deal architect

Going to SuccessConnect

I feel the excitement and the nervousness of a freshman about to go to college and a rookie about to go to training camp. I am going to my first ever SuccessConnect next week!

One of the most popular strategies in on-premise ERP customer bases (SAP, Oracle, others) is to “ring—fence the core” with cloud HCM, CRM, SCM and other solutions. In the SAP customer base, the first advantage goes to SuccessFactors, Hybris, Ariba, Concur and other cloud solutions they have acquired in the last several years.

Thomas Otter, a fellow Enterprise Irregular and Gartner alum saw me at SapphireNow a few weeks ago and ribbed me on why I don’t spend time looking at SuccessFactors (he is GVP Product Management there). Even though I have significantly rationed time for industry events given all my other activities, I reached out to Stacey Fish at SAP and she somehow got me an invite to the sold-out event. 

I expect an upbeat conference and not just because it is in Vegas. In both Gartner’s latest Magic Quadrant and Forrester’s Wave for cloud HCM Wave (thanks to Jarret Pazahanick for links), SuccessFactors shows as a leader along with Oracle, Ultimate and Workday. 

Those who know me know I ask a lot of questions at such events. An annoying volume   Not next week – I am going in with the humility of a rookie and a freshman. I have a lot to soak in. For those going to the event, I look forward to saying hello.

Living the Dreamforce

Salesforce has the honor of becoming “the first enterprise cloud software company to break the $10 billion revenue run rate"

Amazingly, just a short 8 years ago I was blogging about its “second billion”. They have gone from strength to strength.

Am I impressed? Hell, yes. Am I surprised? Hell, yes.

Here is a CRM vendor without much of complex order processing or ecommerce functionality. It is a CRM vendor in a world where there is no shortage of specialists which are transforming field service in the Internet of Things and where digital agencies and social platforms are transforming the marketing function. It is a platform vendor where ISVs do not have very deep vertical functionality. It is a vendor which resisted many temptations of fate to be acquired. In reverse, it keeps tempting fate by promising SIs an outrageously large halo around its revenues.

It has done several things right. While Oracle and SAP continue to target the CIO, Salesforce has built a rabid business user fan base, especially those aligned with revenue goals in companies. It has smartly latched on to emerging themes in the market be they Artificial Intelligence or IoT. CEO Marc Benioff has been willing to stick his neck out on a number of social issues. They know how to throw great parties.

I could go on why they have been so successful. Best to just say hearty congratulations, and watch their path to the “second ten billion”

Automation and Jobs: the tide turns

I felt lonely last year as I was writing Silicon Collar. I had a minority view that modern machines will not lead to dramatic job losses, at least not any time soon. In recent weeks I have read many articles and studies which agree with my assessment.

A paper by Oxford and Yale researchers polled AI/machine learning experts about when machines would match human capabilities in various occupations. “Researchers believe there is a 50% chance of Al outperforming humans in all tasks in 45 years and of automating all human jobs in 120 years.”

US Treasury Secretary Steve Mnuchin has said “In terms of artificial intelligence taking American jobs, I think we’re, like, so far away from that – not even on my radar screen. I think it’s 50 or 100 more years.”

James Surowiecki writes in Wired “It’s a dramatic story, this epoch-defining tale about automation and permanent unemployment. But it has one major catch: There isn’t actually much evidence that it’s happening.” He quotes Andrew McAfee, co-author of The Second Machine Age, saying “If I had to do it over again, I would put more emphasis on the way technology leads to structural changes in the economy, and less on jobs, jobs, jobs. The central phenomenon is not net job loss. It’s the shift in the kinds of jobs that are available.”

Cathy Englebert and Scott Corwin of Deloitte write in Quartz that autonomous cars and trucks will not merely cannibalize driving jobs

“There will be new businesses that will digitally enable the planning and consumption of passenger and goods movement to be more efficient, enjoyable, productive, safer, cleaner, and cheaper. That could mean everything from maintaining vehicle fleets to remote monitoring….The combination of mobility and smart cities can also provide broader benefits, like increased access to healthcare, efficient energy, and different jobs.”

Nicholas Carr writes on his blog Roughtype “You can see the robot age everywhere but in the labor statistics”

Dan Nidess writes in the Wall Street Journal that Universal Basic Income would be a calamity. There has been plenty of discussion on UBI in the scenario of automation leading to massive job losses.

Roman Rytov passed along a TechCast survey of experts, concluding we are likely to go through a “Muddling Through” period of turmoil but relatively few net job losses is most likely.

Of course as the economy turns as it invariably will, we will see the pessimists come back. Happens every few decades.

