deal architect

Analyst Cam: Workday Ventures Portfolio Update

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 Barbry McGann, SVP and Managing Director of Workday Ventures. She is a repeat presenter in this series, though this is the first time she is presenting on the Ventures portfolio. She took over from Leighanne Levensaler who had presented on the fund here 

As usual, Barbry is extremely crisp and covers a lot of ground in 20 minutes. She discusses 9 new investments in the first 6 months of the year and some exits (including 2 profiled in this series - Suplari acquired by Microsoft and Zimit acquired by Workday). She discusses a very vibrant market for startups, Workday's growing focus  (both functionally and around its Prism, Adaptive, Extend tools) and areas which are being prioritized by investors like digital health and fintech.

Earlier this week, I wrote a post titled Get Busy Living or Get Busy Dying.  I pointed out vendors which look like the "living dead" with very little innovation. Listening to Barbry excitedly talk about the portfolio and even more about new opportunities, I am more convinced Workday has been very busy living.

Enterprise Applications: Get busy living or get busy dying

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.

Burning Platform: Ecosystems Galore!

In the 50th episode of the series we have Tyler Prince, EVP Worldwide Alliances and Channels at Salesforce.

While most vendors have siloed groups to manage their SI partners, their platform ISVs and their developer communities, Tyler plays a role in all 3 in Salesforce world. That includes their SI ecosystem with a wide range of global, regional, and vertical specialists, that on their AppExchange platform and in the Trailblazer community.

That gives him a unique perspective on the cross-currents across these very different ecosystems and the vital role they will play to deliver to CEO Marc Benioff's ambition to get to revenues of $50 billion by fiscal 2026 (in FY 2021 they delivered $21 billion)

We also discuss the impact the pandemic had on the SI community and the move to virtual project delivery, how Salesforce has woven diversity and inclusion in its ecosystems and the growing role of Slack acquisition and the Success from Anywhere initiative as lockdowns continue around the world.

Refreshingly different perspective on ecosystems!

Vertical Velocity

While there is a lot of noise about "Industry Clouds", I have been encouraged to see specifics in the form of new product launches and M&A/ownership changes in the last few weeks. They promise to bring a lot more industry focus and functionality.

Admittedly, the valuations in the transactions below are frothy - but one way to look at it - you have to believe they are serious about the market segment if they are willing to pay that much for it.  

Rockwell Automation is acquiring Plex Systems. As I have been reporting for the last few years Plex, has been increasingly investing in plant level and sensory/IoT capabilities. Infor is selling its EAM product line to Hexagon AB, a Swedish vendor focused on asset-intensive energy, construction and manufacturing sectors.

Both Rockwell and Hexagon should bring operational, industrial depth to products which have been positioned for broader ERP markets.

Unit4 is separating its Higher Education Student Information System into a new entity called Thesis. Again, it should allow a sharper focus in a segment which was turned upside down last year as campuses shut down and online education took off.

I have requested briefings with each of these vendors and as the transactions formally close, hope to be able to line up those sessions.

I was also part of two briefings this week:

Christopher Dean, GM of Salesforce's Media Cloud presented on their Advertising Sales Management offering. Listening to him, I was fascinated by how complex advertising world has become. The definition of a media company keeps morphing - everybody from traditional broadcasters to telcos to gaming companies to digital agencies and many others can lay a claim. From a brand pov, clearly digital advertising is exploding but traditional print, billboard, radio and other channels are not exactly dead, especially in major markets around the world. Good to see Salesforce help both sides navigate the complexity.

SAP ran its annual Industry Analyst Base Camp event. I recently ran two Analyst Cam episodes on their Industry Clouds and RISE offering aimed at 5 of those industries - see here  and here. The Base Camp did not add much new coming so soon after SapphireNow. But, frankly, the more SAP talks about industries the better. The verticals market is theirs to lose, after establishing leadership with their IS solutions two decades ago. And as we are seeing new, serious players are starting to focus on deep vertical capabilities.

Analyst Cam: Sapphire Now - Industries perspective, Part 2

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

SAP's annual event - Sapphire Now - is usually about drinking from a fire hose.  Content for customers across so many industries and global regions, and so many products in the SAP portfolio screaming for attention. This year, the second year where COVID restrictions have precluded travel to Orlando where it is normally held, the event was again virtual. I took a industry viewpoint, especially since a major announcement this year was the verticalization of its RISE initiative for an initial set of 5 sectors - utilities, consumer packaged goods, automotive, industrial machinery and components (IM&C), and retail.

In part 1 yesterday, I excerpted from CEO Christian Klein's keynote and from an interview of Dr. Hasso Plattner.

