Apologies to Julius Caesar for mangling his famous quote but a few years ago my colleagues used to call me Vinnie Maintenance for my frequent pointers of low value from software maintenance. Nowadays, some of them call me Vinnie Vertical for my nagging vendors to develop industry-specific operational functionality
It’s too early to declare victory, or vici but there are early sings of thaw around investments in industry functionality.
Bill McDermott has hit the ground running at ServiceNow on many fronts, including the launch of two verticals, banking and telco.
The best thing at Dreamforce this year was Salesforce’s showcasing innovations in sectors like Manufacturing, Auto and Energy; Financial Services, Health/Life Sciences, and Consumer Products as I summarized here
Microsoft was out in force at the NRF retail show in NYC a couple of weeks ago, and provided several briefings on that vertical as I wrote here
I had a long conversation with Leighanne Levensaler who recently added CMO to her Strategy role at Workday and when I asked what her highest priority for this year is, she replied ‘Industries’
I talked to execs at Infor and Unit4, both of which have already invested in several verticals and thought they would be slowing down, and both groups said they will be doubling down on industry investments.
Interestingly, the two biggest vendors, SAP and Oracle, have not yet shown their vertical cards in the form of modern applications. Oracle with acquisitions of Retek, Micros and many others established footholds in many industries and SAP developed Industry Solutions starting in the early 2000s. Neither will just walk away from presence in key industries.
Four hurdles all these vendors and many startup and SIs who are targeting industry functionality face this time around
A) You have to think in terms of micro verticals, not broad industries - claims processing is very different for auto insurance compared to that for life insurance or for property and casualty.
B) The big opportunity is in operational areas, not just spray painting financial, hrm or crm functionality with some industry features. You cannot continue to depend on 20-30-40 year old legacy applications to do the heavy lifting there
C) You have to be contemporary - in retail, for example, you have to support automated warehouses, last mile, same day and reverse logistics, in utilities complex asset management, predictive maintenance and related service management. Very few of us had heard of those terms a decade ago. Now they are increasingly "must-haves"
D) You have to be prepared to compete with corporate buyers-turned- vendors in many of these markets like Amazon, GE, Goldman etc. If you had gone to CES this year, you would have seen many such ‘corporate vendors’ showcasing their tech products.
Urgency to verticalize is also coming from an increasingly commoditized horizontal functionality market. I tweeted this week from Zoho’s Analyst day which with its inbound, web-centric go to market, and highly efficient development and data center infrastructure is forcing a rethink of enterprise software economics.
One of the other standout items from Zoho’s event was their growing presence around countries like Nigeria and UAE which most other Western vendors have ignored. Unlike what my (new) moniker would suggest I have also been talking to a number of executives about global trends.
I have three interviews coming up next week
A) Karl-Heinz Streibich, President of National Academy of Science and Engineering in Germany, acatech talks about how he sees the next decade in Europe and the world
B) Alan Alper of Cognizant provides on-the-ground perspective from his time at the WEF at Davos
C) a conversation with Sridhar Vembu, CEO of Zoho about his Rural Revival efforts in India, the influence Japan has had on his thinking and many other global trends
A common thread in all 3 conversations is that about climate change and role of renewables and the growing backlash against technology companies. You will see more on both topics on this blog - as usual I will present many perspectives on the topics, including mine which, as readers know, is not always mainstream but hopefully will force you to pause and ponder.
Another research agenda item for this year is how SIs are evolving, automating their practices etc. I recently had a two-part conversation with Emily McEvilly and Webb Armentrout on Workday’s SI partner ecosystem. I similarly had a two-part conversation with Francine McKenna, an investigative reporter, about the risk of using Big 4 accounting firms as SIs on ERP/CRM projects. Ironically, I am not hearing much about automation, multi-tenancy, remote delivery from the services firms themselves. I am optimistic, a few of them will find that investment as a way to differentiate themselves in their crowded spaces.
So, it is starting off as a fascinating decade. Hey, it’s a new decade. Why should we expect status quo? I, for one, am very excited. And I promise to keep readers similarly excited. Expect to hear about more than verticals from Vinnie Vertical.