President Lyndon Johnson set up a blue ribbon commission to explore  growing panic about automation. Go back another few decades. Palo Alto, with its VCs and startups, is today the capital of the technology world. But would you believe the mayor of that city sent President Herbert Hoover a letter warning that industrial technology was a “Frankenstein monster” that was “devouring our civilization.”? You can go back every few decades all the way back to the Luddites and you find similar panic attacks. The Luddites, of course, had the ultimate panic attack. They were bands of English workers in the 1810s who destroyed newly introduced machinery, especially in cotton and woolen mills, fearing their jobs would be lost.

For now, though let’s celebrate machines. They take over our dull, dirty and dangerous tasks and make us smarter, speedier and safer workers.

Infosys in a world of Amazon, Workday and Foxconn

Vishal Sikka has resigned as CEO of Infosys. In a blog post he says

“It is clear to me that despite our successes over the last three years, and the powerful seeds of innovation that we have sown, I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks.”

When he arrived from SAP I was excited he would bring an IP centric mindset to a company which, in many ways, carries the pride and the burden of employing ever increasing volumes of human labor in its populous home country. I was also concerned his enterprise software background would bring along expectations of sky high gross margins.

The reality is he tried to turn around a company which is caught in a time warp.

In the 90s and early 2000s, Infosys delighted its customers. Its CMM Level 5 and Six Sigma certifications showed in productivity in the form of tangible cost reductions and lowered code error rates.  In my opinion, one of the worst things to happen to Infosys was the glowing coverage in Tom Friedman’s book The World is Flat. The Bangalore campus became a tourist spot to bring government leaders from around the world as a showcase of India’s software capabilities. This went to Infosys’s head, even as performance on customer contracts was declining and labor teams and cost grew more and more.

I saw this first hand when I took CIOs to Bangalore. Infosys would talk with pride about the campus and the accolades and usually pull in some of the founders and early executives. In moderation, nothing wrong with that but when it took a couple of hours out of the day, it did not help present their credentials for the specific projects the clients needed help on.

Then, you saw a wave of underwhelming presentations at Oracle Open World in the 2010-13 timeframe. After paying millions for the pole position just prior to Larry Ellison’s talk, the pitches, many by early executives would literally put the audience to sleep. You could see the firm was slipping while clinging to its version of a glorious past. (the keynotes at OOW improved a bit when Vishal took over)

All this while Amazon was redefining “continuous improvement” with 50 price cuts over a decade around its cloud storage and compute services. Workday was taking an average of 5 employees to support every customer, using its multi-tenant model and in-background upgrades to delivering ever improving functionality to all its customers. Other SaaS vendors were delivering similar efficiencies. And Foxconn was delivering billions of high quality Apple and other devices under intense delivery and secrecy pressures. Even in a country like China which like India has to encourage labor -centric models, Foxconn was rolling out robotics and precision equipment.

In a comment, Infychallenger says the “world has changed from commodity to digital” and Infosys has not kept up.  Actually, only a fraction of the world has. Even though I write plenty about innovation, most of IT is stuck in 15, 20, 30 year old tech. Way too many companies define digital narrowly – social media or web commerce. The truly transformative companies are making their own products and services smarter, turning their business models upside down and looking at new automation as they rethink supply chains, and move to advanced manufacturing concepts. These innovators are not using Infosys (and in fairness most other outsourcers). But they do want Amazon, Workday and Foxconn type efficiency in their back offices.

In 1995, Michael Treacy and Fred Wiersema wrote their best seller “The discipline of market leaders”. They argued dominant companies picked one of 3 focuses – operational excellence, product leadership or customer intimacy.  Can Infosys become a product leader without beaucoup, particularly industry and geography specific, IP? Not likely. Can it become customer intimate? Possibly, but not with a headcount of 200,000. 

Infosys could again become an operational efficiency leader like it was twenty years ago. But it would need to do that with a heavy focus on automation. Vishal tried that in small doses and even that met resistance. Its time for Infosys to become an operational leader like it used to be not just wallow in the glory of what it was.

A more realistic, less alarmist Oxford study on automation and jobs

In my book, Silicon Collar and in several blogs I have critiqued the 2013 study by two Oxford researchers which reached this alarmist conclusion about the impact of modern day machines on jobs:  “According to our estimates, about 47% of total U.S. employment is at risk.”

I found several flaws in their study. With such a scary conclusion, it was irresponsible for them to not even lay out a timeline. They also did not appear to do a reality check for the job categories they analyzed. They calculated a high 0.79 “susceptibility to computerisation factor” (with 1.0 being the highest) to heavy truck and tractor-trailer drivers. This, when the U.S. trucking industry says driver shortages could reach as high as 175,000 positions by 2024 (even if the industry adopts autonomous trucks, regulations will likely require a driver as a backup). The professors had assigned an even higher factor of 0.84 to cartographers and photogrammetrists (who deduce measure- ments from images), which the Bureau of Labor Statistic projects as one of the fastest growing occupations over the next decade.  They had assigned a yet higher 0.94 factor to accountants and auditors, whereas hiring at U.S. public accounting firms jumped to reach record levels in 2013–2014. What about new jobs from the automation and new digital businesses? The Oxford profs did not feel that was worth quantifying.

