deal architect

The Dynamic US Industrial Revolution

I have been saying for years (while collecting data for an unfinished book tentatively titled “The Invisible Middle Class”) that the US is largest consumer economy in the world. Not just our 800 or so billionaires. We have 25 million (yes!) millionaires. Costco is estimated to have 70 million households as members with over half with annual income of over $100,000 a year. Many more factoids in the book.

This economy DESERVES a lot more making and hiring right here. Makes even more sense after COVID showed us cross-ocean supply chains are chaotic. Makes more and more sense as our plentiful gas delivers cheaper and cleaner energy compared to coal, lignite and renewable fuel in many overseas locations, More of a bonus – Trump’s taxes will turn making in the US even more attractive. And to super-size it all that you can avoid the Trump tariffs by making here

It is a no-brainer.

So, no surprise in the last couple of months, many MNCs have announced nearly $3 trillion in commitments to make here. They include Honda, TSMC, Hyundai, GE Aerospace, Apple. Johnson and Johnson and several others.

What’s especially attractive is the new plants, warehouses, farms, data centers will have plenty of robotics, exoskeletons, drones, sensors and AI and a leaner, next-gen data savvy workforce.

In our recent fiction book, The AI Analyst, we have a company called Polestar showing many examples of that. It combines agentic AI with humanoid robots and other automation for firemen, shop floor workers, pilots, doctors and many of the 800 occupations the BLS tracks.

Jensen Huang, CEO of NVIDIA made that non-fiction last week by showing off a robot on stage at his GTC event and talking about “physical AI” to build on the digital AI use cases his GPUs are already facilitating . He also talked to Jim Cramer about making in the US “ We’re enthusiastic about building in America as anybody. And so we’ve been working with TSMC to get them ready for manufacturing chips here in the United States. We also have great partners like Foxconn and Wistron, who are working with us to bring manufacturing onshore”.

Vice President JD Vance took it another level with his presentation to the American Dynamism event and talked about turbo charging our ship building, auto and other sectors. Worth watching his 25 minute presentation below - talks about global economics, AI job loss concerns and even the Pope's view of technology and labor.

Then you have the “Next Generation Air Dominance” F-47 fighter plane which Boeing is developing (the “sixth generation” fighter is still cloaked in secrecy but is said to support broadband stealth and ‘spectral’ warfare capabilities.)

Add Elon Musk’s plans for a Mars shot.

So while several countries are bitching and moaning about tariffs, the American Industrial Revolution is rapidly building momentum.

Burning Platform: AI and Global Competition in the Trump 2.0 Economy

For the 131st episode of Burning Platform, we host Mark Montgomery, Founder & CEO of KYield, Inc. He is a pioneer in AI systems having invented KOS, the first enterprise AI OS of its kind, developed from the theorem stage in the 1990s. He was formerly an entrepreneur, consultant and VC.

We focus on the fast shaping economy in the second Trump administration. Over the last month we have had similar conversations with other software veterans, John Wookey. and Bill Hewitt

We aim to keep the discussion un-political and focus more on business opportunities and risks. Mark comes from a military family– as he says he was a “NATO kid” and his father was a US Air Force officer, so I especially appreciated his highlighting national security and other cautions. He has communicated to the Trump administration his concerns both its first and second terms.

They include a recent submission in response to the RFI from the Office of Science and Technology Policy (OSTP) on the Development of a national AI Action Plan. He included the following:

“In contrast to many of our peers, rather than release advanced AI to the public prematurely, thereby unleashing significant risks, we made the choice to follow best practices in safety engineering required of other high-risk industries, including the handling of nuclear and biohazard materials. Our reward for doing the right thing in the current U.S. AI market has been severe financial punishment, whereas other companies in our industry have been rewarded with $10s of billions of dollars for doing what leading AI scientists have warned to be reckless, including causing existential risk.” He elaborates on them in the video below.

