deal architect

Renewables: The “great dual challenge,”

The new General Electric  is a shell of its former self as it sheds most of its business units and its industrial coverage is down to its aircraft engine, renewable, and power plant businesses. GE CEO John Flannery has called the three “highly complementary businesses poised for future growth”. Yes, each is based on turbine technologies, but I can see how green zealots cringe when they see the association between fuel guzzling planes, coal and natural gas-driven utilities and wind turbines. It is, however, the reality as GE sees it.

The Washington Post has an article on BP and how the oil giant was “forced to shrink to greatness”. It shows how the US government almost put the company out of business after the Deepwater Horizon explosion and how the rest of Big Oil shunned it. It has trimmed down and is starting to invest again.  Renewable investments may reach $500 million a year, a tiny fraction of BP’s $15 billion or more in capital spending. Its big bet is on natural gas and that utilities will increasingly move from coal to gas.  CEO Robert Dudley says “This is not a race to renewables. It has to be a race to reduce emissions,”The “great dual challenge,” is to do that while generating enough energy to lift people out of poverty and absorb population growth.

You could argue that GE and BP are not ardent supporters of renewables, but how do you explain the situation in Germany? Foreign Policy says

For years, Germany’s Energiewende, or renewable energy transition, was held up as a best practice for other nations to follow. After all, in just 15 years Europe’s biggest economy turned a third of its electricity generation green by subsidizing investments in solar energy and wind power. In doing so, it added 300,000 jobs to the economy. Even while it was in the process of phasing out nuclear power, Germany managed the transition while its factories hummed along, the economy posting record growth and trade surpluses. In the late aughts, Merkel was dubbed “the climate chancellor” for her engagement on behalf of the climate.

Yet, in spite of spending hundreds of billions of euros on subsidizing renewables, Germany will struggle to meet its 18% renewables target for 2020. The country continues to rely heavily on its coal and lignite, and more recently on natural gas from Russia.

Progress is more visible in smaller countries like Denmark (especially with wind), Kenya (especially with solar) and Iceland (with geothermal).  If you include hydro power in the renewables bucket (many hard-core green fans argue that dams cause ecological damage so aren't as as sustainable) Norway, Canada and Costa Rica are shining examples. The little island of Palau has announced plans to move completely to solar power in the next few years.

There is also good news from the state of California. Assembly Bill 32 pushed the state to reduce emissions by 2020; California did it in 2016, dropping from 1990’s 431 million metric tons to 429 million metric tons.

The next big hope is China which is said to be investing $ 360 billion (mostly in wind and solar energy) during the five-year 2016 to 2020 period.

Renewables are making nice gains in the utility sector, but that is not being matched in transportation (tankers, trucks etc.) and heating – which together account for 3/4 of global energy consumption.

A number of fan boys keep arguing otherwise, but the disappointing German experiment in particular tells us the BP comment about “the dual challenge” will be our reality for the foreseeable future.

Renewables are a bit like Artificial Intelligence. Every few years we get excited with progress but you look a few years later and the adoption progress is uneven.

Tech Marathoners: Bruce Rogow – Part 2

We ran yesterday Part 1 of the interview with Bruce Rogow. Part 2  below focuses on his time and learning at Gartner and since

As I mentioned, he is a throwback to the time of really big IT thinkers and analysts with big ones who vendors and yes, even their employers could not push around.

The Gartner Years

Gartner Home Depot’d the IT decision industry. Gartner in 1987 was aimed at Wall Street and the vendors. It had a minimum of user clients. Gideon Gartner talked about wanting to primarily serve users, but the company was not relating to users except for residual values and mainframe decisions.

Back then, a technology decision was client researched or they called a consultant. If a NNC client needed to select an email and office system, they engaged NNC, Index and Andersen to evaluate selecting IBM PROFS or Digital’s All-in-One. They spent nearly three years and $5-10 million of in-house and consultant resources and finally decided the winner for the future was to be Wang.

Gartner was much smaller than Yankee, IDC or Dataquest. Each played to a niche following rather than broad market. Gideon Gartner said don’t ask users what they want as they don’t know they need us until we make the market. Gartner’s goal was to be the highest quality, most provocative, pre-packaged, mass-marketed, ultimately big box, Home Depot for an expanding body of in-house decision makers.

Gartner thrived allowing all IT decision makers to first turn to a $20-30,000 continuous service for the latest analysis rather than engage consultants. The decision process sped up and got cheaper, changing the IT game.

Also, Gartner analysis was done by a highly experienced professional rather than by an inexpensive, inexperienced, volatile staffer. Unlike the competition, Gartner invested in analysts who knew what they were talking about and world class sales staff.

About that time, an un-virtuous cycle emerged. Increasingly, DOacies took on the management consultancy role recommending immediate, drastic change whether the client, vendor or product was ready. Remember, I believe it takes five to seven years to get ready.

Worthwhile enterprise scale but immature products like SAP got dumped on organizations almost bringing companies to their knees. Firms turned to their DOacy for management consultancy and guess what? The DOacy recommended the DOacy do more and outsource rather than hire expensive staff. Today, firms are paying the price as they lack in-house skills.

Some argue the WEB changed this. Not really. The Web was pasted onto what firms were doing, not requiring full end-to-end business change. Gradually, firm genes/DNA for change disappeared.

