I have been telling some of my friends "I started my career when the pendulum said "Build systems, don't buy them". Since my first implementation (a mainframe application in 1983) I have enjoyed a glory time for packaged applications and related services. However, I am afraid I will end my career with the pendulum swinging back to "Build, don't Buy"
Ok, for starters, I am not retiring anytime soon, so this is not likely to happen for a few years. But then, I have been saying it for a while. In SAP Nation 3.0, which came out two and half years ago, I wrote
"Enterprise vendors, who were sitting so pretty at the turn of the century, have lagged in many new markets, as profiled in the last bunch of subsections (I had identified markets like smart products, digital marketing and the Industrial Internet they missed)."
and
"More alarmingly, we are starting to see customers get tired of waiting for vendors and go back to building their own replacement systems. With microservices, open source and other options, we are seeing the pendulum swing away from buy back to build. That’s a stunning reversal from the 1990s."
What happened last year has only accelerated the pace. We saw new ways of doing business (micro-fulfillment, telemedicine, virtual open houses in real estate etc etc) in most industries and geographies, but many vendors continue to sell what they had in the bag in January 2020.
I saw The Shawshank Redemption recently (for the nth time) where the Andy Dufresne character says at a pivotal point "Get busy living or get busy dying". And I asked myself why are we wasting time with vendors which 2020 confirmed are the 'living dead", when there are so many others are vibrant?
Let's talk about the vibrant ones first. Whether you think they can get there or not, I love Salseforce's ambition to get to $50 billion in 5 years - 2.5 today's revenues or Workday with its goal of $10 billion by 2025. My recent conversation with Tyler Prince, who runs Global Alliances at Salesforce only confirmed it.
You can see the whole interview with Tyler here and he talks about how Salesforce ISV partners like nCino helped banks through the pandemic. He talks about how SI partners pivoted to a world of virtual deliveries. How with the Slack acquisition Salesforce is helping customers deliver Success from Anywhere with the continued chaos of COVID workplaces. How the TrailBlazer community continues to blossom.
In background, we had a chance to reminisce a bit. Tyler and I helped Price Waterhouse set up a software intelligence group - an internal, mini Gartner - in the early 90s. Tyler reminded me we "found" i2, Commerce One, Platinum Software and many other vendors and introduced them to the PW field. Most of those vendors are a distant memory - as they have changed names or are part of other entities. But it reinforced to me, Salesforce has been busy living.
There are many others who are keeping up with rapid changes. In a book, I recently helped narrate for a CEO I talked to a number of companies which are dramatically reshaping their business models to outcome based contracts and developing platforms like those of Apple and Google. I have talked to strategy consultants and investors who are putting together application portfolios for micro-verticals most vendors know very little about. More proof of busy living.
Now for the living dead. While they continue to invest in areas like quantum computing, they have done little to help move along the enterprise application game. If anything, their products and services burden applications with a significant layer of overhead.
Take Arvind Krishna, the new CEO at IBM. He inherited from the previous CEO, Ginni Rometty a labor-intensive outsourcing business and an aging systems software portfolio where application assets like Maximo struggle to be recognized (Tivoli, Domino - want me to go on?). Ginni herself was dealt those cards by Sam Palmisano a decade prior. IBM now has a cash dividend yield which makes some public utilities look stingy. Not my idea of "get busy living" in this vibrant digital market.
Or Oracle. It continues to spend billions of dollars in legal fees trying to protect a business model of maintenance revenue which is decades old. Think how long it would take them to move to outcome based models. They call themselves an ERP vendor, but hardly ever talk about operational areas. They spent billions acquiring retail, utility, telco and other vertical industry assets but largely talk about their cross-industry accounting and HCM products. The cross-industry space is one of the most crowded with competitors. Their prerogative - but not my idea of "get busy living"
In contrast, there are companies like Amazon and Spotify delivering ecommerce and fulfillment capabilities to thousands of small merchants. On a pay-as-you-go basis. There is Zoho which has taken a page out of Amazon Prime and keeps delivering to thousands of SMEs more apps each year for the same price as part of its Zoho One suite. Think these customers are going to sign up for Oracle or NetSuite licensing and IBM's hybrid clouds and services given the price points and convenience they have become used to? Or even large companies - I know several executives who have unwritten "no new purchase" policies around vendors who have treated them like cash cows over the last decade.
Don't mean to pick on just those two vendors. There are many other vendors who have wasted much of the last decade.
