Ten enterprise trends from the COVID-19 pandemic

In December, I wrote decade-end perspectives on enterprise software and services. You can read them again here and here.  

So, how has the pandemic changed the landscape? In many ways, it has exposed the weaknesses of many software and services vendors. In other ways, it has opened up brand new opportunities. Here are ten observations from many executive interviews - nearly 50 of which are public in this series on "acrobatics during the crisis" I have been running here 

1) Moore's Law is being applied to humans with stunning results

In all the doom and gloom around the virus, it is easy to miss the amazing acrobatics we have witnessed both in healthcare and life sciences. Telemedicine, pop up hospitals, medical professionals parachuting in wherever needed. Healthcare professionals have learned so much from the Italy and NY experience - how not to overuse ventilators, how to flex ICU capacity. Therapies like Remsdesivir, Dexamethasone and Convalescent Plasma have kicked in. All kinds of vaccines are being developed, clinical trials being accelerated like never before. It's too early to declare victory but if the current spike in positives that many US states are experiencing had happened in March, we would have seen far worse crowding in hospitals and many more fatalities.

It has opened the eyes of executives in every industry to opportunities in healthcare  -  a fifth of US GDP is spent on that sector. Auto companies helping with ventilators, distilleries making hand sanitizers, everyone looking to make or disinfect PPEs, technology companies helping with contact tracing, statisticians looking to improve pandemic modeling and on and on

However, just because you serviced that sector in January does not guarantee you continued success. The expectations of exponential improvements in functionality and speed of delivery have been raised and there are competitors approaching from everywhere. Just look at COVID testing. The US has done over 50 million tests in just 4 months and yet the process feels so slow and cumbersome. There is immense pressure to move to 10-15 minute test results available at point of care. That's coming - and soon, given the speed at which our expectations are running.

2) Cloud apps supported WFH well....but....

In interview after interview, CIOs have talked about the heroics it took them to provision employees as they moved to WFH. Most also compliment how well SaaS applications scaled and supported WFH in comparison to on-premise applications, especially in self-run data centers. But dig a bit deeper and they also share all the complex protocols they are having to factor as they reopen plants, warehouses, stores, delivery vehicles, airplanes and other sites where physical presence is critical and WFH cannot help. Ask them what those on-prem systems supported and many will tell you about critical operational areas that SaaS applications have not tackled yet. Even if they could support those areas, justifying a move to SaaS in today's economic conditions is tough. If anything, moving legacy applications to IaaS looks more appealing.  Others tell you about problems with WFH in several countries with poor last-mile connectivity, and with employees with kids at home (increasingly complicated by complex decisions around whether school districts can re-open physical classrooms after summer). Long and short, be careful selling WFH support as your most beneficial "feature".

3) Video was not the only killer app

The Berkshire Hathaway annual meeting is a cult gathering for many investors. It was a virtual event this year. More emphatically, Warren Buffett talked about his long time partner, Charlie Munger who was not at the meeting "Charlie at 96 is in fine shape. His mind is as good as ever. His voice is as strong as ever, but it just didn’t seem like a good idea to have him make the trip to Omaha for this meeting. Charlie is really taking to this new life. He’s added Zoom to his repertoire. So he has meetings every day with various people, and he’s just skipped right by me technologically." 96 year old Charlie and many other senior citizens whose last technology upgrade was a Kindle reader have adopted Zoom. All of us have our Zoom bombing stories. I could add to those my experiences with MS Teams, Google Meet, Skype, ON24, Streamyard and other platforms. I have been cataloging the art form of virtual backgrounds - see here. So, yes, video has definitely been a killer app in the last few months.

But, even more so have been revenue facilitating, industry-specific technologies. Telemedicine in healthcare, PPP loan and mortgage processing and mobile banking in fintech, drive-thru support for the food industry, last mile logistics for grocery stores and restaurants, contactless checkin at airlines and hotels, distance learning in education - the list is long of applications which were life savers for certain industries. Your grandparents probably know all about Zoom but likely have no clue about nCino or Teladoc or Shopify though these vendors have allowed many customers to survive and even thrive in the last few months.   

4) Get ready to hear more about these two acronyms

L+S - "lift and shift" legacy applications to cloud infrastructure at hyperscalers like AWS, Microsoft and Google. Do it to reduce your data center costs. Do it to improve security and scalability. Yes purists will argue you don't get multi-tenancy advantages of SaaS. Yes, but SaaS may not offer the industry functionality. Additionally, SaaS vendors continue to depend too heavily on partners for labor intensive migrations. Interestingly, I had called Oracle's IaaS opportunity bigger than that of Amazon's back in 2016. That called for L+S of their PeopleSoft, JDE, EBS customers. Since then. Oracle's 3 big IaaS competitors have grown their cloud footprint significantly. 

