deal architect

The Real Deal: Ben Pring on the Room in a Flat World

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

This time it is repeat contributor, Ben Pring who co-leads Cognizant's Future of Work Center, a global think tank that researches and advises organizations worldwide on the promise and challenge of digital business transformation. He is also the co-author of Code Halos: How the Digital Lives of People, Things, and Organizations are Changing the Rules of Business.  Ben joined Cognizant in 2011 after spending 15 years with Gartner as a senior industry analyst researching and advising on areas such as cloud computing and global sourcing.

This time he writes about the continued need for physical presence in our virtual world.

As someone who’s worked remotely for the last 17 years at companies leveraging “flat world” principles  it may surprise you that I’m about to extol the virtues of the “face to face”; but here goes!

There are a ton of elements of most jobs that can be done anywhere; if you write code to a spec you can do it in the office, in your bedroom, in Starbucks, in the bath. Nowadays, nobody really cares. As long as it’s good and on time, anything goes. If you handle customer service calls you can do it on the massive floor of a call center or at your kitchen table in Lebanon, Kansas, as long as your turn-around times and customers’ satisfaction ratings are up to snuff. If, like me, your job mainly consists of the three R’s – reading, ‘riting, and ruminatin’ – a “clean, well-lighted place” is about all you need.

Except … when you need the heat, and energy, and frustration, and excitement, and drama, of intellectual hand-to-hand combat to find, build – and win – the future of your work. Then there is no substitute – still no substitute – for being in the room.

The phone, Skype, email, Slack, video conferences, Jabber, FaceTime, Hangouts, are all great and serve their purposes well, but when you want a group of people to come together to really talk, really focus, really energize each other, really be creative and innovative, really sell ideas to each other, and really dig deep, then being in the same physical space at the same time really still takes some beating.

In our Collaboratory in midtown Manhattan we see the truth of this every day. Our customers are energized by being in the room with their peers (some of whom they hardly ever see in person), and our consultants, and engineers, and designers, and strategists. Building off the vibe and energy of the world’s ultimate 24-hour city and a WeWork building full of entrepreneurs and creative millennials (“is one of these guys the next Zuckerberg?” you catch yourself thinking in the elevator), they step outside of their Q by Q, day by day, minute by minute concerns and give themselves the time and the space to think differently about what comes next, and what they should do about it. As we develop more Collaboratorys around the world (in Amsterdam and London already, coming soon to Australia and Singapore as well as India and California), we’re finding a new “hybrid” model emerging in which we meld the still amazing upsides of working wherever and whenever with the catalytic heat that “the room” generates.

In 2016 the world is flatter than ever but, paradoxically because of that, the “room” matters more than ever, too.

The Real Deal: Bill Hewitt on Contracts meet Machines

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

This time it is Bill Hewitt. Bill joined Exari in 2015 as Chief Executive Officer, responsible for the company’s vision, strategy and business operations. Bill has a strong track record of growing technology companies including Kalido, PeopleSoft and Hyperion Software. Bill began his career at IBM in sales, marketing and executive management. Bill holds a degree in business administration from the Questrom School of Business at Boston University. 

I recently interviewed him for my upcoming book on how automation is changing various occupations and it was fascinating to hear how Exari is transforming the world of lawyers and risk managers.

Here he writes “thar’s gold in them contract hills” if you only know how to mine them

Imagine a world where the contract process is virtual. Companies negotiate with each other in cyberspace, taking best practices from a universal library of clauses and precedents. Automatic scoring of risk gives the negotiator visibility into how exposed they are, allowing them to ensure they are putting proper protections in place. Finally, the contract is analyzed against all previous contracts of its type and the libraries are updated even as the contract whizzes through cyberspace with electronic counterparty signatures. The contract and its core data are stored and now ready to inform downstream and upstream systems of the new rights and obligations.

That future is not that far off. But it is jarring because the traditional contracting process has been slow, cumbersome and error-prone. Anyone who has been through a contract cycle knows it.

Why?