They have been busy:
- renaming products (over and over) instead of building new functionality
- pretending to be focused on UX and "experience" when much of the innovation there has come from consumer tech.
- investing heavily in analytics and cloud architecture but not growing their geographic or vertical functionality
- continuing to rely on armies of people when they should be automating and moving to digital services like their customers
- screaming about machine learning when very little customer data is available in their clouds or worse, is locked up in customer data centers their machines cannot learn from
- scheming to charge more for the same while claiming to be proud about Moore's Law
- bragging about their diversity, their "ethics", their green policies. Nice, but how about also some new features and functions?
I do hope they turn around. I am reminded of this quote from Hemingway's novel The Sun Also Rises
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually, then suddenly.”
I plan to spend much more time with those busy living. And especially with those that recognize they are at a critical juncture and like Andy decide they need to do something radical.
Marc Benioff, CEO of Salesforce, has long preached the Zen Buddhist concept of Shoshin = Beginner's Mind. Look at everything afresh, even if you are an expert in the field. He said again recently "In this new world, if you're not cultivating a beginner's mind as a CEO, you're making a mistake."
I could not agree more. Pivots, rebrands and turnarounds are always more fun to work with. Let's get busy living. So many new applications to create and deliver.
Marc Benioff's bet on 'Trusted Enterprises"
Marc Benioff, CEO of Salesforce, used his keynote at Dreamforce to point out that we are "in a trust crisis". He coined a new term, Trustblazers, building on the successful Trailblazer community around the company. He showcased several of his customers as examples of "trusted enterprises" and promised “We want to have a playbook for this new trusted enterprise. It‘s got to start with trust. It has to.”
Watch the rerun here
To me, Marc and his team definitely have the credibility to talk about "trusted enterprises". As far back as 2010, I wrote "I saw several signs of openness - like its trust site which showcases performance metrics for all, including competitors, to see. How many vendors, even years after salesforce started that site, openly showcase their operational metrics?"
When Marc talks diversity and inclusion, I see it in his executives like Tony Prophet, Neeracha Taychakhoonavudh and Jujhar Singh. Not only are they competent, they are modest enough like Tony is in the interview linked to say, they themselves have a long way to go. I hear it in the words of Tyler Prince when he describes how he has also pushed a focus on diversity in the ecosystem around Salesforce.
He has credibility as customers plan for COVID recovery with the push around his recent acquisition, Slack as a collaboration, work from anywhere, platform and as he calls it his "Digital HQ"
What I would caution Marc (and other influential executives) about is the zealots who jump on the bandwagon of "causes". I recently commented on Dennis Howlett's post on "Wokeistan" "These are do gooders who guilt us all about gender, race, sexual orientation, inequality, sustainability, vaccines and so much else. You must agree with our position - don’t dare present contrary data or else you are racist, sexist, MAGA, deserve canceling, and worse."
Let's look at sustainability, as an example. We should have been focusing on the "circular economy" which the WEF defines as “an industrial system that is restorative or regenerative by intention and design." Instead, a lot of attention has gone toward demonizing fossil fuels and building up renewables, particularly wind and solar fuel.
As Europe stares at a winter with major fuel shortages, it is useful to learn from the German experience over the last decade
I started pointing out a few years ago that "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."
However, most just lauded Angela Merkel as Klimakanzlerin or "climate chancellor". Now that she is out of office, we are starting to see sobering assessments. Here's Bloomberg, The Wall Street Journal and New Statesman.
The reality is Lufthansa will fly on aviation fuel, the German export engine will rely on tankers which run on bunker fuel, German auto makers will make diesel cars for a long time. Look at this site about carbon intensity (the amount of CO2 produced to generate a unit of electricity - a kilowatt per hour) across Europe.
The important thing is not to just focus on Germany which looks a bit stark. Look instead at how green France, Iceland and Norway look. They have done so with a focus on nuclear, geothermal and hydroelectric power It is a reminder to other economies to not just look at renewables. We should all be looking at a balanced energy strategy. And expand the definition of sustainability.
In their fervor, fanboys actually hurt the credibility of so many other worthy causes. I can provide several more examples around many causes where they have narrowed the focus. Hope Marc emphasizes a 360 degree view as he builds the playbook.
In the meantime, watch the keynote and Marc's passion about building trust.
September 27, 2021 in Industry Commentary, Leadership during Crisis, Sustainability, Green Computing | Permalink | Comments (0)