The IT Odyssey Years

As I visited folks in the 2003-2016 timeframe, a zero-sum game mentality had taken hold. Over a decade of relatively flat growth, extreme cost pressure and diminishing resources, IT searched for safe, best practices. Risk and ambiguity were banished. Mediocrity set in. Now firms struggling to innovate find making needed changes difficult in their cultural context. Increasingly, senior execs recognize they need totally different cultural DNA.

We faced a similar, but less complex situation in 1973 and 1982. Business and technology disruptions demanded drastic changes, but folks were trying to tweak their way to the future. Today, executives struggle with prudent investments to make new markets, change cultures and educate their people.

Most IT organizations face a Myth of Sisyphus challenge. One CIO calls it "achieving escape velocity." Incoming changes are coming faster than they can deal with the gravity of legacy and conversion.

A big DOacy client expressed frustration saying she hasn't seen anybody in the last two years from their DOacy who understands context and has the depth to be of meaningful help. “They can't answer critical questions. So, we turned to Azure and then AWS. They understand what they're doing, but don't understand what we're doing."

Pundits and vendors complain firms don't move fast enough. Business users complain IT doesn't move fast enough. IT organizations trying to transform themselves are drowning in demands and complexity. An overriding understandable management framework is needed to examine readiness, set priorities, build capabilities across an updated version of NNC’s Four Growth Processes.

Without such a framework, firms are increasingly vulnerable to drive-by-shooter vendors and pundits sprinkling simple answers throughout the firm. An underlying structural framework is needed such as described in George C. Marshall: Organizer of Victory: 1943-1945 by Forrest C. Pogue. Marshall had to organize the WWII victory in a complex situation on many fronts.

I don’t see management frameworks emerging from the big spenders, academics, vendors or consultancies. Short term, vendors and DOacies thrive on the avalanche of piecemeal approaches they call “solutions”. There is little interest in developing a framework. Long term, the chaos will slow down new capability adoption.

In the 70’s, management frameworks emerged, highly supported by clients and vendors. While I was head of research at Gartner we established technology decision frameworks: The Industry Scenario with discrete probabilities, Total Cost of Ownership (TCO), Hype Cycles, Magic Quadrants, as well as Symposiums and Executive Service to convey these broadly. All are still around today.

Gartner “Probabilities” (p=???) highlight how IT thinking changed over time. In the 1984-’93 era, no “p” was allowed > .4. If the p>.5, the clients already knew it. No value added. Analysts were forced to be edgier with more risk. Since ’95, clients wanting to avoid risk, uncertainty and ambiguity demanded p>.7. But we’re no longer in a p>.7 world.

We need at least two things:

· New IT management roles to coordinate the avalanche and assure material contribution at strategic, tactical and operational levels.

· Frameworks or Pathways to manage the journey from today to our goals.

Vendors and DOacies claim to have Roadmaps, but these basically say “Buy now from us. Then buy more.”

NNC developed baselining frameworks for each growth process at excruciating detail levels. But, NNC didn't know how to provide an operating model for change.

NNC client, Charlie Feld, took the NNC framework and made it an operating model. He pioneered it at Frito Lay as CIO and it became the basis of his executive management service.

We need someone to develop a framework and somebody to operationalize it. The IT4IT group is developing an ERP for IT, but, it's not getting the pickup it should be.

Reflecting Back and Looking Forward:

Legacy firms no longer seem to have the pride, fun and passion within the work that I got to experience in my career. Today, the pride, fun is pasted on by adding a distilled water foosball area to the gym catered by our Michelin 3-star chef. CEOs need to put fun, pride and passion in the work.

Mentors have been critical for me. I was blessed with brilliant mentors. My first career life mentor was General Douglas MacArthur. Invited to sit next to him at a lunch, I asked “as an ambitious high school student, what do you recommend I understand?"

“Find and go to the Camelots. They’ll be where the world is changing. I’d rather clean a latrine in Camelot than be a five-star general of something that doesn't matter. Camelots destroy themselves from within, so constantly be searching for the next.” I’ve been blessed with seven.

When interviewing people in IT odyssey visits, I ask "Who do you consider a mentor or sage advisor?" The typical paraphrased answer during the 2002-2015 period: "I don't need no mentor. I'm frickin' smart. Don't need old stuff that didn’t work."

What a level of arrogance (or ignorance). There is hope. Since 2016, the answer is becoming… “guess I should get one.”

Pundits constantly demand legacy firms be more like dotcom digital firms like Amazon, Netflix or Uber. They fail to recognize business context. Dotcoms were born digital without legacy products, markets, customers, staff and cultures.

Many have been built with OPM (Other People’s Money). UBER has lost over $17bn without a glimpse of profitability or way to recover the $17bn. Fortune or Forbes articles give dotcoms a pass focusing only on valuations and funding rounds vs. profitability? What legacy company today would be allowed to lose $17 billion? Dotcoms are playing another game. Legacy firms must craft, execute asymmetric strategies to be competitive.

In current culture, people feel entitled. “I don't want to ride in a taxi. I am entitled to an Uber. I expect to linkup with all my buddies and get Facebook for free.” Long term, this could be a major issue.