3PM - Third Party Maintenance never went out of fashion. In a recession, companies will look at it even more. With travel restrictions, the remote support model of 3PM vendors may allow them to even expand their footprint to broader Level 2 and 3 support.

5) The world is definitely not flat

In a world of travel restrictions and two-week quarantines, globalization is increasingly a dirty word. The reality is COVID-19 was not consistent in its geographic impact. The global recovery is already shaping up as uneven. It will mean new opportunities for regional players, expanded software functionality to markets that are recovering quicker, a redistribution of global delivery centers and reshaping of global supply chains. Now is the time for buyers and vendors to also be rethinking their global IT supply chains and offerings.

6) Remote services are only the start

I wrote a paper at Gartner in 1998 where I pointed out just the travel expenses (not their much higher fees) of systems integrators were often greater than the cost of the software they were implementing. I also pointed out the productivity impact of 4 day SI on-site weeks and health issues from continuous, long-term travel. Buyers and vendors would agree on ways to cut that back on travel, but it was grudging. Even offshore vendors which had honed the discipline of remote support were proposing much more on-site support. Suddenly, there is no more grudging. Remote diagnostics, remote delivery, remote support are hot. But it should not stop there. Outsourcers should be thinking about shared services  - data conversion, testing, training "factories" from where specialists should be helping multiple customers, not just one project at a time. And as that knowledge gets codified to then move to automate many of the tasks.   

7) Executive Changes at Vendors

Many people have been puzzled by sudden executive changes at a couple of large vendors. I am expecting many more. Aging workers and execs across industries are looking at early retirement or at least slowdown scenarios. The last 3-4 months have been traumatic. I have heard of unbelievable efforts and wonder if the pace is sustainable. Many of these execs look at their pipelines and workloads and think the next couple of years will not be much fun.  Or they have finally had time with family and want a bit more of that. Given uncertain markets, layoffs combined with new employees from M&A opportunities, I am expecting to see many new executive faces

8) Digital Twins - with an emphasis on Twins

In my conversations I have repeatedly heard about digital acceleration during the crisis. In this interview with Tamas Hevezi I discussed examples from a wide range of industries - healthcare, retail, banking, higher ed and many countries like Japan and Germany. 

However, I am worried we will starve the physical/analog experience for customers and employees. Ideally, we end up with parity between the digital and physical worlds. Let's treat the twins equally well. 

9) Full-spectrum automation

In my book, Silicon Collar, published in 2016, I had profiled automation trends across a wide range of work settings - at accounting firms, on the basketball court, in banks, on the battlefront, in digital agencies, in the oil patch, in R&D labs, on shop floors, in wineries, in the warehouse and many more. During this crisis, I have heard of many more use cases for drones, kiosks, shop floor and warehouse robots and autonomous vehicles.     

Most of the software and services world has largely defined automation as machine learning and RPA. HR groups have watched automation from a distance - the lead has often been taken by operational executives. Lots of changes are needed as a new wave of automation arrives.

10) Certainty is even more elusive than toilet paper

Partly because it is hurricane season and I live in Florida and partly because pandemic modeling has been so chaotic globally, I have increasingly been thinking about my case study on the National Hurricane Center and my update from a visit there in 2018  The NHC has long understood the track of a hurricane (what they call cyclones) swings wildly and they talk in terms of "cones of uncertainty". In their lingo it is "The cone represents the probable track of the center of a tropical cyclone, and is formed by enclosing the area swept out by a set of circles (not shown) along the forecast track (at 12, 24, 36 hours, etc). The size of each circle is set so that two-thirds of historical official forecast errors over a 5-year sample fall within the circle." The NHC has tons of historical data, but they refresh it for each hurricane with data from satellites, Hurricane Hunter flights, sensors on buoys, dropsondes and many other sources. I am seeing CFOs shorten planning horizons dramatically, I am seeing them move to continuous planning and frequent re-planning. Certainty is an elusive commodity these days.  I hear vendors talk ML but they are still largely working from historical, internal data. They need to step up and help customers think in econometric terms with a lot of external, constantly refreshed data.

To the last point about uncertainty - the last few months have been humbling. So much noise yet so many new signals to process. I am sure I will be writing about even more trends in coming weeks.