Because for years contract management has been about documents. The future is about data. Exari’s focus on 100% contract certainty is all about extracting relevant data from contracts and making it accessible for business decision making. Until now, if a company wanted to find out their rights and obligations, they would either pull the contracts, review them one by one, keep key terms in a spreadsheet or turn to their outside law firm for a lengthy- and expensive- review.

Fast forward to today. Exari has created a “machine” to extract key data from contracts and deliver insights instantaneously. We’ve created a “Universal Contract Model™ that can harmonize any contract, regardless of the form, language or style. Why does this matter? Because contracts are intended to be business tools and today, most contracts are artifacts and only exposed when something goes wrong. The fact is, if companies could operationalize their contract data, they would not miss revenue opportunities and would be 100% informed as to the risk of their contract portfolio.

More importantly, industry specialization matters. For years, we have been working with the world’s largest banks and are the leaders in using near real-time contract data to manage counterparty, credit and collateral risk. Last week, Exari acquired CMA Contiki, a leader in the highly regulated Oil & Gas market. Their expertise and depth in understanding the complexity of project-intensive industries is unrivaled.

By working with leaders in business, we are breaking new ground in how contract processes are automated, not just from a workflow standpoint but from a contract intelligence standpoint.

Is Gartner slicing the bologna too thin?

I burst out laughing when I saw Gartner’s Magic Quadrant for “Single-Instance ERP for Product-Centric Midmarket Companies.” Talk about a mouthful. When I was there in late 90s, we worried about segmenting markets too narrowly. Apparently, in the last 15 years, that worry has gone away.

And even then that MQ does not include vendors like NetSuite, Plex and others who do sell to mid-market, product centric manufacturing and retail/distribution companies. Presumably that’s because of the fine print which says to be included vendors have to report at least 20% of their revenue in each of 2 out of 3 major global regions.

So, where to next?

Will they use “more than 5 global data centers” as a filter and leave out Workday (which has 2 each in NA and in EMEA) from some MQs?

You wonder how brutal the filtering process was when only 17 out of what it identified as 7,400 SAP service/channel partners were included in the MQ for those services.

Or worse, will Gartner have to resort to external channels to explain why for example Oracle was not included in their recent MQ for BI reporting tools?

When I was at Gartner, clients were already complaining our definitions and segmentation were confusing. Now, they must need a Master Data Management tool to keep up with all the MQs.

Come to think of it, Gartner probably uses a MDM tool to keep all their stuff somewhat coherent. Wonder which one from their MDM MQ they do use? Hopefully, not one from the Mobile Device Management MQ

The Winter of Discontent

Over the last few weeks I have had a feeling of déjà vu. It’s a feeling I last had when I was writing SAP Nation a year and a half ago.

As I wrote in the book “I reached out to analysts who track SAP to see if they had estimates. I was surprised at how narrow their focus is. Many can tell you about SAP’s metrics but not much about its partners or its customers….I found other analysts defensive. One questioned why I was even trying to size the economy since I was not a “full-time SAP analyst.” Another declined, saying “it’s a sensitive topic.”

I kept wondering why no one had written about the massive economy which kept growing and the implementation failures which kept happening after two decades. I started to self-doubt – may be it was just my imagination? No, it was not – it’s just that others were oblivious to the mountain of data I was able to mine for the book.

I am feeling the same sense of self-doubt as I write my book on automation. Why am I excited about how automation is making most occupations smarter, more digital, more efficient? In comparison, why are most analysts and economists so pessimistic as Phil Fersht summarizes (as he adds his even more gloomy tone)? .

I see automation as a pet who enriches our lives. They see automation as a grizzly bear, a mortal threat. They see accelerating computational power, robotic dexterity, autonomous everything as unleashing of automation that far outstrips previous generations of mechanization. They see imminent doom and gloom.

Have they looked at data from the Bureau of Labor Statistics? Over 140 million non-farm jobs will not vaporize anytime soon. The IRS is counting on taxes from over $ 6 trillion in wages and other compensation.  In the last couple of decades, China has created  the largest middle class in the world. Most of that is workers with technology enabled skills. Amazon is betting big on India – last time I checked they expect similar humans, not machines. to buy from them.

