deal architect

Burning Platform: The Trump 2.0 Economy

For the 129th episode of Burning Platform, we host a repeat guest, John Wookey who is a long time veteran of enterprise software world. This time, however, we touch on the fast shaping economy in the second Trump administration.

We aim to keep the discussion un-political and focus more on business opportunities and risks.

I start off by pointing out Washington, DC has not seen this level of intensity since Newt Gingrich launched his 100 day Contract with America as Speaker of the House in 1994. And Trump is setting an even more blistering pace.

We discuss DOGE – Department of Government Efficiency. Presidents Clinton and Obama had attempted to tackle waste in our Federal Bureaucracy. Differently this time we are trying it with someone from the private sector – Elon Musk and a group of 100 young whiz kids. We discuss how Elon is taking a high-tech sector “fail faster” approach – ok to make mistakes, don’t sacrifice speed. I use a quote I learned very early in my Price Waterhouse career “Better to be approximately correct than to be precisely wrong”

We discuss if DOGE principles can be applied to the private sector and to state and local government. John thinks the private sector in some ways is ahead of the Feds and cites his experiences at Oracle and Salesforce with CEOs Larry Ellison and Marc Benioff assisted by executives like Safra Catz and Jim Cavalieri. He is less certain about its applicability at the State and Local government level. We discuss the significant differences between California and Florida which would influence any such attempts (I did not mention it in our conversation but a significant portion of Trump’s cabinet is from Florida and that could improve chances of success there. The state is running budget surpluses today but that can quickly turn south)

We next turn to tariffs. Neither of us is thrilled with them but I point out I hope foreign MNCs get around them by “making and hiring” in the US. Our states will have a feeding frenzy to attract MNCs who show an interest. John says he is proud his preferred car brand, Subaru, has a plant in Indiana. (BMW has one in S Carolina, Hyundai in Alabama, Totota and Daimler have them across several states). And COVID taught states like Texas and Florida to refresh their relocation value propositions.

I point out the new plants and warehouses they build will not have circa year 2010 designs – they will be heavily automated with robotics, AI etc. That allows us to segue into a discussion on our talent and education. John laments as a country we have had too much focus on white collar education. We discuss Mike Rowe and his crusade to make blue collar and trade jobs more attractive to our young,

We discuss a concern of mine that our utilities could become a road block to the resurgence of plants and distribution centers here – especially as they are already struggling to keep up with AI data center and EV charging demand.

We also discuss immigration reform (the need for legal compliance and immigrant assimilation into society, balanced with the need for speed), automation in construction and farming, and several other topics. At the speed at which Trump is moving, we did not get to discuss his idea for a “Gold Card” investor visa.

Still, we cover plenty of ground in 50 minutes. It was a real joy to host John with his pragmatic views on most things in life. I am going to invite other business executives to provide similar perspectives on the Trump 2.0 economy in future episodes.

DOBE – Department of Business Effectiveness

I am encouraged by Elon Musk’s start on his DOGE initiative. While many nitpick, he is helping President Trump deliver to my first ask in this post I wrote last August about my 10 expectations for POTUS 47. It is just a start and I agree with Mr. Wonderful – Kevin O’Leary that the DOGE team should increase the speed and volume of these cuts. He says they should “cut, cut, cut, cut, cut” while the president has a “24-month mandate” between his Nov. 2024 election victory and the 2026 midterms.

We have $36 trillion in national debt. Speed is critical. Fail faster, I say – don’t fall into analysis paralysis.

I am also a fan of Trump’s tariffs as they help deliver to my second ask in August. I wrote “The US has been running trade deficits for decades. Trade deficits mean we keep exporting good jobs. We are chumps who continue to believe in ‘free trade” while China, Germany, India and so many countries continue to take advantage of our openness. Trump tried with tariffs on imports. We need much more. We need foreign companies to make and hire more right here at home. In turn, we also need to encourage more US companies to urgently adopt an export mindset.”

Tariffs also help deliver to my first ask in the revenues they raise. Trump has talked about an External Revenue Service and shrinking the Internal Revenue Service. I am ok with having MNCs from our trading partners pay for access to our market – the largest in the world. It should motivate them to make and hire more in the US.