People spend 1-2 hours daily watching TV and pay $200/month for cable. Facebook suggests "We may need to charge for the eight hours daily you spend immersed in our site." The Entitlelistist impaired set their hair on fire and demand Congress end this dastardly threat.

Why does this matter:

· A culture of expecting free or non-sustainable services sets in and that can’t end well.

· Businesses need to make profits and not just live off OPM.

· Our best, brightest, most creatives are caught up in what may never be sustaining, profitable ventures.

· Many flit from one non-sustainable venture to another, not re-inventing sustainable, profitable businesses.

· Legacy businesses cry for new talent.

Both factors are dysfunctional at best. We need to restore understanding that if wanting to go to the future, we're going to have to bring money. Many best and creatives are caught up in Ponzi schemes based on the greater fool theory sticking it to the last investor.

Any Downturns in Life?

Yes, a huge one. Until leaving Gartner, my life had been one Camelot after another. Then, I made a catastrophic mistake thinking I could be an angel investor. I started Rogow Opportunity Capital, an angel capital firm. Someone should have just shot me that day to avoid the disaster.

As an active member of a group and part of the team taking on tough challenges, I excelled as a “Happenator”. When choosing investments, being on boards and indirectly being involved, I was hopeless.

What haunts me most is not the failure I had. It is that I had attracted many fine people to invest in these ventures and how much hard-earned money they lost. I'm still friendly with all of them. But, every time I sit down with them, I'm embarrassed for what I did not do well enough.

My Greatest Career Pride:

I joined Gartner at $13mm in revenue. Our management team grew it to $110mm and handed it off to a more fit-for-next-purpose team. I worked with Gartner as an Executive Fellow until 2016. According to the NY Times, over 100 early Gartner staff became millionaires. Today, Gartner has:

• Revenue approaching $3.3bn
• Market Cap of $12.75bn
• Profit of $6.3mm
• Staff over 11,000
• Customers over 12,000

Tech marathoners: Bruce Rogow

This continues a new series of interviews with tech executives who have seen the industry evolve over a minimum of two decades. They have helped analyze, envision, develop and take to market some of the most influential technology the world has seen. And they have done it well mile after mile as elite athletes do. I am honored they spend the time with me reminiscing and star-gazing.

This time it is Bruce Rogow who after 5 years in IBM Advanced Technical Training developing what became Systems Management, spent a decade as Senior Managing Principal of the prestigious Nolan, Norton & Co. He then joined Gartner and served as the EVP of World Wide Research. Since 2013, he has been doing his IT Odyssey visiting with hundreds of IT and business execs as well as serving as a Principal at ICEX, a high end, private experience exchange.

Part 1 of the interview focuses on IBM and NNC time. Part 2 will focus on his time at Gartner and since.

As you will see, he is a throwback to the time of really big IT thinkers and analysts with big ones who vendors and yes, even their employers could not push around. 

“From over 50 years in the IT industry, I’ve have four big learnings that are very trivial but constantly forgotten:

· Things constantly change that can be dealt with by tweaking, but every 10-15 years a major shift occurs that demands radical new capabilities.

· At each major shift, the pundits, academics, vendors spring out of hibernation with self-serving screams for disruption armed with simple answers. But, simple answers are for fools.

· Every major shift demands Dick Nolan and Chuck Gibson’s concept: IT requires a long, cultural experiential learning exercise that must be done in iterative stages. Don’t let pundits shouting about Moore’s Law and imminent annihilation drown out the reality of the painful, slow adoption process required.

· The journey for each major IT shift doesn’t get to the target state before the next major shift intercedes.

My career started at IBM selling to the University of Florida and local companies. I was blessed with a territory that taught me about business context and that as business cycles change, so must I.

The IBM Poughkeepsie (P’ok) Experience

Based on good communication skills, I was lateralled from Gainesville sales to a educational development team in Poughkeepsie, NY (P’ok). We were focused on the management structures/tools/process that customers, IBM Systems Engineers and Field Engineers would need to manage technology that would evolve in three to five years.

Starting in 1973 IBM found they couldn’t successfully install its System/370s. System 370 complexity overwhelmed the IBM team and customers who suddenly needed what we had coming out of our navels.

We were working on such “advanced” techniques as Problem Recording Logs. Believe it or not, nobody had one and argued they had no need. If they had a log, it was on the back of a 5081 punch card. DP management and operations also resisted Problem Resolution/Management, Change Management, Component Failure Impact Analysis, Root Cause Analysis, Installation Planning and Service Level Agreements as ridiculous overhead. By the end of 1973, we mutts became global missionaries for what became systems management.

We moved from three to five years out to, "we don’t care if you are in Greensboro and it is 3 AM. The Chairman wants your butt on an airplane to be at John Deere in the morning when they open.”

We had to convince very mature, much older customers and IBM field forces, that what they had done in the past wouldn't work. Secondly, you can't tweak yourself to the future. Getting more 5081 cards isn’t the answer. I remember telling the Deere exec that local IBM should have guided them differently. I still have the toy Deere tractor the IBM systems engineer gave me with the suggestion “You drive it up your ….”. That part of his comment fell off but we became friends over time. The manure spreader below came from my later NNC work.