He raises other concerns when our conversation shifts from AI to global trade and immigration. He has long lived in the US Southwest, particularly in the state of New Mexico and has seen up close the risks of open borders. He is concerned Trump is biting off more than he can chew by putting tariff walls simultaneously against so many countries. As he says “if you could negotiate a grand,free trade agreement that had teeth that would be great. I'm not so sure that negotiating on on Twitter, one prime minister at a time is a way to do. It would be fantastic if you could include non tariff issues too.”

We cover plenty more ground in about 50 minutes. You (and I) may not agree with everything Mark says but I appreciated his caution on the massive investments we are making in LLMs and GPUs and the global competitive and security threats we may be underestimating.

I am going to invite other business executives to provide similar perspectives on the Trump 2.0 economy in future episodes.

Analyst Cam: Unbeatable 2.0 - a book on the State of the SAP economy

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

Paul Coetser of Big Blue Advisory in Australia is a frequent guest on our video channel. He shared with me an advance copy of his new book, Unbeatable 2.0. I wrote a foreword for it – see an extract below.

I also invited “The SAP Whisperer” to summarize the contents in this episode. We discuss among other things

- The state of migration of the customer base away from ECC to S/4HANA
- The momentum behind RISE and GROW
- The new Business Data Cloud
- Joule agents and broader AI trends
- The state of automation SAP’s ecosystem is using on migrations

Very nicely done in about 35 minutes.

Burning Platform: More on the Trump 2.0 Economy

For the 130th episode of Burning Platform, we host a repeat guest, Bill Hewitt. Founder, Windmill Hill Advisors. He is a 30 year veteran of the software industry, having held senior roles at companies like IBM, Hyperion and Peoplesoft. For the past 20 years, he has been a 7 time CEO, and currently works with Private Equity sponsors to improve portfolio company performance.

This time, however, we touch on the fast shaping economy in the second Trump administration. Couple of weeks ago we had a similar conversation with another software industry veteran, John Wookey.

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

We broadly cover 3 themes

• Nationalism vs. Globalism and the effects on global trade
• DOGE and how it can apply to business, and
• How immigration policies impact business growth

Bill discusses how over the course of a century the US has evolved from a domestic economy to global supply chains. However these supply chains have brought logistical challenges and costs across oceans and the pendulum is swinging again. I point out the US is the largest consumer economy in the world with 800 billionaires but even more importantly 25 million millionaires and a strong middle class. It makes a lot of business sense to make close to this large demand. Especially given the opportunity to avoid post-COVID supply chain issues and the fact that the US can offer plentiful cheap, clean natural gas fuel.

Bill points out he is on the board of two companies in Canada. “There's a fairly significant anti American sentiment among the politicians and the media. Business owners on the other hand tend to take a longer term view, because they have to. They're not swayed by the media”

We also discuss that next-gen manufacturing, logistics, farms etc. will be heavily automated with robots, sensors. autonomous vehicles and AI. We have still-active execs like Jeff Bezos, Elon Musk, Tim Cook, Marc Zuckerberg and others who have shown the art of the possible in warehouses, plants, space, data centers in the recent past. As I say “They can help. If you want to build here, we'll bring them in and help you make sure your concerns (about talent shortages) go away.”

We next discuss DOGE and efficiency in government. Bill says “All Elon Musk is saying is we are spending way too much money. Most companies, do that - based on where they are in their stage of growth, are they organized the right way? Do they  have the right mix of skills and talent? You have to analyze that on a frequent basis. If you don't, you become Xerox, you become Kodak, you become a company that stops looking at the market and the forces that are affecting you. We are $36 trillion in debt. We are spending at a rate that's unsustainable.”

and

“What are the core essential things that we need to satisfy the taxpayers who are providing this funding to the government? What are the social programs that we need to keep a contract between the government and the taxpayer, and what do we have left over to make sure that we are able to spread our message of freedom and democracy, because that's been a key tenet of our Republic for so long.”