In Part 2 below, CMO Julia White leads off with a nice summary across industries. At 4:41, the focus shifts to changing business models - an increasingly common trend as industries morph. It is a discussion with Peter Maier, President of SAP Industries and with executives from Discovery Limited which is a South African-founded financial services firm in healthcare, insurance, banking, and wellness markets. Lots of discussion around outcome based models. Finally at 11.47, Georg Kube, Global Vice President of the Industrial Machinery & Components vertical drills down into his sector and details the RISE offering there.

 

 

Analyst Cam: Sapphire Now - Industries perspective, Part 1

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

SAP's annual event - Sapphire Now - is usually about drinking from a fire hose.  Content for customers across so many industries and global regions, and so many products in the SAP portfolio screaming for attention. This year, the second year where COVID restrictions have precluded travel to Orlando where it is normally held, the event was again virtual. I took a industry viewpoint, especially since a major announcement this year was the verticalization of its RISE initiative for an initial set of 5 sectors - utilities, consumer packaged goods, automotive, industrial machinery and components (IM&C), and retail.

I reviewed hours of video and have excerpted in Part 1 below, from CEO Christian Klein's keynote. He nicely lays out how 2020 turned the world upside down and the impact on most industries. I found fascinating CMO Julia White's interview of Dr. Hasso Plattner, one of the co-founders, who for me is still the "Chief Enterprise Architect" at SAP (for legal reasons, he does not have a formal executive position).

Starting at 9:40, the conversation is partly a history lesson, and partly a "state of the possible" when it comes to business processes facilitated by technology. Let's face it, most vendors, SAP included, have done much better with horizontal, cross-industry processes. Most vertical operational processes are still done by custom applications or by specialist vendors, so it is interesting to hear what may be different going forward.

In Part 2 tomorrow, CMO Julia White will lead off with a nice summary across industries. Next the focus shifts to changing business models - an increasingly common trend as industries morph. It is a discussion with Peter Maier, President of SAP Industries and with executives from Discovery Limited which is a South African-founded financial services firm in healthcare, insurance, banking, and wellness markets. Lots of discussion around outcome based models. Finally, Georg Kube, Global Vice President of the Industrial Machinery & Components vertical drills down into his sector and details the RISE offering there.

 

Analyst Cam: Salesforce Industries Summit, Part 3

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

Salesforce held an Industries Summit earlier this month. They invited me to an analyst pre-briefing and gave me access to keynotes and sessions across 8 sectors - Communications, Energy and Utilities, Financial Services, Government and Public Sector, Healthcare and Life sciences, Manufacturing, Media, Retail and Consumer Goods.

I have excerpted segments across the sectors and am posting them into three parts.

Part 1 covered 3 "mega-trends" I heard during the sessions, around sustainability on the energy sector, servitization on the industrial sector and the impact of "everything from home" on the communications and media sectors.

Part 2 yesterday profiled Jujhar Singh, the EVP and GM of Salesforce Industries with the theme of "industry success from anywhere" as we move into hybrid work and shopping world. There is a demo of a new Salesforce offering for investment bankers. Next, Kristen Jensen of the Utah Governor's Office of Economic Opportunity brought a public sector perspective on change. Finally, there were demos relevant for channels in retail and consumer goods covering rebates, incentive management and trade promotions.

In Part 3 below Bret Taylor, President and COO of Salesforce touches on the "digital first" and "transform now" themes in every industry. He also covers industry specific AI and Hyperforce - Salesforce's infrastructure architecture that allows customers to scale rapidly and securely using its public cloud hyperscaler partners. Next at 5.34 is a demo of a local government application - the use case revolves around licensing of a day care facility. We next switch at 10.09 to a telco and the opportunities 5G is opening up.  Mallik Rao, CTIO at Telefonica Germany is certainly qualified to describe that. Finally there are two product discussions - one around wealth management at 18.42 aimed at financial services customers and the other at 21.54 on patient appointments aimed at healthcare customers.

While every vendor is talking up "industry clouds", the breadth of vertical processes covered during the Salesforce Summit was truly impressive. I have excerpted only a small fraction of what I saw and heard. You too can sign up and watch the full range of sessions or an industry specific track by registering here

 

Analyst Cam: Salesforce Industries Summit, Part 2

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

Salesforce held an Industries Summit earlier this month. They invited me to an analyst pre-briefing and gave me access to keynotes and sessions across 8 sectors - Communications, Energy and Utilities, Financial Services, Government and Public Sector, Healthcare and Life sciences, Manufacturing, Media, Retail and Consumer Goods.

I have excerpted segments across the sectors and am posting them into three parts.

Part 1 yesterday covered 3 "mega-trends" I heard during the sessions, around sustainability on the energy sector, servitization on the industrial sector and the impact of "everything from home" on the communications and media sectors.