The night before the 370s came up at McAuto’s Long Beach Data Center, the operations head told me: "I'll just write it on my 5081 card." A great movie line: "I think you need to get a bigger card." We had 1,100 incidents the first week. He was let go by 11 o'clock the next morning. They started bringing in new people. We had to fight and yet work with people in the IBM and customer management as well as staff one site at a time on a global basis.

We were a 7 person education team. Our division president and VP didn’t support our efforts. They felt it was someone else’s responsibility. Ignoring them, we went directly to the field organizations building over 1,000 cross-divisional customer support teams globally over five years. Eventually, for going around my management, I got a highly prized IBM “Wild Duck” award.

Relevant Messages for Today: Making behavioral or cultural BIG change demands:

· Thinking at scale, not just first convert

· Having dedicated organization,tools and process for the change journey

· Taking on or defying many including your management

As IBM’s top brass realized systems management was critical to IBM success, I was also assigned to the customer executive program’s President's Class. The IBM vice chairman, Warren Hume, served as host, moderator, instructor. He asked the attending customer CEOs, "How is IBM organized?" They’d typically answer: by geographically, by product, by function. He said, "No. IBM is organized by time."

This is an extremely important lesson today. IBM recognized neither IBM or customers were properly prepared for radically evolving technologies or application capabilities. IBM was segmented by time horizons to get itself and customers ready for what they would sell, install and use three to five years out. Also, each horizon segment was organized by a supply side focused on designing, manufacturing, selling and supporting as well as a demand side focused on building a market understanding of the capabilities.

The horizons were:

· Watson Lab: 7-10 years

· Advanced Systems Development: 5-7 years

· My group was Advanced Technical Training: 3-5 years

· Regions & Ed Centers: next year's quota

· Field Resources: Making this year’s quota and fixing today's problems.

Such thinking went away in the '80s, Now, vendors slap a product into the market assuming an unprepared market will snap it up. The market isn’t prepared on the demand or supply side. This causes the frustrations heard today where CEOs scream "Show me the money. How the hell do we make this crap work?"

Experience underlies Rogow's Rule related to context, fit, readiness and adoption. Rogow's Rule says:

Despite Metcalfe's or Moore's Law, the rate at which organizations can adapt and profitably adopt is dependent upon the rate at which organizations and culture can change.

Pundits constantly quote the power of Moore's or Metcalfe's Law. But, the realization reality is that organizations have to work backward from context, readiness, fit and adaptation capability. The challenge: how best to prepare organizations to be ready for and absorb things more rapidly?

Many vendors remind me of an old sales school parable:

"Hey, do you want to buy a riding lawnmower?"

"I don't need a lawnmower. I live in a 12 story condo."

"Well, that's what we're selling today. You must need it."

Despite 30 years of pushing inadequate product into unready markets without context, this lesson has been lost.

The Nolan, Norton Experience

In our P’ok work at all levels, we found that until senior execs saw Nolan and Gibson’s HBR Stages Model, they believed DP was unmanageable, confusing and incompetent. Dick Nolan had a Four Stages Model which could actually explain DP to senior management and presented a logical way to build DP capability. It paralleled our P’ok work that was pioneered enabling processes such as portfolio management, systems development life cycles and charge back.

I got a call to join a startup consulting firm that was an outgrowth of Dick Nolan’s Harvard Business School work. Why not? Boston beats Poughkeepsie. Originally named DP Management Corp, it became Nolan, Norton (NNC).

A critical understanding of terminology is in order. In those days, Management Consultancy was a protected word. Management Consultancies, such as McKinsey and others would solely do evaluation, strategy and planning work. They wouldn't do the implementation as that was seen as unethical behavior.

They believed it unethical for Management Consultancies doing evaluation, strategy, planning to sell follow-on implementation work. Implementation was delegated to the client or a contract “DOacy.” Management consultancies independently and objectively focused on a baseline or profile such as: where are you versus others? Are you doing the right things? The right way? Is spending the right amount? Strategy and planning might follow.

If a firm did a baseline, strategy and plan, knowing the big (10x+) payday would come with multi-year, multi-million dollar implementations, it would be hard to resist tilting the scales and being objective. Many NNC projects ended with “you are fine. No further need of us.” That would have been hard to say if the NNC management were expecting SBJ (Sell the Big Job) follow-on.

Also, NNC was unique in that NNC’s well documented methodologies were done with the client and transferred to the client to do themselves in the future. NNC also organized client working groups to develop shared management processes and guidelines.

One, the Computer Executive Symposium, CES, a group of 10 to 20 CIOs or DP execs, developed guardrails for the IT management profession. These collaborative methodologies and guidelines built on NNC’s four Growth Processes of experiential learning: application portfolio, resources, management controls/organization, and the level of user sophistication. Each was quantified and calibrated balanced with stage context.

As an example, if a Stage I or II needed to build an IT administrative, finance and planning function, the funding required was 3% to 5% of the IT budget for 2 to 3 years. Once established, steady state budget of 1% to 2% is sufficient. Each IT management decision had a healthy guideline.

The application portfolio should have quantifiable and measurable functional and technical quality. Functional quality should be above 65 while technical quality should be above 60. Otherwise replacement was required. Healthy maintenance and enhancement spending measured against production costs for each system should be on average about 38%. Below .38 the portfolio would degrade. Above .38 usually meant the portfolio needed refresh.