I point out Elon is uniquely qualified to assess efficiency opportunities. During a visit to the SpaceX Boca Chica, TX facility I heard a startling factoid. They were lowering the cost of getting a payload into orbit down from $10,000 per pound during the NASA Space Shuttle days to about $9 per pound. Musk had shown similar adeptness when he significantly trimmed Twitter staffing after he acquired it.

We next turn to immigration. Bill goes “what immigration does is help fill in the gaps of our national construct. Because if we tried to satisfy our appetite with local labor every family would have need to have six kids. And it's a real fallacy to say, well, immigrants only do the low skilled work, because we know we have brilliant scientists, doctors, computer scientists, people in every walk of life that are immigrants, that contribute to our economy.”

He adds “We need people who want to be here, people who want to be part of our nation and part of that national identity, are enthusiastic about contributing to the economy versus taking from the economy. And finally, gratitude for everything that this country can provide, versus saying, no, the beliefs that I bring with me are the most important thing, and so I'm going to try and rebuild those here. You have to be part of this national identity in order to be a long term contributor to the economy”

I add color with my own journey as a talent based immigrant to the US – the long process it took for me to become a citizen, but how that vetting was so important and the time allowed for better assimilation into what Bill calls the “national identity”. I add we need to dust off and update that “process” to restore confidence in our immigration policies.

We cover plenty more ground in around half an hour. It was a real joy to watch Bill calmly discuss the state of the economy while Wall Street and the world are reacting so emotionally to Trump.

I am going to invite other business executives to provide similar perspectives on the Trump 2.0 economy in future episodes.

A time to reap, a time to sow

I have had the good fortune (or curse) to survive several recessions and market meltdowns over my career – Black Monday in 1987, Dot.com bubble burst in early 2000s, the housing bubble in 2008, COVID crash in 2020 and many more. 

While none of them were fun, I have noticed a common pattern – most of our industry tends to turn cautious and retrench when actually it is a great time to catch up on missed and upcoming opportunities. And with lowered Wall Street expectations there is often a window of opportunity to invest more in R&D, data centers and other assets to grow your footprint.

As we look at the current Wall Street meltdown and signs of recession, let's look at opportunities we missed in the last five years, and what is plausible in the next five.

A look at the recent past

Look at how many applications you would have struggled to sell in 2020, but you could have sold since to hundreds of customers if only you or you partners had developed them 

Think of how much had changed in daily life thanks to COVID, Ukraine war and massive digital transformations – telemedicine in healthcare, product delivery and returns in retail, mobile banking, real estate virtual open houses and digital paperwork, EV charging and billing, CPQ for Industrials which bundle product, monitoring, spare parts, financing and other elements. And many more

Going beyond the western world you could sell even more if you had localized for India, Cambodia, UAE, Kenya, Nigeria, Brazil and so many other markets which are growing much quicker than western economies. Just look at places hyperscalers have recently opened data centers as starting points.

These opportunities are still open. Not only will you be building unique transactional capability, you will be building domain expertise and operational data which will also allow you to develop unique AI use cases.

A look at the coming future

While the Trump 2.0 economy is a bit bumpy. it provides a great landscape to run scenarios. His tariffs will lead to make and hire more in the US. In the first 2 months, in spite of all the noise, it has already picked up commitments for $1.7 trillion from MNCs like Honda, TSMC, Apple and others. These will be next gen facilities – lots of automation – AI, robotics, sensors, exoskeletons, GPS etc. and AI savvy workers . Many changes coming to fintech, defense, pharma, mining, space, agribusiness and other sectors.

Don’t just think Agentic AI, look at occupations as verticals and convergence with humanoid robots, UAVs, drones etc. Solutions you could put together with a new breed of partners. Don’t just think Agentic AI for SG&A functions, think of CoS line items and partnering with customers for unique vertical operational data. Look at the AI use cases some of the leading Wall Street firms are dreaming up, filing patents for and even having their CEOs actively involved in the visioning.

