deal architect

Plex and the Fourth Industrial Revolution

I first wrote about the Fourth Industrial Revolution in the 2013 book The Digital Enterprise. A collaboration with the CEO of Software AG, most of the examples profiled there were Germany based. At the same time, companies like GE were rolling out their vision of the Industrial Internet in the US and elsewhere. Today, it is far more mainstream and showing up as “Advanced Manufacturing” all over the world.

Plex does a very nice job capturing the excitement of this wave reshaping shop floors, logistics and customized products all over the world in their annual State of Manufacturing survey

“In review of the survey findings, there are a number of major factors that emerge as the foundation for the 4IR. Without question, cloud computing has been a universal accelerant for this innovation, supporting connected processes that extend across the shop floor and out into broader customer and supplier ecosystems. With cloud comes connectivity, enabling everything from tighter links across production ecosystems to better system, equipment, and end-product integration. Every day, new devices and equipment, both those designed specifically for manufacturing and those conceived for other industries or even consumer markets, are providing new opportunities for innovation and connection. From additive manufacturing (3D printing) to connected sensors and wearable devices, the Industrial Internet of Things (IIoT) is delivering new endpoints to enhance the ways we design, build, sell, and service products.”

Get yourself a copy. If you are only using cloud computing for your administrative functions and your IT infrastructure, you are missing out on the Revolution.

Oracle OpenWorld – enhanced expectations

Oracle OpenWorld starts Sunday. I am going with more enhanced expectations than I have in previous years

As a baseline, I expect to hear updates on Oracle SaaS – financials, HR, ERP, CRM and on the NetSuite business unit. With a very strong 1Q where application revenues went up 62% year-on-year, it will be interesting to hear from new customers and how Oracle expects to keep growing its market share.

I hope to hear a lot more about vertical applications in the cloud. That is the next frontier for SaaS and Oracle is ideally positioned to lead in a number of industries if they are prepared to make the investments.

The driverless database is clearly something Larry Ellison is very excited about. Beyond details on speeds and feeds, I hope Oracle can quantify the likely impact on outsourced managed services, DBAs, BASIS in SAP world and other payback areas. An added bonus would be if Oracle starts to articulate a vision of autonomous applications leveraging robotics, AI, wearables, drones etc in various business processes.  

Finally, I look forward to hearing about Oracle’s IaaS momentum. In the June 2017 Gartner IaaS Magic Quadrant, Oracle was in the bottom right as a Visionary – way behind Amazon, Microsoft, Google, IBM and Alibaba. It’s not a position they are likely very happy with. I am sure there will be plenty of “quotable quotes” about Amazon. I would like to also hear how about they will pick up market share from the weaker, legacy infrastructure, telecom, hosting and outsourcing vendors. And how they plan to leverage their much stronger PaaS position.

That’s the fun part about covering Oracle. So many angles to consider. And this year the Chainsmokers are playing at AT&T Park. No shuttle buses to worry about, a reason why I have missed all the bands at previous OOWs. So, I may also get to check out some “tattoos on shoulders”

IFS extends its vertical focus

Readers know I think the software market is at a pivot point. We have plenty of hr, financial and basic CRM functionality, but very little in the way of industry specific functionality. I have always liked IFS’s focus on complex, often heavily-regulated, asset-intensive industries and on product and asset centric break-fix and maintenance-based service organizations.

They are extending their industry focus with the acquisition of WorkWave, which offers cloud based field service and fleet management solutions targeted at micro-verticals such as landscaping, pest control, home delivery and HVAC service. A common thread is these sectors aim at residential customers and small businesses, tend to have recurring relationships and they have mobile workforces.

When I say extending, I mean out of IFS’s comfort zone in two major vectors. This takes them out of direct, large software sales model their current industries require to more web-based marketing and selling. And for now, WorkWave is largely US based, whereas IFS is particularly strong in Europe.

In talking to IFS Group SVP Fredrik Vom Hofe this morning, he estimates the US market for the sectors WorkWave focuses on is $ 11 billion so there is plenty of runway right here. And he was excited about leveraging more broadly the mobility, simplicity, usability and other unique traits WorkWave has successfully honed for SMEs in the industries they service.

Look forward to more such vertical investments. There is an incredible amount of white space waiting to be filled.

Cloud, Digital: a Continental Divide?