I could go on. My dissension paled compared to citations in 500+ academic journals which parroted that Oxford study without questioning any of its assumptions. Now, four years later, not a single job has been lost and yet, Oxford has chosen to not issue a disclaimer or mea culpa.

Instead, a more recent Oxford paper (in collaboration with colleagues from Yale) is much more realistic about “When will AI exceed Human Performance?”. The abstract says

“Here we report the results from a large survey of machine learning researchers on their beliefs about progress in Al. Researchers predict Al will outperform humans in many activities in the next ten years, such as translating languages (by 2024), writing high-school essays (by 2026), driving a truck (by 2027), working in retail (by 2031), writing a bestselling book (by 2049), and working as a surgeon (by 2053). Researchers believe there is a 50% chance of Al outperforming humans in all tasks in 45 years and of automating all human jobs in 120 years, with Asian respondents expecting these dates much sooner than North Americans.”

The chart below provides more “milestones” from the paper. It is much less alarmist than the earlier Oxford study – when the dates for machines being able to match human capabilties are years and decades away.

And yet, I wish this new study had surveyed practitioners, not just AI experts. They would have heard automation is still too expensive. That their industry regulators take a long time to approve technology in the workplace.

And I wish they had considered what I called in my book societal “circuit breakers” to rapid adoption of automation. While the pace of technology supply is accelerating, the acceptance rate is not keeping pace. As my book pointed out:

• An early version of the ATM machine was introduced in 1960. Six decades later and even with mobile banking taking off, we still have over 90,000 bank branches across the U.S., employing over half a million tellers and other employees
• The UPC code and scanner were patented in 1952. It took the grocery industry two decades to start to widely adopt it. The end result was not loss of checkout jobs. It improved inventory control and led to an explosion of SKUs. Even today, with self-check out kiosks in many stores, those jobs have not disappeared.
• We have been predicting the death of “snail mail” for decades as email, texting, Skype, Facetime, and social media have become our preferred methods of communicating with each other. Unbelievably, the US Postal Service business has gone up — it sorts half the world’s paper-based mail and packages and keeps over half a million workers employed.
• With digital voice mailboxes and most of us doing our own word processing and travel arrangements, who needs secretaries or administrative assistants? Well, according to the Bureau of Labor Statistics, that category still employs nearly four million workers in the US.

As a technologist, it frustrates me that markets absorb technology so gradually. As a realistic analyst, I have learned we cannot force that pace too much. The more we hype technology, the more cynical are the adopters.

In any case, I am glad to see a more realistic Oxford paper. Hope they would publicize this more and distance themselves from the previous one.

Update: The World Economic Forum has transcribed the range of dates in this video

 

A Post-Trump Globe. And Trump had little to do with it.

Whether you worship or abhor President Trump, whether you are a proud American or one who thinks Americans are ugly humans, get ready for a dramatically new world order. And it has little to do with Trump.

We are ending a three-decade, post-Soviet period where the US was the locomotive for the world with more than our fair share of trade, immigration, military intervention. In the next phase, we will see other rich countries increasingly share the load.

On trade, post-WWII we set up the export engine model to allow Japan, Germany, Italy to recover. 70 years later they continue to benefit and China, Korea, India, Mexico and others also have also got used to that export model. The US cannot be the dominant sponge for taking in most of those exports. On immigration, the US legally allowed about a million a year starting in the 60s. In the 90s, with newer H1-B, L1, and other visas, and the undocumented we are up to over 3 a year. The US cannot be the dominant sponge for those labor exports going forward.

The world does not like US military interventions but does not exactly push the Australians or Nordics to pick up the slack where the world needs policemen. They scream at Trump for not willing to give up on our shale but will not ask Trudeau if he will not use his oil sands our Putin his coal. Spread the burden, world.

We will not slam our doors — but others will need to step up and pick up many of the flows. The Germans need to import more, Japanese need to open more to immigration etc. They would rather the US continue with that status quo while they enjoy their relative prosperity. You can blame Trump or the US broadly for these traumatic changes, but the bigger issue is other rich countries are fighting the need to pick up the slack.

