deal architect

Salesforce: Plenty of growth markets

Most of the recent analysis I have read about Salesforce has focused on the stakes taken by Starboard Value and Elliott Management. Activist investors play a useful role as they push for efficiencies and resets to increase shareholder value.  I hope in this case, however, the activists don’t just use old playbooks and benchmarks. We have entered a very different world of enterprise applications. Four big drivers – COVID, the Ukraine energy crisis, climate change urgency and major digital transformations – have opened up a slew of new enterprise application markets.

Take intelligent returns in retail as nearly 15-20% of ecommerce sales are returned and have to be efficiently restocked, refurbished, scrapped or donated to charity. Or complex CPQ as companies “servitize” and bundle products, services, spares, financing and more in outcome based contracts. Direct to consumer models that take advantage of new micro-fulfillment ecosystems. Field service of complex equipment which leverage mixed reality and digital twins. Smart insurance as cars get smarter and more connected. EV battery charging operations. Applications for the emerging hydrogen economy. Applications for the growing utility prosumer market. Telemedicine. Digital mortgages.

I could highlight another hundred such applications which have emerged or accelerated in the last few years. These are nascent markets and easy to dismiss.  There is plenty of wishful thinking – help me find the next ERP or CRM market. I have been in the industry long enough to have seen when both ERP and CRM were tiny markets. I have seen them mature and I am seeing them get commoditized as too much investment has chased after core functionality in each.

I have spent a fair amount of time with Salesforce’s vertical teams and many have presented in my Analyst Cam video series. They are not anywhere as deep as SAP’s vertical capabilities but that is by design. Salesforce focuses on front office, revenue centric apps, not as much on operational areas that SAP thrives in. But compared to other enterprise vendors and even hyperscalers, Salesforce is very well positioned when it comes to many verticals. 

As I like to say business as usual, circa 2019, is a recipe for mediocrity. We have had too many black swan events in the last few years to pretend the world has not turned upside down. One of my recommendations as Salesforce and its investors chart a new course is to double down on its application savvy and lead its customers with a new generation of enterprise applications. Plenty of growth opportunities to mine and generate shareholder value. 

Burning Platform: The enterprise suite does not always win - Zoho One is a standout

In the 78th episode of Burning Platform, we host Raju Vegesna, Chief Evangelist at Zoho, a repeat guest in this series

Zoho One – also branded as “the Operating System for Business” - is a suite of 50 and growing applications across sales, marketing, finance, hr, legal, collaboration and other functional areas – see the full list here (btw it does not list the 50+ mobile apps which are also included)

We discuss a major milestone in the evolution of Zoho One – its fifth anniversary.

In those 5 years, it has been adopted by over 50.000 customers. Notably, it has also penetrated markets like UAE, Nigeria, Kenya, Mexico and others that few enterprise vendors ever cover.

The glib statement in the enterprise applications market is “the suite always wins”. Yes, it is compelling to have an integrated solution with a common UX, single version of truth across the enterprise. The reality is first-gen ERP, CRM and other suites were inconsistent in their functionality by module, often cobbled together via acquisitions, attracted lots of Sis who were comfortable in HQ functions but not in operational areas the suite promised to cover, resulted in massive overruns. My view is that experience has made enterprise buyers much more cautious and back to buying at a much more modular level. With that backdrop, Zoho One has done very well.

Raju discusses many things Zoho has done right – “a dollar a day” pricing; organic, self-discovery of applications so users expand their use of the suite at their own pace, rather than being oversold what ends up becoming shelfware; and a focus on customers without much of a legacy application portfolio to migrate.

He also discusses what’s next in the evolution of this success story.

Crisply (and modestly) done in 16 minutes.    

Workday’s Relentless Discipline and the Power to Adapt

Some of us are old enough to remember Workday’s pioneering analyst summit in August 2010. I wrote back then

“Few vendors have the guts to be open to such a smart and opinionated bunch as Workday was during its Technology Day yesterday. Like a marathon tennis match with plenty of volleys and lobs and aces, the back and forth was something to watch.  As you can see from the Twitterstream and blog posts from the day a wide set of angles were covered - object models, user interface design, change management processes, analytics and integration tools (in a SaaS market where both are still weak), stuff from the labs - tablet and voice interfaces, mobile applications - and more.”

So, when we were invited to the latest iteration of their Innovation Summit for analysts last week, I had two questions:

• How many of my peers would show up given continued pandemic travel restrictions and worries?
• What would count for innovation at a company which is now almost 80 times as large and for an event whose theme was a confident “Made for this Moment”?