They taught their senior executives and boards to assure IT stayed within the CES Guardrails. Consistency allowed members to compare themselves quantifiably. CES ultimately became the basis of the balanced scorecard. My wife managed those projects for Kaplan and Norton.

About 1986, the simpletons held sway as firms such as Index pushed Mike Hammer’s Re-Engineering and also became DOacies. The Re-Engineering mantra: "Don't waste time on existing context, baselines or management. You will be totally Re-Engineering everything in the next year or so. You don't need administrative stuff like existing portfolio management. That stuff will be gone soon”.

"By the way, not only will we do strategy and planning, we're also doing implementation. It's one-stop shopping. (….and we’ll start the BIG billing on the DOacy sooner.)”

It sounded wonderful. Starting about 1986 firms started dismantling their management controls. At that time, firms had more adequate management process than they do today. I'm not saying that the simple-minded systems management processes of '85 or '86 would work today. They aren’t robust enough. But, they had the foundation.

I continually visit firms today saying they are implementing an IT management process for the first time. They are shocked when I pull up how they had that process in 1986. But, they took it apart when the DOacy that masqueraded as a management consultancy told them, “You don't need any of that stuff as we're all going to the future.”

Going back to Rogow's Rule, the concept of re-engineer an enterprise in two or three years was a pile of crap. By ‘95, most firms were left with a semi-completed Re-Engineering and a rotting legacy portfolio. Until about '86, nobody talked about a legacy portfolio as they were focused on invested asset management.

IT was viewed as an asset management game such as a hotel chain refreshes its hotels or how an airline looks at its planes. Assets, (all four Growth Processes) were rationally grown, maintained, operated, refreshed and replaced based on metrics, budget and schedule.

By '87 the game switched from selecting your distinguishing independent, objective Management Consultancy to finding a lowest cost DOacy for one stop shopping. Also, firms that were management consultancies moved toward implementation issues to survive.

NNC had gotten into some financial trouble and were selling out to KPMG. I saw consulting commoditization and felt technology decisions would be the next major chessboard. Gartner was going to be the next Camelot.

The end of Cloud history?

In 1989, Francis Fukuyama, then deputy director of the State Department's Policy Planning Staff (he has since taught at Johns Hopkins and Stanford among other institutions) predicted the fall of Communism and the world beyond in an article titled “The end of history”. In 1992 he elaborated his thoughts in a book. His view was optimistic – that Western democracy had prevailed and would survive as the “final form of human government”

Margaret Thatcher, one of the major contributors to the Fall of communism, and conservative herself is said to have reacted to Fukuyama’s article thus “The end of history? The beginning of nonsense….” No doubt, history marched on – there were wars in the Middle East, the EU and China both emerged as major global powers, Russia has not exactly disappeared.

Cloud computing is entering its third decade (NetSuite was founded in 1998, Salesforce a year later) and in many ways we can say it has won out over on-premise computing. And we can like Fukuyama say it is the end of cloud history, but how will the next decade and beyond play out?

Based on my research and consulting the last few months, we could see at least five scenarios emerge: 

a) Next-gen enterprise apps continue from current market leaders

The current crop of leaders – Workday, Salesforce, Oracle may continue to go from strength to strength. To SAP’s credit it has through its cloud acquisitions managed to survive the onslaught of those three and others and is poised to lead again. As I wrote a few weeks ago, it will take a next generation of apps with changing UX of voice interfaces and digital assistants, a lot more integration of automation like drones, robots, wearables and functionality which reflects today’s business practices not those brought forward from client/server world. This is a challenge for the incumbents. They want to keep selling what they have versus developing their next-gen of apps, and may give SAP a chance to get to leadership again. Having said that. in the last couple of decades, SAP has missed out on several trillion dollar markets as I wrote here. All these vendors are somewhat myopic – they keep looking at each other as competition and ignoring the white space around them.

b) A verticals led market

In the first two decades of cloud apps we mostly saw financials, hcm and crm functionality – horizontal across industries. Major chunks of functionality – utility billing, insurance claims processing, electronic medical records, retail merchandising,  manufacturing execution and countless others have stayed in client/server and prior architectures. By my estimate that leaves 80% of the market uncovered and opens opportunity for a new set of vendors (or outsoucers like Accenture) to come at enterprises with industry functionality partnered with horizontal functionality available  in the market today.  In other industries, large customers may themselves port their legacy industry applications to micro-services architectures.

c) Portfolio of technologies from multiple vendors

My colleague, Brian Sommer and I have looked at several business processes which the current apps leaders offer, and even there there are enough SMAC – social, mobile, analytical and cloud components you can use to craft far better purchase to pay or recruiting or shop floor capabilities. Customers prefer to buy versus build but many are finding they can combine components from multiple software, hardware, sensor and other vendors and create far more relevant and cost efficient processes.

d) A data led world

A radical new way to think of applications may be emerging. As John Wookey explained “And rather than ask people to type data into a system and then spit it back at them, {which is honestly what most applications do) ...ask for data and then give it back to you…you start with the idea of, here's the business objective, AND there's all the data in the world. What kind of an application would you build? The analogy I always use is Waze, which is to me, like the application that showed the best value or the best shift that will happen. When you go from a world in which you have an app that shows you red lines, yellow lines and green lines on a hard to read Google Maps, which is kind of what used to be in the traffic apps, if you remember them. To Waze. No one cares what the traffic is like in that area. What they care about is finding the best route to get home. How do I get from A to B as quickly, easily as possible. And tell me my options in doing that. And then feed me, turn by turn what I should be doing.”