The changes will be dramatic, especially for Americans. We will have more opportunities to export as other rich countries open up. Our small and middle class businesses will need to think much more globally. As our immigration slows down, our businesses will have to rethink apprenticeships and automation. As US multinationals bring back trillions they parked overseas we will find new sources of funding for our infrastructure. I am just scratching the surface on changes that are coming.

You can blame or credit Trump for these changes. It was going to happen anyways. Nature hates vacuums and linear trends.

I had a chance to travel to 60 countries in the last phase. I look forward excitedly to the next phase. I hope you do the same —embrace the coming changes in the new world order.

Cross-posted at Medium

The New Polymath–the seven year itch

John Wiley released The New Polymath seven summers ago. Lots of readers tell me it is my best book. It inspired them as executives to build multi-disciplinary teams and multi-faceted products. Modern and ancient polymaths I described have inspired other readers to broaden their own skillsets.

They say Millennials treasure experiences over physical possessions. Book writing has made me feel much younger and similarly treasure experiences.  Each of my six books has introduced me to hundreds of innovative executives and forced me to do lots of research and learn about subjects I knew little about or to surprises around topics I thought I knew a lot about. While I appreciate the compliment of Polymath as my best book, I take pride in all of them.

The big aha to me across the seven years since is how slowly technology matures, gets adopted and transforms societies. Us technologists constantly brag we live in a fast-moving industry. Silicon Collar forced me to look at a century of automation, identify circuit breakers which slow down adoption of machines and challenge the hysteria that the contemporary generation of machines will destroy tens of millions of jobs any time soon. SAP Nation 2.0 forced me to study next-gen products at Oracle, Infor, Microsoft, J.D. Edwards and SAP over the last quarter century and see how slowly enterprise software matures and sells. The excitement around healthtech and cleantech I described in Polymath has met the cold hard realities of markets and incumbent interests.

That frustration of slow change only spurs more innovation. The New Polymath was born out of patterns I had seen in the 2,000+ posts on my New Florence innovation blog in the preceding 5 years. In the seven years since the blog has cataloged another 3,500 entries.  The next version of Polymath enterprises and innovators is analyzing the patterns in that knowledge base.

Life keeps getting better. Gradually.

Oracle Cloud Apps 13: A pivot point?

Oracle Cloud Applications Release 13 – its bi-annual cloud applications release – announced this week solidifies the company’s position as the industry’s broadest suite – across ERP, HCM, CRM and SCM domains. Oracle has been at work on this for over a decade now, and it shows that competitors like SAP and Infor who want to sell broad suites still have a few more years of work before their next-gen products reach the same level of breadth and maturity.

While all their products have been evolving, the adoption in their customer bases has been gradual. The cloud/in-memory penetration in on-premise customers across Oracle, SAP, Infor, Unit4 and even the pure play cloud vendors like Salesforce and Workday is still, by my estimate, less than 20%. Can release 13 prove to be the pivot point to accelerate customer adoption not just for Oracle but for the broader enterprise applications market?

I sure hope so. I have been a fan of the cloud model and been writing about it since I started this blog in early 2005, so I have been disappointed the customer adoption has not been faster. The reality check however comes from my conversations with customers.  Here are some reasons I hear for their reluctance to migrate:

a) stable on-prem functionality – many customers will cite stability of their on-premise software as reason not to move to the cloud. The last generation of software applications are mature and “safe” and they can manage their costs with third party maintenance and other techniques. In contrast,  migration to next-gen applications opens them to change management risks and another wave of SI costs and potential failures. It’s changing – I know several CIOs who are adopting a “cloud first” mindset but there many more who worry about the fear of the unknown.

b) new choices have emerged – I hear from a segment of customers that over the last decade, they have seen consumer tech, and peer companies like GE push the boundaries of process automation, cloud data centers, industrial internet much faster than have their enterprise software vendors. Also, those embarking on digital transformations say custom developed processes and products using social, mobile, analytical components have exposed them to a new wave of technologies and vendors. In other words, the landscape enterprise vendors compete in has changed quite a bit but they still tend to mostly look at and keep up with each other.

c) lack of vertical functionality – very few vendors have moved non-manufacturing functionality to the cloud. Many vendors claim to support “services” industries with their PSA capabilities but that does not help healthcare, retail, banking, utility and so many other industries. Many customers are waiting for cloud suites which provide a broader footprint for their industries.

d) distaste for software industry practices – still other customers will say they have been shell-shocked by the behavior of software vendors and their partners in the last few years. They are unwilling to re-commit given that distaste. 

Now that products are starting to mature, I hope enterprise vendors start focusing on these and other issues which are holding back many customers.

With 13, Oracle has a clear product lead.  As it invests in its IaaS data centers, its machine learning and other innovations, it will help the sector’s image in other ways. In many ways, I believe it is poised to be the locomotive for the sector. Time to accelerate!