Today in video below, Jujhar Singh, the EVP and GM of Salesforce Industries leads off with the theme of "industry success from anywhere" as we move into hybrid work and shopping world. At 4.48 there is a demo of a new Salesforce offering for investment bankers. Next, at 10.06, Kristen Jensen of the Utah Governor's Office of Economic Opportunity brings a public sector perspective on change. Finally, at 16.26 there are demos relevant for channels in retail and consumer goods covering rebates, incentive management and trade promotions.

In Part 3 tomorrow, Bret Taylor, President and COO of Salesforce will touch on the "digital first" and "transform now" themes in every industry. He also covers industry specific AI and Hyperforce - Salesforce's infrastructure architecture that allows customers to scale rapidly and securely using its public cloud hyperscaler partners. Next is a demo of a local government application - the use case revolves around licensing of a day care facility. We next switch to a telco and the opportunities 5G is opening up.  Mallik Rao, CTIO at Telefonica Germany is certainly qualified to describe that. Finally there are two product discussions - one around wealth management aimed at financial services customers and the other on patient appointment aimed at healthcare customers.

While every vendor is talking up "industry clouds", the breadth of vertical processes covered during the Salesforce Summit was truly impressive. I have excerpted only a small fraction of what I saw and heard. You too can sign up and watch the full range of sessions or an industry specific track by registering here

 

Analyst Cam: Salesforce Industries Summit, Part 1

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

Salesforce held an Industries Summit earlier this month. They invited me to an analyst pre-briefing and gave me access to keynotes and sessions across 8 sectors - Communications, Energy and Utilities, Financial Services, Government and Public Sector, Healthcare and Life sciences, Manufacturing, Media, Retail and Consumer Goods.

I have excerpted segments across the sectors and am posting them into three parts.

The part in the video below covers 3 "mega-trends" I heard during the sessions. The first is around sustainability - while the desire for clean energy is affecting every sector, it is especially impactful on utilities. I have excerpted from a conversation with Yves Le Gerald, EVP at Engie, the French multinational electric utility company and Megan Lorenzen, Sustainability Manager at Salesforce. It is nice to hear the perspectives of both a procurer and a producer of energy.

At 13.10, the focus shifts to "servitization" - a growing trend in the industrial sector as product makers get more revenues from services and move to as-a-service, subscription and outcome based business models. It features Thomas Gocke who heads digital business transformation at Koenig and Bauer, the German company that makes printing presses and is very well versed in servitization trends.

At 21.19, focus is on "everything from home" - the impact of working, dining, studying, entertaining at home and the impact on broadband and media. Linda Yaccarino, Chairman of global advertising sales and client partnerships at NBCUniversal has a front row seat watching the massive changes that the pandemic accelerated.

In Part 2, Jujhar Singh, the EVP and GM of Salesforce Industries will lead off with the theme of "industry success from anywhere" as we move into hybrid work and shopping world. Then, there is a demo of a new Salesforce offering for investment bankers. Next, Kristen Jensen of the Utah Governor's Office of Economic Opportunity brings a public sector perspective on change. Finally there are demos relevant for channels in retail and consumer goods covering rebates, incentive management and trade promotions.

In Part 3, Bret Taylor, President and COO of Salesforce will touch on the "digital first" and "transform now" themes in every industry. He also covers industry specific AI and Hyperforce - Salesforce's infrastructure architecture that allows customers to scale rapidly and securely using its public cloud hyperscaler partners. Next is a demo of a local government application - the use case revolves around licensing of a day care facility. We next switch to a telco and the opportunities 5G is opening up.  Mallik Rao, CTIO at Telefonica Germany is certainly qualified to describe that. Finally there are two product discussions - one around wealth management aimed at financial services customers and the other on patient appointment aimed at healthcare customers.

While every vendor is talking up "industry clouds", the breadth of vertical processes covered during the Salesforce Summit was truly impressive. I have excerpted only a small fraction of what I saw and heard. You too can sign up and watch the full range of sessions or an industry specific track by registering here

 

Burning Platform: Not your grandpa's Services economy

In the 48th episode of the series we have Peter Bendor-Samuel of Everest Group, a research firm focused on IT, business process, and engineering services since it was founded in 1991.

I enjoy catching up with Peter on a regular basis to get his perspective on trends in outsourcing and the broader IT, BPO, strategy services market.

He says the market is broadly strong - "rising tide raises all boats" - with the confluence of digital transformations, modernization projects/ related legacy outsourcing and pent up demand from projects slowed down or postponed in 2020.

What's different is the influence of hyperscalers like Google and Amazon and strategy firms like McKinsey, BCG and Bain. We also discuss the trend of "servitization" - where industrial and other sectors are generating more service revenues around their products and moving to "as a service" models with subscription revenues and outcome based models.

BTW, on the last point about servitization, I have been researching that trend in detail over the last few months. You will hear more from me on that in the next few weeks. In the meantime, enjoy this conversation.  

We cover wide ground, as is common with my conversations with Peter. I always learn something new from him.