And I increasingly listen directly to businesspeople, and much less to the noise from media (mainstream and social), about how they will navigate the impact of both. I am already seeing companies apply DOGE principles to their own costs. In our own small business in the last year we have found it fairly easy to consolidate and cut costs in financial services, especially insurance and brokerage and in telecoms. Over two decades, our advisory business has helped many companies shrink their technology costs.

Additionally, if our trading partners are going to make and hire a lot more here, we need our talent, real estate, utilities, automation, construction and logistics sectors to be turbocharged.

I think every company, big and small, should launch their own DOBE initiative and every state and local government should start becoming responsive to those needs. There are all kinds of new revenue and expense optimization opportunities and they are evolving every day given the frenetic speed at which the Trump team is moving.

You don’t have to like the folks in DC, just take advantage of the opportunities and solve the challenges they are opening up.

Analyst Cam: Hypercard.ai by Customertimes

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

Jim Goldfinger, 40 year CRM veteran and his colleagues have built an innovation platform that sits on top of public and private AI tools and content for what he calls, “putting a saddle on a wild horse”.

His presentation below describes how sales teams, investors, recruiters and many other professionals can easily leverage the power of multiple language models for their proposals, projects, portfolios etc.

It allows for emulating the best practices of experienced resources across the enterprise through a template driven, project oriented application. It facilitates efficiency for veterans and accelerates proficiency for newcomers.

Nicely done in about 20 minutes

 

Cowbell and Application Vendors

I was chuckling to myself as I was watching SAP’s "Unleashed" presentation last week. I kept getting flashbacks of the SNL skit from the 2000 “More Cowbell” featuring Christopher Walken, Will Ferrell, Jimmy Fallon and others (see video below). It was recently featured as one of the top 10 skits over the 50 years of the show.

As a subtle part of a song, a cowbell can add a nice cadence. However, it can quickly get annoying – even hilarious as it does with Ferrell’s energetic playing.

Application vendors have a similar distraction. I have an acronym for it -“PAID” for Platform, Analytics, Infrastructure and Databases. Customers pay them for business functionality, and appreciate PAID as an underlying element. But vendors often get carried away and focus a lot more on PAID. Some of you have heard me say it is the equivalent of going to a Michelin Star restaurant and instead of being served a gourmet meal with a personal visit with the chef, you are shown to a buffet of ingredients and told to grill them yourselves.

SAP last week featured its Business Data Cloud and partnership with Databricks and the Joule agent builder. Both nice for a product demo, but does that deserve the moniker of “Unleashed” from the world’s largest enterprise application vendor and a kickoff from the CEO to a global audience? I shudder at the thought of SAP going back to a phase not long ago where HANA became an obsession for the company, and applications an afterthought.

Not just picking on SAP. If you look at Salesforce, their biggest acquisitions have been Slack, Tableau, Mulesoft – tools, not applications. I have called Oracle and Microsoft enterprise application “underachievers” – you should buy databases and hyperscaler infrastructure capacity from them, not domain expertise in form of business applications.

I cannot tell you how many application vendor execs say they want to become “platform vendors”. No wonder so many industries and geographies have so little choice in applications. I saw that in the 1980s when I had to custom build for clients functionality for multiple spouses in the HCM software sold in Saudi Arabia and when we tried to do oilfield cost allocations using a GL in the Netherlands. Even today, you cannot find many vendors who would support those and countless other needs.

Three decades after cloud applications started to show up in the enterprise, 75% of the 2x2 grid of applications by industry and geography is still pretty empty. Similarly, you can find plenty of AI use cases for SG&A, back office functions, but not a whole bunch in the COGS, operational areas. Vendors just do not have the relevant domain expertise or sufficient relevant data to train their machines.

Tone down the cowbell and PAID, folks. If we don’t build business functionality, customers will custom develop it. Many already have. We appear hellbent on shrinking our addressable market.

SAP Unleashed: Big Fish, Small Pond?

I am looking forward to hearing Christian Klein tomorrow as he presents on “SAP Business Unleashed”. In many ways, in his 5 years as CEO he has already unleashed SAP growth especially in stock market valuation. It now stands at over $350 billion, more than twice what it was when he was appointed co-CEO. It has the largest market cap of German publicly traded companies.

While that is impressive, technology market leadership has decisively shifted away from enterprise application vendors (not just SAP) to the Magnificent Seven as I wrote here. Microsoft alone is valued at $3 trillion, and just its data center capex will be more than double SAP’s revenues.