We are starting to see vendors talk about machine learning – but those are in context of their current flows. Workday has Prism analytics which bring data together from multiple sources, SAP is talking about intelligent apps, but a new wave of business applications which works backwards from goals and objectives may be emerging. It could be data centric vendors like Google and others like IBM with Watson type capabilities which lead in this market

e) An infrastructure led world

The fastest growing segment of the cloud market today is that around IaaS. Amazon and Microsoft with their massive data center footprint and platform ecosystems could start through acquisitions and partnerships start to redefine the application landscape.

The problem with infrastructure led vendors is usually they think in speeds and feeds not features and functions or business outcomes. As an example, Oracle could have run away with the cloud apps market in the last decade, especially with SAP’s issues. They could have replaced hosting in tens of thousands of their PeopleSoft, JD Edwards, EBS and other customer bases with their IaaS. They have chosen to chase after Amazon. They could have listened to their legacy customer base which went to third party maintenance. These customers consistently ask for support of their customizations and improvements in ticket resolution. Oracle responds with “ours is more trusted – secure”. It’s ships passing in the night.

Yes, we are approaching a pivot in the cloud apps market. This is where the geopolitics were in 1989. The next decade and beyond will be tumultuous – exciting for some, disrupting to others.

It is the end of cloud apps 1.0.

A Midsummer Night’s Musing: Clouds, Renewables and Digital

In November, I ran a 3 part series titled “Raising the Bar” around cloud computing, renewables and digital transformations. 

Over the next few days I will provide an update on each. Each post should benefit from the vendor event season which seemed unusually busy this year, from the consulting I have been doing, from the on-going research and interviews for the next volume of SAP Nation, and from analysis of global events and twists and turns at major companies.

Each of the markets is at a pivot. It shows in changing fortunes of companies like GE and Oracle. With renewables, we are seeing the results of a long experiment in Germany and the beginning of a new one in China. With digital, we are starting to see some tech vendors open up about the impact transformations at their customers/clients are having on their operations and business models.

In the meantime, hope each of us is enjoying the summer. Hope you have found your version of Shakespeare’s contentment

“I know a bank where the wild thyme blows,
Where oxlips and the nodding violet grows,
Quite over-canopied with luscious woodbine,
With sweet musk-roses and with eglantine.”

Tech Marathoners: Sabrina Horn–Part 2

We ran yesterday Part 1 of the interview with Sabrina Horn. Part 2  below focuses on her view of the future of the industry and marketing trends

What she is proudest of

I alluded to it earlier. I think my legacy are all the employees we had at Horn Group through all the years. Before I sold the firm, my HR guy told me we had employed 1,001 people in 24 years across a handful of locations. Many of them have gone on to work for companies like Oracle, for SAP, for some of the hottest start ups and disrupting innovators in the industry, and other top agencies.

I'm so proud of them. I see what they are doing on LinkedIn or on Facebook. These are people who, I think, they learned well, but I also built a culture where I feel like I taught them well. They are out there adding value wherever they are.

I always told them: "Know what you don't know. Never get too big for your britches. Always do your homework. And, ask smart questions so that you are informed.” In an industry in tech where there's so much obsolescence, and not much loyalty to brands or to employers, I am proud how the Horn Group brand lives on and stands for something.

Where tech is headed

I actually think everything goes in cycles. Honestly, I got so tired of big data companies and analytics. Platforms and infrastructures take a long time to build and implement. And they are very hard to sell. I think that we're coming out of that phase, and I think we're going to see an influx of fun, new, interesting, and strategic applications in the cloud. I've been actually talking to some early-stage VCs who only focus on investing in companies making application software.

Their strategy is no more plumbing. They're done with plumbing. It's not about big data. It's about the right data and using that data to do your job better, whether that's in supply chain, logistics, or in finance. I think we're going to see a phase of application software expansion in the next few years.

Like, who cares if it's a lot of data or a little data or whatever? It's about giving you the right data, the right information, and being, functionally, much more rich.

They don't have to be broadly sweeping applications because, as you say, many companies, many enterprises, already have these massive, huge, departmental applications running their groups. Like a product lifecycle management application, right? That's cloud-based. It's so rich in functionality. It's helping a group of people get their jobs done in a much more effective way. But, everything -- the stakes are so much higher, right?

Today, if you were to go and look at new payroll systems, the standard is raised even higher. It will be interesting to see what comes out on the market and what these entrepreneurs and innovators come up with because, in a way, it's like reinventing the HR industry itself and rethinking HR, as an example, or rethinking product lifecycle management and what it should be in disrupting that first and then putting the software on top, not making a business reinvent itself for the software.

Then you take verticals. Like in the education market, higher ed or K-12 and healthcare, certainly, are screaming for it, and utilities and so forth. That will be really, really exciting.

How Marketing is evolving

I have worked with probably over 600 or 700 chief marketing officers in my career. The world has changed so much for them that it's a very difficult job. It's become much more difficult because they have to know so much more about so many different things.