These analysts know about technology hype cycles – similar will apply to automation. How many times have we been excited about artificial intelligence in the last few decades? These analysts know about slow enterprise technology adoption patterns. Economists know labor models have been morphing – with crowdsourcing, the gig economy and on. Most of these pundits are in the Northeast, where Massachusetts is the most difficult state in the country to hire tech workers, a field which should long ago have felt the impact of automation.  Yet, as with SAP Nation, they seem to ignore the data and persist in their pessimism and in doing so are causing panic in their followers. It will be brutal, they say. It will lead to unrest – pitchforks, the UK “winter of discontent” in 1979, even the French Revolution.

Me - it is leading me to more research. I have identified several what I call “circuit breakers” to “over-automation”. I remain convinced that automation is making human work smarter, and us humans will adapt to machines and we will be fine for a long, long time.

Oracle’s Confident Cloud

I have analyzed Oracle for over two decades – at PwC, at Gartner, and now at Deal Architect.  I have written before Oracle does not get enough respect – I would say it has to work twice as hard as other vendors to score points with market watchers. There are plenty of analysts who are turned off by Oracle’s bombast, others who feel slighted by the way Oracle segments analysts and media and no shortage of customers who complain about its aggressive tactics.

I have learned to focus more on Oracle’s product trajectories.  I get the most from sessions like last year’s Cloud Summit, and last week’s Cloud ERP briefing.  It is good to see Oracle’s cloud SKUs continue to explode and customers of all stripes continue to grow.

Last week, product leaders crisply marched through features in Financials, Procurement, Projects, Performance Management and Supply Chain modules and provided quick updates on Oracle’s IaaS and PaaS. They also shared customer details, most under NDA as it is Oracle’s quiet period. The presentations were confident, yet humble, with plenty of time for questions.

A nice touch was a session with CEO Safra Catz. In the two decades I have followed Oracle, I cannot recall the last time she has addressed industry analysts. With her banking and CFO roots she has always presented to financial analysts while executives like Ray Lane, Charles Phillips and Mark Hurd have addressed industry analysts and media. Safra was witty and self-deprecating. When I asked that a few years ago, Clayton Christensen’s theories would have forecast Oracle and other large vendors would be disrupted, she interrupted and suggested the word “dead?” She then proceeded to explain that Oracle pioneered Business OnLine in the late 90s, and Larry Ellison was an early investor in SaaS startups like Salesforce and NetSuite. It was nicely done – not a whiny “you analysts have never appreciated our cloud chops”.

Still, over the course of the day, there were several occasions when I felt Oracle cloud applications will need to go through a few more iterations of change. A walkthrough of their UX lab was like that of Q’s workshop in Bond movies. An Amazon Echo, smart watches, several gestural devices point to further changes in interfaces. Our expectations are being shaped by rapidly evolving UX in our cars and homes. Enterprise UX expectations are being pushed by work at Microsoft, Apple and others.

Functionally, the Oracle cloud apps feature sets mirror those of PeopleSoft, Hyperion, Primavera and other products written a few decades ago. With my current book research, I see that every job is going to be touched by machine learning, robotics, 3D printing and a variety of other automation technologies. Every business process and user role will be affected as man and machine converge, and Oracle applications will have to reflect that new world.

So, I look forward to product progress at Oracle, and a continued sense of humility, even if they only get grudging respect from the analyst corps.   

NetSuite's "Dent Repair" for the IT world

An exec at a failed on-premise ERP project told me he was delighted the project crashed. I thought he was joking. No, his later SaaS project alerted him to the fact that even if his on-premise software had worked, he would have continued to pay premiums on on-going maintenance, hosting, upgrades, application management – it would have been an on-going car wreck. Now, his SaaS provider bundles all that in his annual budget. And for his industry, the SaaS provider has much more relevant and recent functionality.

That made me think, how many so called successes in the on-premise world – success declared loosely as going live on the software, irrespective of the implementation time or budget – are actually failures when you look at total cost of ownership. And that is just to keep that system up - a system designed 20 years ago, or even further back in the pre-internet, mobile, sensory world of today.