The first question was relatively easy to answer. I ran an informal survey when I arrived and tweeted to a colleague

“…talking to a few analysts here, we have become more selective about attending in-person events. Travel experience is still not that business friendly. Puts more pressure on vendors to rethink events. Well-crafted analyst summits like #wdaysummit are ideal format.”

It helped that this was their first in-person summit in 3 years and they took elaborate COVID testing precautions. They shipped a Lucira kit for PCR quality testing at home. We ran a test 24 hours before our flight to Silicon Valley and repeated that test upon arrival at the event hotel. About 20 analysts showed up.

The second question turned out to be far more complex. Ray Wang of Constellation Research would have liked to have heard about the metaverse, DeFi and more contemporary tech trends. Other analysts had other questions like “what about treasury management?” I myself would have liked a bit more about how Workday is reacting given the "made for the moment" theme to current events in Ukraine and the energy transition focus it has created in every country and industry.

I have been lucky to feature in my Analyst Cam and Burning Platform video episodes several Workday executives and products in the last 2 years.  So, I expected a nice recap during the event.

What we did hear a lot about is Workday's architectural journey, their distinct M&A strategy and how their solutions enable what Workday calls the “Power to Adapt”.

I particularly liked the presentation by Sayan Chakraborty, EVP, Product & Technology where he said “We believe great applications can only exist alongside a great platform and from this combination - you get the 'power to adapt’”. Rather than try to just absorb acquisitions, Workday tries to benefit from the contemporary thinking at startups they acquire. More on how Workday’s architecture has evolved over 15 years in this episode of Analyst Cam with Sayan Chakraborty.

Pete Schlampp, Workday’s Chief Strategic Officer, told us about their growth in packaged solutions.  “Since starting this program last year, Workday and our partners have published 15 Packaged Solutions supporting the oCFO and oCHRO, with another 20 slated for FY23.” Packaged solutions are small bundles of contemporary features like VIBE they had presented to me here .

I have been pushing Workday to get more into operational areas in industries where they have plenty of presence – most in the services sector. For now, I am not worried about Workday’s disciplined approach and  continued focus on the financial, hcm and planning/analytical areas. Workday has been delivering plenty of innovation in these areas. They also have miles to go with their current focus. During the session, they talked about their global growth – there is so much more of the world to grow into. By my estimate only 5% of its employee base is in the APJ region. Same thing with the SME market – there are plenty of opportunities in subsidiaries of large companies and the higher end of the SME spectrum.

In my analyst role, I get to hear competition bashing on a regular basis. Workday is a frequent target. My question to the haters is “Why are you letting Workday so dramatically narrow your definition of addressable market? There is so much white space around them for you to exploit”.

Frankly, I wish they would speak like C0-CEO Aneel Bhusri did at the event. He generously complimented his peers and said he was proud of the software industry for how it had responded to the pandemic.

Analyst Cam: CaptivateIQ – Demystifying Sales Commissions

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

This time it is Mark Schopmeyer, co-founder and co-CEO of CaptivateIQ which has a no-code SaaS solution to manage the thorny area of sales compensation.

As with many “junction points” in the enterprise – in this case between sales operations, finance and HR compensation management - you find many spreadsheet applications and convoluted legacy/custom developed and user-unfriendly applications. CaptivateIQ has thrived in this niche. It is barely 5 years old. and says it has crunched $2.5 billion in sales commissions. Importantly it allows for transparency to the calcs so salespeople can focus more on selling and less on algorithms which drive their paycheck. No wonder they are already a “unicorn” - valued earlier this year in its Series C round at a $1.25 billion valuation.

Mark does a nice job explaining why sales commissions can be obtuse in many enterprises and how they are likely to become even more so as business models evolve and customer contracts blend product, service, data and other components across a product lifecycle.

I was introduced to them by Workday Ventures. They are an investor along with many others like Accel, Bessemer and Sequoia.

Crisply done in about 25 minutes.

Analyst Cam: Workday’s architectural journey

In a February episode of Burning Platform, we hosted a back and forth on architectural trends in the industry with Sayan Chakraborty, EVP of Product and Technology at Workday.  Here we have him back to present more specifically on Workday’s architectural journey.  He only presents 5 slides but makes powerful commentary.

He presents some high-level philosophy, he discusses how Workday has integrated several acquisitions – some analytical, other transaction processing heavy. But I really liked his description of how Workday’s architecture has evolved over 15 years

"Today, we have a highly scalable platform that can support millions of employees on a single instance of Workday. We have elastic capability, horizontally scaling elastic capability because you have business cycles. You do payroll on particular days and times. You run specific reports at times during the month or during the fiscal year.