Marketing is much more complicated because it crosses over so many different functions. Just the measurement piece of marketing alone, there's so much to understand. It's a much harder job today than it was 25 years ago, and it's not for everybody. There's a reason why chief marketing officers turn over every two years because it's a really hard job.

The world has also become a much more complicated place to do marketing. I believe we are living in an age of extremism. We have extreme politics; we have extreme violence; we have extreme behavior. Everything is extreme. I think there is going to be a turn back to marketing that is love-based, I will say, as opposed to marketing that is fear-based.

I think the world, companies, businesspeople are all consumers in one way or another. I think the world is just craving for positive marketing messages. I think there's going to be a trend towards that.

It's already starting to happen. We are witnessing this whole new marketing strategy de jour in which CEOs and CMOs are issuing apologies for when they've done things badly. We have to be careful with that because apologies don't hold any water if they're not sincere or if they aren't followed up on. Facebook is apologizing. Uber is apologizing with a big ad campaign. Rosanne Barr apologized, said she would get off Twitter and then went back on Twitter. It's all kind of wearing a little thin. But in general, I think that marketing strategies grounded in positivity and optimism and security will be well received by audiences everywhere.

You only get to apologize once. If everybody is doing it, then it doesn't have as much credibility. It's not just an apology. You have to have a whole “apology strategy”. You have to follow-up with things that substantiate your apology and make it seem sincere.

Tech Marathoners: Sabrina Horn

This continues a new series of interviews with tech executives who have seen the industry evolve over a minimum of two decades. They have helped analyze, envision, develop and take to market some of the most influential technology the world has seen. And they have done it well mile after mile as elite athletes do. I am honored they spend the time with me reminiscing and star-gazing.

Sabrina Horn is a tech industry communications expert and executive advisor. She founded and ran Horn Group, the iconic Silicon Valley PR firm for over 2 decades during which time she counseled over 500 CEOs and helped bring their companies’ stories to life. Sabrina currently serves as a Senior Advisor to Finn Partners, the firm to which she sold Horn Group in 2015, and resides in Manhasset, NY and San Francisco, CA.

Part 1 of the interview focuses on her career and her mentors. Part 2 will focus on her view of how the industry is evolving and how the marketing function is changing.

Her Career Arc

In looking back on my career, when I started I was 29 years old and I knew just enough to be dangerous, and I really had a head full of steam. I got this idea to start an agency while I was working for another very reputable tech PR agency. Before that, I had worked as a junior account executive for Edelman PR in San Francisco, CA, and had a freshly minted master's degree in PR from Boston University.

I started to think about how I would run an agency differently. I was inspired by my parents, both immigrants and successful entrepreneurs in their own right. And, it was right at the time when the new client-server architecture paradigm was being embraced by the computer industry. But up to that point, there were really no enterprise-class applications running on that paradigm. I was very excited about apps because they enable people get their jobs done. I thought, that’s where all the interesting stories will be!

I came into touch with a little company back then called PeopleSoft, which at that point was only $5 million and 50 people. Dave Duffield asked me if I could write a press release because they were going to port their payroll application onto Sybase SQL Server. I wrote that press release, and his head of marketing, Linda Zecher, called me and asked if I could write a few more of them for the company.

That was when the lightbulb went off. I took a 2-week vacation, wrote a business plan, designed a logo for my new agency, and thought I would try to win the PeopleSoft account to start my own company.

I pitched my heart out to Dave Duffield and his executive team in their boardroom. I probably had about 80 overhead foils, which was the technology of the day for presentations. I got home that night, and there was a message on my answering machine that I had won the PeopleSoft account. It was $7,000 a month, which is still, by many standards today, a respectable retainer for a start up.

I very much believe in doing right by the people that one works with and went to the founders of Blanc & Otus, the agency I worked for at the time. In essence, I asked for their blessing and their support to start Horn Group. They were not too intrigued with payroll software and I think they thought that HR software was kind of boring. They wished me well, offered their advice, and there I was, in business!

We made $1 million in PR fees, I think, by year number three. We set up our offices in Burlingame at 500 Airport Boulevard. We were co-located with ComputerWorld magazine and Meta Group, names which I'm sure you remember.

PeopleSoft went public in 1992 I believe, and the phone lit up like a Christmas tree. We started to build this franchise of companies that were in the application software space, many of whom PeopleSoft actually bought. I began to realize that I had to diversify my client base because all of my clients were getting acquired, whether it was by PeopleSoft or by other companies, like Oracle for example.

I visualized a tech landscape or an ecosystem that became the foundation for our client portfolio: tools and middleware, business intelligence software, workflow/groupware, and then all the business applications on top of them, supported by a strong networking platform. I was introduced to many of the companies through the venture capital community and through the PeopleSoft network. That's how I built Horn Group. I never took one cent of financing from anyone and bootstrapped the business.

My goal was to strategically help these companies achieve their goals, many that no one had ever heard of. Some companies were pivoting or maybe coming out with a second version of their product or going into a vertical market. Others had specific business goals: to go public, to be acquired, to just grow to the next phase, or get a round of funding. All of them wanted to build their brand and their awareness.

Back then, PR was all media relations and analyst relations. There was no social media. The Internet didn't exist, or at least not known to us at that point from a practical standpoint. It was all about how much “ink” one could get. And it was about relationships.