DSAG, the SAP user group for German speaking Europe, shared results of a recent survey involving  more than 500 decision-makers from IT and various business units. Reading it I was struck by similarities and differences between how the US and European (with the DSAG base as a large proxy) markets view cloud computing and digital transformation opportunities

a) Cloud Computing

The DSAG survey says “the more than 3,300 DSAG member companies didn’t consider the other cloud solutions any more relevant for digital transformation. One of the DSAG’s missions is to critically assess the extent to which platforms such as Ariba, SuccessFactors and Concur can truly be integrated into existing IT environments and where their actual benefit lies for SAP users.” It is far different in the US market. “Ring fence with clouds” have been a dominant coping strategy in a number of SAP, Oracle, Infor and other on-premise customers for several years now. They explain the massive growth runs seen by Amazon, Salesforce, Workday, ServiceNow and other cloud vendors. SAP’s cloud acquisitions and customers in the US have also kept its own financial results respectable the last few years.

b) Digital Transformation

DSAG says “70 percent of respondents gave S/4HANA a high to very high degree of relevance for digital transformation, while more than half saw the Business Suite as another option for future digital projects.”. In the US, digital pioneers and increasingly the second wave are NOT relying on their ERP vendors, especially if they are in non-manufacturing industries. The reality is most of the large ERP vendors have not kept up industry specific transaction engines related to billing, merchandising, patient records and many others. You cannot do impactful digital transformation with just back-office functionality. Even when it comes to the back office, their AP system assumes you are still mostly paying by checks, not by corporate cards and digital methods. These vendors have also not pioneered much when it comes to next-gen customer facing areas, product engineering for contemporary smart products and services and next-gen business models.  They are also stuck in older user based licensing models in a world where millions of sensors and machines are increasingly driving business processes. Even in Europe when  you look at technology that Daimler and Bosch are embedding to make their vehicles and appliances smart, they are relying on a very different ecosystem of tech vendors. They are more likely to rely on a Foxconn than an Accenture for that digital evolution.

c) Automation 

DSAG says “The verdict on SAP Leonardo is quite clear. 82 percent see this new solution for the Internet of Things (IoT) and Artificial Intelligence sector as playing a very small role in their digital strategy, which might be partially due to the solution only recently having been launched.” I think that applies to US market as well. When it comes to IoT, automation like AI, wearables and robotics, US customers are not waiting for their ERP and IT infrastructure vendors. They are adopting technology from smaller vendors like Uptake and Kiva (part of Amazon). And like GE, European companies like Siemens and ABB are investing heavily in their own “platforms”.

Vive La Difference, I say. Somehow, though I see a much more fragmented global IT and OT market in the future. 

Oracle’s momentum

I tend to not listen to vendor quarterly earnings calls. I get much better value from briefings at industry analyst events and from customer feedback. I also find it irritating that executives brag and beat up on competitors on these calls knowing full well they will themselves be targeted a few days or few weeks later.

I listened to a replay of the Oracle 1Q18 earnings call last night, and sure enough there was bragging and bashing (like Larry Ellison saying “there is no one left to buy” ) but couple of things stood out for me.

The cloud momentum

As I wrote a few weeks ago, cloud computing is at a pivot point. In the next wave, hairy industry applications – utility billing, retail merchandising, healthcare emr - and many others need to be tackled. The easier administrative and customer facing cloud applications are maturing nicely. The operational systems, hardly at all. In the next wave, we will also need massive cloud infrastructure investments as decades of creaky on-premise and outsourcing/telco assets need replacing. The funny thing is most vendors will sell cloud to customers as replacing capex with opex then magically expect their own capex to disappear or be someone else’s responsibility. 

So, I am pleased to see Oracle’s cloud momentum -  Software as a Service (SaaS) revenues were up 62% from the previous year to $1.1 billion. and Platform as a Service (PaaS) plus Infrastructure as a Service (IaaS) revenues were up 28% to $400 million. To me, success encourages investments and I want Oracle to focus much more on verticals and infrastructure. With the broadest set of cloud offerings - SaaS, PaaS, IaaS and DaaS - Oracle is positioned to be the industry’s locomotive for the next wave of cloud evolution.