If we look back 15 years ago, we would see a lot of general compute engines in the Workday stack. Today, you see a lot of highly specialized compute engines, and we send the right workload to the right engine.

• If you've got an analytics workload, it will go to the Prism technology that came in through the Platfora acquisition that is designed for that type of workload and optimize for that workload.
• We have the OMS transaction service in the middle of this diagram that handles our high-performance transaction workloads.
• We've got integration servers that handle the ins and outs, as you connect Workday to systems outside of Workday.
• You have ML workloads that move into our ML environment that have a different kind of usage rate, memory consumption, CPU usage than these other workloads.

            We can optimize for all of those, and I think that's really the dramatic difference. If you time-traveled back 15 years and showed this slide to architects at Workday, what they would be surprised by is the specialization and the elasticity and the horizontal scale that's now ...

The age when you would do machine learning processing at a hardware level on standard CPUs from Intel or AMD is essentially over. The industry realized that there were these devices, these GPUs that had been developed primarily for gaming, and realized that, hey, these are really, really interesting because of the way they tackle the processing problem, and we can leverage that capability – essentially, parallel processing versus serial processing (parallel at scale) – and those kinds of problems are the kinds of problems we have in deep learning networks or other kinds of workloads within the ML AI capability."

25 minutes of wizardry. Very well done.

Analyst Cam: CRM Watchlist

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

This time it is Paul Greenberg, Managing Principal, The 56 Group, LLC. He summarizes the results from his latest CRM Watchlist survey. He is a repeat guest and was last on the Burning Platform episode where we discussed generational shifts in content creation and distribution.

This is the 19^th edition of his signature, annual project. He describes how the effort has evolved over the years. Lot of factors go into his scoring and they change every year. As he says, he looks at a vendor’s strategy and scores it on how well they executed on what they said they would. He then measures the impact they had on the market. Impact as a company – so not just their architectural excellence or financial performance or social responsibility posture. And it is based on the vendor’s stated strategy and market focus – which allows smaller vendors to be evaluated fairly depending on how they delivered against their geographic, vertical or size of customer focus.

He does factor in what he calls “intangibles”. His scoring for that category is a bit less transparent considering how much he guides vendors about the others. But he shares one nugget - he deducts points for “competition bashing”. Good for him.

He is tough and thorough, but very fair. Does not matter if you are a client of his or a close friend. This year, he evaluated 59 vendors reading every word of the 4,682 pages (yes!) if they were submitted to his guidelines. It is a testament to his market impact that vendors spend so much time and effort on their responses.

He has three winning categories -Winners, Winners with Distinction, and Elite. Only a handful have qualified for the Elite designation over all these years. There were 4 winners with Distinction this time around – Oracle, ServiceNow, Thunderhead and Zoho. He discusses another 12 in the Winners tier. Zoho scored highest in total this year. It also submitted the longest response at 259 pages. Paul insists there is no correlation between size of the response and his scoring.

He also shares the vendors who scored highest for each of his categories and summarizes with 4 promising and 2 concerning trends he gleaned from this year's responses.

I have run competitive evaluations of software vendors and outsourcers for many a client. At Gartner, I ran similar structured reviews for Magic Quadrants and other long-form content. I feel no shame saying I did not ever come close to evaluating 50+ vendors or reading 4000+ response pages for a single deliverable.

Next year, Paul says will be the final Watchlist. I suspect he will get an even larger population of vendors who pay homage by participating. In the blog post he said “Since this upcoming one is the very last one so, if I'm you, I'm registering to take a crack at it. Even if most companies don't win the award, they more often than not appreciate the exercise that you go through to put together the submission because it, when completed, gives you a holistic look at your company that you otherwise do not have.  It's worth it for the workout.”

I will absolutely bring him back for to describe the process for the 20th in the series. In the meantime, I need to have him back around his other passion – professional sports. We can discuss Tom Brady’s “un-retirement”, the return of baseball after a near shutout and so much else.

Analyst Cam: ASUG – Pulse of Customer Survey

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

This time it is Geoff Scott, CEO of the Americas' SAP Users' Group. He has been a frequent guest in this series and on Burning Platform. Here he summarizes results from their recent N. American Pulse of Customer survey including:

• How does the COVID-19 pandemic continue to affect organizations’ operations?
• Who is making IT buying decisions today?
• Where are SAP customers placing their focuses in 2022?
• What technology is having the most impact on digital transformation efforts?
• What’s the status on migrations to SAP S/4HANA?
• What role is cloud playing in organizations’ current landscapes?
• Why does SAP talent and training continue to challenge SAP customers, especially with the “great resignation” affecting most talent sectors?

