something philantrophic and a FitBit driven competition involving the audience fit the bill

d) Several Ahas 

Surprise to have Microsoft CEO Satya Nadella show up. NetSuite is doing more with Office365 and the Azure Cloud

A stage in the middle of the audience. Thankfully, all the punches had been thrown this weekend. 

The disclosure that he was an early rapper during his days at Stanford

Nicely done!