The other piece of our work was to help our clients strategically by fine tuning their marketing strategy, helping them tell more powerful stories to have a bigger impact on the markets they wanted to sell into. It became about so much more than just media relations and going out on press tours. We became strategic advisors to our clients’ executive teams. For this, I added on more senior people. We were a pretty well-rounded agency. We did the tactical work that clients expected, but we also were able to help the CMOs and CEOs of those companies think through their next moves.

Much of it was matching the right strategy with the right tactics. It was really exhilarating!

The third aspect I found exciting about building Horn Group was that I wanted to build a company where employees would stay and build their careers. PR agencies were known then, and many unfortunately still are, for having really high turnover, a crappy culture, and delivering crappy results to clients. I really wanted to raise the bar and create a nice working environment for people where they could stay and build their careers.

In the early 1990s, the idea of having a beer night on Thursdays was a new idea. We implemented all sorts of new benefits and perks for our folks. Some of them stayed with me for almost 20 years. We even won an award for Best Employer in the US in 1998 by Working Woman magazine.

It was a great ride until the dot.com bust. Thankfully, we didn't do a lot of dot-com business and were more focused on deep tech and B2B enterprise software. So, while our business definitely suffered, it was a softer landing than many of my competitors who saw their clients vaporize overnight.

Before the bubble burst, we were up to almost 100 employees and had a growing office in Boston. My business strategy was always to grow the agency along 3 vectors: by service offering, by geography, and by tech sector. We listened to our clients and what they were asking us for. We followed the tech industry and where new hubs were being established. We stuck to our knitting and focused mainly on the enterprise software market and e-commerce companies at that time.

We expanded successfully, to New York in 2002. I told my executive team I was going to open that office myself. I wanted to be close to Wall Street when the market came back. I wanted to play with the big boys on Madison Avenue. And, I wanted to diversify our client portfolio more into what was then just emerging as the new digital media sector that ultimately became the ad tech boom.

We got some space in Lower Manhattan for a great price through the good graces of Mayor Bloomberg who wanted to bring business back to Lower Manhattan after 9/11. I had my Silicon Valley badge of courage and my VC relationships, and I built that office from scratch through my connections.

Through the venture capital community, I was able to get a book of business, and I relocated four employees from our Boston office. They helped me start our New York office. We rented space from Insight Venture Partners on 5^th Avenue. One of the firm’s founders, Peter Sobiloff, was very, very kind and took me under his wing. We hunkered down in that space, and we were profitable from day one.

I believe you make your own luck in business and in life. And what you give, comes back to you in some form. We did our homework and found those companies that created new markets. I guess I should say, we helped them make those markets for themselves. Our first client in the adtech space was a little company called Right Media, which ultimately was bought by Yahoo for $800 million.

We built a franchise of companies in content creation, distribution, and monetization. We rode that wave and built a beautiful, incredibly thriving, New York office in Lower Manhattan on Broad Street.

At the same time, the PR industry was also undergoing a lot of change. With the Internet and all the social channels that evolved, we had to change our service offering. But, before digital was really even a word, we started an Interactive group building websites for clients.

This was in 2004. It was a heavy lift. It was really, really difficult because these business models were so inherently different. Building websites, making infographics, even a little-animated video, is a very project oriented business. But PR, as we know, is based on a monthly retainer and an annual contract.

I'm very proud that the Horn Group was one of the first agencies to bring visual communications into the PR fold. We won many awards and, I think, kept our revenues up when many other firms who solely relied on PR retainers did not.

This was a big lesson for me. We help our clients reinvent themselves, but we, as the agency, also have to reinvent ourselves and constantly stay fresh and ahead of things. This is vitally important for employee retention and continuity of business.

Switching gears now to today, what’s exciting is of course everything in the artificial intelligence space. It is the platform for everything. It's in your sprinkler system, in healthcare, in education, even in art. Then there is blockchain, another exciting new platform technology that will change the banking industry and the advertising industry. It will be exciting to see which applications will be reinvented on top of blockchain.

In terms of Horn Group and its longevity, a couple years ago, I started to think about my own plans for the firm. Ultimately, I decided that it would be the most prudent to go down the acquisition route and sought to be acquired. That was a big decision for me, having been so fiercely independent for so, so long.

It was in 2015, after the holidays, I decided, okay, I'm going to do it. I hired a broker. I put together a presentation, was showing it around to various companies, and got it down to a short list. Then I met Peter Finn with Finn Partners. It took us about seven or eight months to do a deal. My key criteria were: will my culture, will my people be a good fit here, and will they want to stay here? Will I be happy because I have been an entrepreneur for so long? It was a very successful deal, and I ended up overseeing the global technology practice for Finn Partners, which is their largest practice area. Now they're about a $100 million company, and I think the tech practice was about 25% of that, maybe more, 30%.

It was a very entrepreneurial position, and it was wonderful to spread my wings and to bring my relationships to the table, but to leverage the power of a much bigger firm from a global perspective. They have a growing digital group, a healthcare group, a consumer group, higher education and even a financial services practice. They continue to grow by acquisition. If I had to do it all over again, I would absolutely sell to Finn Partners. I am consulting for a handful of clients that are still from the Horn Group portfolio in both New York and San Francisco. And, I'm thinking about what's next for me. That's kind of longwinded, but that's a summary of my story.