I was reminded of that episode when NetSuite told me about a recent customer, Dent Wizard, which specializes in car cosmetics including Paintless Dent Repair services. 

After it was acquired in 2010 by a private equity firm, Dent Wizard needed to transition off its legacy IBM AS/400 environment. They looked at some on-premise alternatives, but decided on doing a cloud implementation on NetSuite. Now, when they talk about NetSuite, they talk about not having “to manage servers”, and as a consequence, running lean IT, even as revenues have grown 60% since they started implementing NetSuite.

Dent Wizard also describes the ease of integrating their field service technicians, who make up 80% of their staffing. The efficiencies are showing in customer invoicing (1.8 million invoices a year) and inventory management, which the technicians can manage through their mobile devices.

A number of customers groan at the thought of another ERP implementation having gone through the pain of their on-premise project. Cloud implementations, especially when the vendor’s services teams are involved, are showing to be far more pleasant. During the recent quarterly earnings call, NetSuite CEO Zach Nelson called his services organization “among the largest, if not the largest midmarket consulting firm in the world” reflecting the fact that his services team is delivering lean implementations to many of his customers.

It’s NetSuite's version of “Paintless Dent Repair” for the IT world where so many on-premise ERP implementations are the equivalent of a major accident pile-up that clog up customer systems “highways”.

S/4HANA–a year later

The German SAP user group, DSAG morning emailed this morning the results of its 2016 investment survey. I also read a ComputerWorld article about migrating custom code as SAP rolls out S/4HANA.

The DSAG report says

“DSAG asked for assurance that all applications currently available in Business Suite – including industry-specific solutions – can be operated in S/4HANA in future, without any loss of functionality.”

and

“We also think it’s important to ensure that S/4HANA can be operated on alternative databases soon. Companies must also be able to implement S/4HANA without additional expenses for things like licenses, migration, functionality, and investment protection,”

The Computerworld article says

“On average, SAP users have close to 30,000 objects that will need updating, Strand added; for some companies, the process can take as long as a year.”

Reading both reports, I felt a sense of déjà vu back to when I started to write SAP Nation 2.0 soon after S/4HANA was announced a year ago. While the book has much more details, I had scored S/4HANA as follows, and now other industry observers are starting to come up with their own scores as the product reaches its first brithday

IT: Not a “single issue” function

Presidential candidate Hillary Clinton recently said “I am not a single-issue candidate, and I do not believe we live in a single-issue country.” It’s actually a tag line her competitors will increasingly adopt as we move from personalities to policies in this year’s race.

And the need to juggle multiple balls reminded me of the 2016 CIO magazine State of the CIO report (sub required)

“On the one hand, you are expected to be the driver of enterprise digital transformations. However, on the other hand, you face a wide range of tactical challenges — from defending against increasingly sophisticated and potentially damaging cybersecurity threats to managing mass cloud migrations to leading agile development projects.”

That sentence masks the fiendishly complex task most CIOs face. The two volumes of SAP Nation showcased a wide range of CIOs who are “ring fencing with clouds”, “two-tiering”, using third party maintenance, rethinking networks and data centers and a variety of other moves to reduce their IT burden. And that’s just in SAP World and back office systems. Think of all the other enterprise tech and similar streamlining opportunities.

And when it comes to Digital Transformations, the job is even tougher because there are few clear road maps. For The Digital Enterprise we interviewed a wide range of CIOs who described their roles with smarter products, newer business models, newer go-to-market models, radical shop floor and supply chain rethinking, better leverage of assets and other strategies.

The job gets far tougher when you realize as the report says they directly control only 57% of their enterprise’s technology spend (down from 66% in 2014). 

The positive news is in some ways in the spend they do control, CIOs are getting tighter control. More CIOs like David Smoley at AstraZeneca are inverting their internal to outsourced staff mix. And when it comes to smarter  products, a number of companies are investing in proprietary software and contract manufacturers who work to their design specs.

Of course, control is too strong a term to use in a world with so many digital breaches. So, the report is pretty sobering when it comes to security issues. 46% of CIOs surveyed reported security as one their top areas of focus, up sharply from 25% two years ago.