As I start my research for SAP Nation 5.0, I will be doing my usual 360 degree set of interviews with customers, partners, competitors and fellow analysts. I hope to learn more about how SAP plans to unleash even more growth in a dramatically changing world. Christian is sharing the session with several other speakers so won’t have much time, but hope to hear more from SAP over the next few months.

I am encouraged that David Lowson of Capgemini thinks SAP is already looking ahead to 2030.

“I’m pretty confident that SAP's growth and increasing cloud revenues are secure for the next few years. The move to RISE and BTP, and their acceptance in large programs, is driving that. Many large clients have committed to RISE journeys that will last several years of growth. I really think that SAP is using this period of comparative calm to think about what’s next and actually focusing on 2030, not just the end of Q1 2025. “

I would like to see a bit more urgency than 2030 given all the changes we are likely to see in business and in technology and particularly if it wants its market cap to rocket to hyperscaler levels.

Clean Core in ERP – too small a focus?

SAP has been very focused the last few years on migrating on- prem ECC customers to S/4HANA in the cloud with hyperscalers. And there it has been pushing a “clean core” message. While that makes for less custom code and facilitates IT hygiene, it narrows the functional scope to mostly accounting and inventory processes, and encourages customers to “ring fence” S/4 with even more functional specialists than they have in the past. SAP’s own presence in many non-ERP categories has suffered. I was at Paul Greenberg and Brent Leary’s IRL25 conference in Atlanta recently. They used it to announce the award winners in Paul’s CRM Watchlist. That’s not just Paul’s view of the CRM vendor space. He polled 27 analysts for input. I must have been one of the few that nominated SAP for some of the awards. There were 21 categories of awards (16 at the company level and 5 at the executive level and their assistants). Salesforce dominated the company awards, Zoho the executive ones. SAP didn't even make finalist for a single category! Its leadership is similarly challenged in HCM, EAM and many other market categories.

Trump and China impact on business

Trump’s tariffs should lead many MNCs to make and hire more in the US. These are likely to be next-gen manufacturing, logistics etc. with a lot more automation than in the past. His immigration policies will similarly lead to changes in farming, construction, other sectors. His thoughts about crypto, Greenland and Mars should impact fintech, space, mining and other sectors. China’s expansion plans are as ambitious. How is SAP preparing for changes in various verticals? SAP has historically been a leader when it comes to industry depth but many of the industry thought leaders that I had helped profile in “Business as Unusual with SAP” have moved on. I am also seeing a lot more momentum of newer players like Palantir and C3.ai and established ones like Salesforce and ServiceNow when it comes to operational experience in several verticals

The coming blend of agentic AI and humanoid robotics

In our new (fiction mystery) book, The AI Analyst, Polestar is a next-gen vendor which combines agentic AI with humanoid robots, drones, UAVs etc. Not just a software or silicon focus. Polestar also has an expansive definition of its verticals as each of the 800+ occupations the Bureau of Labor Statistics tracks. Their solutions automate limbs, eyesight and other human faculties, not just cognitive skills. Salesforce, Workday and others have already started introducing their agents to customer care, HR and other back office functions. Nobody is thinking yet like Polestar at the micro-vertical, occupational level where productivity and ROI will be pretty easy to quantify. Will SAP?

A rapidly shrinking world

SAP has led the enterprise world in localizing for 60+ countries for changing taxes, payment protocols, customs and other nuances. However, they have had sales and product leadership changes in the last year. And players like Zoho are rapidly growing data center and customer presence especially in fast growing BRICS, Middle East, ASEAN, Africa and other markets. They are selling way above their positioning as a SME focused vendor in those markets at far more competitive economics than Western vendors. Last week at a Zoho event, I heard a Dubai-based company glowingly describe their rollout of Zoho Expense for T&E management across 70+ business units in 50+ countries.

In SAP Nation 3.0  in 2019, I had invoked the US’s westward expansion in the 1800s. The rallying cry used the term “Manifest Destiny” to do so. Trump is now setting the country's visions on Mars and elsewhere as a continuation using the same term. In that book, I had described several markets SAP had missed in that decade. I had also said SAP needed its own Manifest Destiny rallying cry. I hope Christian does that over the next few months. I look forward to cataloging a much more ambitious SAP in Nation 5.0.