Autonomous database

With my recent focus on automation with Silicon Collar, I liked Larry Ellison previewing the “driverless database” on the call. He promised, using machine learning, it would reduce today’s  labor (DBA and managed services) time and effort, and even more the errors they cause, while improving reliability to what he called “99.995% …while charging much less than AWS.” I want to next see what Oracle is thinking in terms of autonomous applications and how it plans to further leverage the growing world of robotics, drones, AI, wearables, sensors, 3D printing and other automation in its design of business processes.

I look forward to hearing,  seeing and discussing a lot more on both topics next month at Oracle OpenWorld. 

Rimini Street: The next chapter

People still think of Rimini as a cut rate, third party maintenance provider for on-premise Oracle, SAP, IBM and Microsoft software. That was Rimini 1.0. In a talk series I did with them last year, I saw Rimini 2.0. Because they support customizations, not just the core software, I heard their customers and prospects talk about different ways they could rethink enterprise application and related infrastructure support. Rimini was allowing them to rethink outsource, not just software, vendor arrangements.

Now, Rimini is poised to enter phase 3.0. This Gartner research paper talks about the possibilities as Rimini finalizes its merger with GP Investments Acquisition Corp. Gartner says:

• By using up to $157.8 million in cash from the SPAC (special-purpose acquisition company) investors to replace debt with equity, the company will strengthen its balance sheet, and
• Merging with the SPAC allows Rimini Street to take a spot as a public company on Nasdaq (ticker: RMNI). Since the merger is between Rimini Street and a "fund" company, there should be no impact on Rimini's running its business.

More significantly, Gartner confirms what CEO Seth Ravin has previously discussed with some analysts.  It wants to get beyond on-prem products into the SaaS world and the new entity should allow it more investment bandwidth to do so.

The larger software vendors still view Rimini as just a nuisance. Over 1,300 customers think otherwise, and a growing set of new customers will get to taste a very different form of enterprise support.

SuccessConnect–a higher calling?

We live in troubled times. They call for principled leadership, standing up for values, and for ignoring our darker angels. Whether that was the intention of SuccessConnect or not, I certainly walked away from the event with that message.

Rob Enslin, President of SAP’s Cloud Business Group kicked off the event with a focus on philanthropy – Houston hurricane relief, Africa Code Week and SAP’s initiative to hire a large number of autistic candidates. No mention of software. Oprah Winfrey delivered a keynote  (see my post here) which was about giving human goodness a platform. No political angles in her talk. Frances Frei, tenured prof at Harvard Business School making a transition to a senior position at Uber, engaged the audience in exercises focused on authenticity and trust. No discussion of the turmoil at Uber.

There were visible signs of focus on wellness – wearables as swag, cold pressed juices with kale and other exotic vitamins as nourishment.  The breakouts focused on contentious issues like diversity in the workforce.  I had to pinch myself a couple of times – am I at a weekend retreat with Deepak Chopra and Tony Robbins?

What was less on display was the software. The sessions were long on slides and words, less on demos. Given that it was my first SuccessConnect, I asked a few “regulars” – analysts who come to the event every year. To a person, they used the word “transition”. SuccessFactors is being transitioned to leverage SAP’s assets. The HCM chatbots are leveraging the CoPilot digital assistant SAP discussed at SapphireNow earlier this year. The planned Workforce Insights functionality will combine employee data from SF and contractor data from Fieldglass, another SAP cloud acquisition. SF will be available on HANA next year. The data centers should be able to leverage SAP’s still evolving cloud infrastructure plans. SF will leverage SAP’s field assets even more than it has in the last few years of success selling global deals. The leadership like the new President, Greg Tomb, will bring more legacy SAP pedigree. There will be tighter coordination with ASUG and other SAP user groups. In a Q&A, Jana Kanyadan, CIO at Mohawk Industries gave an impassioned endorsement for SF as an integral part of the SAP portfolio he had come to depend on.

Will this tighter embrace by SAP help SuccessFactors with the HRO buying center? Historically, SAP (and other broader ERP vendors) has not been able to “out-Dave Dave” in this demographic. That’s Dave as in Duffield who is legendary in that community with successes like PeopleSoft and Workday.

I look forward to seeing if this event was an exception or more of a statement of direction. The themes of leadership and values from this conference give it the potential to come at this market from more of an emotional and humanitarian angle. That even more than SAP’s formidable development and sales assets may give SF more of a competitive differentiation.