Yup, IT is not a “one issue” nation, and good to see CIO compensation and recognition reflect the huge challenges of the job.   

One Microsoft–in vendor world

In the last couple of years I have written about the One Microsoft strategy – its ability to leverage a wide range of assets. In a demo at last year’s Convergence event it brought together its CRM, Office365, Skype for Business, Cortana personal assistant, Surface Hub display, Delve and other tools. I look forward to hearing successes in corporate world as at Delta Airlines where Microsoft has Surface tablets for pilots, Nokia devices and POS software for flight attendants.

But as Brian Sommer writes, the wide range of Microsoft assets (Azure, Machine Learning) is finding even more of an audience in vendor world.

“Microsoft is providing some powerful tools and capabilities to a lot of ERP vendors these days. Unit4, SYSPRO, Acumatica and others have been provided some slick tools that plug into their product lines and cloud technology stacks. Your next application purchase could very well have some material Microsoft technology powering it.”

Brain also comments “What’s interesting with this is that Microsoft has a large enterprise application business of its own.”

I am not surprised. Nearly two years ago I wrote that CEO Satya Nadella is re-writing the book on co-opetition, after his moves with Apple and Salesforce. With Surface becoming a much more competitive tablet with each generation and what Brian describes in ERP world , that book continues to grow in page count. No question, much of it is due to Satya’s  cultural influence – a relatively non-confrontational style which makes partnering with Microsoft less intimidating.

As I was reading Brian’s post, two questions kept going through my mind

- what impact will Microsoft’s ability to offer a wide range of tools have on other “arms merchants” like IBM, Oracle, SAP, Salesforce and others who offer their own (albeit narrower) set of tools for other vendors to leverage?

- what impact is it having on Microsoft’s positioning in end customers like Delta where it can pull together multiple components and differentiate itself from every other competitor?

I don’t have the answers but will watch the enterprise tech market more from the lens of both questions going forward.

The never-ending technology hype cycle

Quicken Loans says it has 30 years of lending experience and closed more than $140 billion in mortgage loans in 2013-2014. They say they have streamlined the mortgage loan process and it is “engineered to amaze”. A few weeks  ago, I saw a commercial for their Rocket Mortgage app, with a 8 minute approval process, and my immediate reaction was  “about time”.

Having refinanced our mortgage a few times over the last two decades I continue to be staggered how long the process takes and how paper intensive the closing step is. Even though the bank has remained the same, they cannot seem to find or leverage the results of the previous round.

The Rocket approval process sounded intriguing, but I was pretty sure the inspection, appraisal and other steps would add several more weeks to the process. Sure enough, the app only streamlines the loan pre-approval process – mostly the credit background checks. A bit misleading I thought to talk about the whole process in terms of minutes versus weeks.

Then I saw their Super Bowl ad and I cringed. The message is "If it could be that easy, wouldn't more people buy homes?" and from that the promise of jobs for workers who in turn would buy more homes, stoking the economy further and then the claim “and isn’t that the power of America itself?”

Wow, never has an app had so much impact on our economy!

 

While I was thinking hype, many others were thinking 2008 sub-prime crisis.  Indeed, The Consumer Financial Protection Bureau felt the need to tweet soon after encouraging home buyers to take their time and ask questions during the mortgage process. And Quicken Loans social media team has had an avalanche of concerned responses. Sure, their product awareness has spiked but not sure the company’s image will benefit long term from the PR.

And  it made me think, we (I am no exception) technology fans hype up technology a bit too much. For years I have seen enterprise vendors over-promise payback from their products, but they are selling products to corporations who have analysts and accountants who can vet their claims. In consumer world, the hype leads to unintended reactions from many quarters.

As I continue my research on automation, I am seeing so much hype around machine learning, drones and robots, and I am seeing the common person freak out and behave as if we will all be jobless in a couple of years. Amazing how much pessimism there is about jobless futures, even though my research shows most of these technologies will reshape occupations, not replace them, and that process will likely take decades.

So here’s my appeal to fellow technologists. Hype your product – it’s in our DNA. But don’t over-hype and if you do, be prepared for all kinds of overreactions.