Trump 2.0 is also turning the world upside down. In the US, growth will be regional as states compete to attract MNC investments. Ukraine, Israel, the Middle East, Greenland? No need to speculate – most vendors have a long way to go to catch up to even SAP’s 60 or so country localizations. 

Also rethink ecosystems. Some SIs are starting to use LLMs to bring efficiencies to their own DevOps, testing, data conversion etc. Time to demand more from them so they move away from their addiction to the "school bus" model. Need more partners with product design, logistics, shop floor and vertical operations domain expertise. New more partners in non-English, non-Western markets. Also think anew of customers as "partners" for their domain expertise and even for licensing of their operational data to anonymize and train your models.

Sridhar Vembu of Zoho recently tweeted a perspective on what is ailing the software job market – “AI is not taking away jobs (not yet anyway)” he says. I agree with him - software talent is not the constraint. Unique domain expertise and data is what’s scarce.

This is no time to retrench. It’s time to think much bigger and very differently than we have in previous slowdowns 

Analyst Cam: ZohoDay25 - The Back Story

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

My favorite vendor event is the Analyst Summit. In our recent fiction mystery, The AI Analyst, a character describes them

“Those (analyst) briefings have become extremely complex. About a decade ago, Workday pioneered an Analyst Day where it encouraged analysts to tweet. It was an electric environment as management took loads of questions and analysts live tweeted the exchanges. Soon after this, many vendors adopted the same approach. An Indian vendor, Zoho, had taken it to a new level as they flew selected analysts for a week-long trip to its HQ and to its CEO’S farm in South India. It was meant to showcase the firm’s culture and how it was a family to its employees and provided for schools, hospitals, and other facilities.”

The book also describes an Analyst Summit at the Inn at Spanish Bay in Northern California.

While I publish my perspective from such events on LI, X, Instagram and my blogs, I like to invite vendors to present on the prep and summary of the sessions and the hospitality. Zoho always takes me up on that opportunity

Mira Natrajan, part of the Corporate Communications team presents below on ZohoDay25 held recently at the Horseshoe Bay Resort in Texas Hill Country. It fits in with Zoho's corporate preference for secondary and tertiary towns and focus on rural revival.

She covers the unique branding Zoho’s amazing creative team conjures for each event (see more about the creative team here), details of the history and campus of the facility, the sessions and social agenda, the demographics of the audience, summary of some of the key sessions and contrasts this event to those in previous years.

Very nicely done in about 35 minutes.

Analyst Cam: Service Performance Insight - State of the Professional Services Market

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

Dave Hofferberth is founder of Service Performance Insight. SPI is a global research and consulting firm helping PSOs improve productivity and profitability. Since developing the PS Maturity Model™ in 2007, SPI has become the industry authority, with over 50,000 organizations leveraging its insights to drive service excellence.

He presents below a summary of results from his firm’s 18th annual Professional Services Maturity Benchmark. He also kindly shared with me the 259 page report which is chockful of detailed data. You can buy a copy here.

I love that he has an expansive definition of “professional services". His firm tracks metrics across 7 categories of firms

• IT Consulting
• Management Consulting
• Services within SaaS vendors
• Services within Software vendors
• Architecture & Engineering
• Agencies
• Other PS organizations

His surveys measure firms across 5  organziational“pillars” and places them in 5 levels of maturity. Only 5% of the 403 firms surveyed this year qualified for the highest level.

I particularly liked his summarization of 2024 results into high level sector trends like “revenue growth dropped to 4.6%, down from 7.8% in 2023 and well below the five-year average of 8.7%.” and recommendations for 2025 like “Deploy AI with Purpose” and “Recalibrate the Workforce Model”

He is very generous with his findings in the presentation below but as you can imagine he has a goldmine of data from each year’s survey of hundreds of firms. Reach out to him to tap into his vast knowledge of the sector - he has been covering it for 27 years.

Very nicely done in about 30 minutes.