This truly is an abridged version, though as you will see I asked a number of questions. If you are an ASUG member you can access a much longer version here. And if you are not a member yet, as Geoff says you should definitely consider signing up here

 

 

Analyst Cam: Zoho Creator Platform 6 and low-code positioning

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

Zoho announced today version 6 of their Creator Platform and are also positioning it as a low-code development solution. As it says "Organizations currently face soaring demand for new business software, but existing low-code platforms for business users only facilitate basic app building, lacking the sophistication needed to develop scalable, enterprise-ready end-to-end tools."

In advance of the announcement, Zoho arranged a conversation with Hyther Nizam. I had talked to him about his regional role in the Middle East and Africa here. In the segment below he provides a 10 minute long exec overview on the low-code market. As he says. we have “crossed the chasm” in terms of IT acceptance of citizen developers. I also liked his point how customers are using the tool for developing industry specific application extensions. 

I also had Tejas Gadhia in Product Management at Zoho present in a longer segment below about new functionality in the platform. It includes role-based access controls and comprehensive audit trails and backup to give IT more visibility and comfort about casual developers and has an embedded business intelligence and analytics engine among other features. More about the features here

It is clearly not just for citizen developers. If anything, I hope Zoho does not overemphasize the low-code moniker - the platform is being used by much more sophisticated developers 

Analyst Cam: HCL Technologies and complex industrial asset monitoring and maintenance

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

HCL is a leading Indian outsourcing firm. Differently from some of its Indian peers, it has long had a strong product engineering/testing focus, not just an IT practice. I profiled some of that prowess in a case study I wrote (see excerpt here) on the innovative Boeing 787 design and the radically redesigned supply chain for the plane’s components. HCL had helped Boeing with testing and other services.   

HCL has also been investing in and offering more in packaged software and IP, not just selling labor and project services. As an example, it acquired collaboration, commerce, digital experience, AppScan, & BigFix solutions from IBM in 2019.

With that backdrop, we had Colin Breakwell, Associate Vice President at HCL Technologies present on their iMRO and iSAM extensions to SAP’s S/4HANA ERP core for applications in aerospace and other complex equipment settings.

Many of those complex product industries have been generating more in services revenues – it is a trend called servitization – see episodes here and here which go into more of that trend. That transition to services is calling for a wide range of asset tracking, digital twin, field service, spare part inventory, outcome based business models, SLA management and other functionality and as Colin points out coordination across a vast ecosystem of cross-border equipment makers, operators, lessors and service providers. 

It is also leading to legislation around the world under the moniker of “Right to Repair”. Customers want the choice to maintain these assets on their own or with third party service providers, not just be forced to sign up for multi-year service contracts with the equipment maker.  

Colin does a nice job describing in about half an hour this new world of making, maintaining and monitoring some of the most complex aircraft engines, wind turbines, mining, oilfield, medical, transportation and other equipment. And the wide range of software functionality SAP and HCL offer this sector.

Burning Platform: Architectural Trends in Enterprise Software

In the 72nd episode of Burning Platform, we host Sayan Chakraborty, EVP of Product and Technology at Workday.

Sayan is, in many ways, a rocket scientist. He has degrees in aerospace engineering from MIT. He started his career as an engineer on interplanetary spacecraft at NASA’s Jet Propulsion Laboratory and on the early commercialization of global positioning systems (GPS).

However, in his career he has influenced more of the arc of enterprise software. He arrived at Workday in 2015 through their acquisition of GridCraft which he co-founded. Prior to that, he led teams focused on next-generation collaboration products at Oracle. Leading up to that he worked at several startups for two decades

So, the conversation is a bit of a walk down memory lane. We invoke terms like SOA, CPU speeds and OLTP as we discuss today’s microservices and how Workday deals with scaling of massive transaction volumes across finance, hcm, procurement functions while also becoming a powerhouse in the planning/analytics space.

We have a bit of a debate on whether consumer tech is leading enterprise tech when it comes to ML and AI. That leads to threads on data regimes and bias in AI.

We have an interesting section on the need to rethink enterprise application categories and definitions, to break down traditional silos and to rethink business processes. As he says, the pandemic has forcefully shown us an enterprise is not just a “campus of buildings”. He discusses how Workday’s string of acquisitions has already helped challenge some of the traditional thinking.

This a master class on IT architectures.  You can see and hear Sayan's high-energy and passion for his role in shaping the industry in his body language and tone.

An absolute must watch.