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. 

Analyst Cam: SAP S/4HANA as “next-gen” ERP

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 Jan Gilg, President of S/4HANA Development at SAP.

I invited him to provide an update on S/4HANA. He spends most of the presentation discussing how this is a very different iteration of ERP beyond just the cloud-driven architecture which too many vendors emphasize even after 25 years of SaaS.

There is a lot more focus on new business models and industry networks, on the changing mix of  products and services at most customers, the need to be much responsive to climate change urgency, and the transition to very different UX with the impact of AI and collaboration products like Teams.

As I mention to him, I was part of the Gartner team which popularized the ERP term in the 90s. This is definitely not that vision of ERP. It has come a long way.

I have invited him to come back and present on how customers are seeing different value points in justifying their moves to S/4HANA and also on how SAP is delivering vertical industry functionality in and around S/4.

Very nicely done in about 25 minutes.

Burning Platform: The demise of the mainframe has been greatly exaggerated

In the 79th episode of Burning Platform, we host Hari Candadai, SVP of Service Innovation and Thought Leadership at Origina. They are a third-party software maintenance company focused exclusively on providing IBM Support. As he says “Over the last decade Origina has perfected the third-party software maintenance model for IBM Passport Advantage customers around MQ,  Cognos, DB2, Informix, FileNet and  other products down the list.”

We discuss why we have for decades discussed the death of the mainframe and how it continues to survive and thrive especially in airlines, banks and other high transaction volume environments. IBM continues to breathe life with the latest z Series architecture and is reporting numbers which are delighting Wall Street.

However, that is no reason to put up with the high cost and shrinking talent in that world. We cover why third-party maintenance is attractive around IBM products – the lack of skills at customers and even at IBM (and how Origina has built its talent pool), the high cost for relatively stable environments (and how Origina can shave half off), and the need for interoperability with all the systems that keep on mushrooming around the backbone applications on the mainframe.

He goes into plenty of detail and spends some time describing their long journey with the utility. Southern California Edison.

McKinsey recently wrote “For many companies—and many industries—the COVID-19 pandemic set off a period of head-spinning change. They realized they were capable of moving faster than they ever thought possible. They went digital in a matter of days, not years. They offered new services almost overnight.

If companies sustain this newfound speed and agility, it’s conceivable that more innovation will happen in the next ten years than in any previous decade in modern history.”

That innovation will need money and staffing commitments. Another reason to consider a firm like Origina. Nicely covered by Hari in about 20 minutes  

 

Gartner and Oracle: Why I am missing their major events this week

Sneak Preview – Workday Rising

It’s an annual ritual, or used to be till COVID interfered. A Workday executive does our readers a favor and shares a curtain raiser on their Rising event.  This time it is Patricia Harris, Senior Vice President, Solution and Revenue Marketing. She has over 25 years of industry experience including several years at SAP, at the industry research firm IHS Markit, and the IT Service Management firm Hitachi Vantara.

Here are some excerpts from our conversation

Patricia, welcome back to my home state, Florida.  I presume Rising is a hybrid event as many have been with COVID. Let’s start with the demographics of the audience you are expecting in Orlando and virtually and the overall vibe you expect.

Vinnie, to start off it is going to be so nice to be back in person. We're expecting over 9,000 people on site – we are sold out for our in-person experience - and tens of thousands attending digitally. I think it will be a different kind of hybrid event than you may have seen from others. I am really excited to be one of the co-hosts of the Digital Experience and to make it compelling for those who cannot attend in person. We'll be doing a live broadcast from the Expo Floor. We will be giving viewers a nice warm lead into all the major keynotes and supporting them with deeper discussions as they come away from those keynotes.  

In terms of an overall theme, we are humbly acknowledging what the world has gone through over the last few years. It’s not just the pandemic, it's also the vast change in technology. As you know, we have released so many new solutions over the last few years.  On top of that, we've had social change on so many different issues. And so this year, we are honoring that change and acknowledging all the Changemakers. It will be about our customers, the ones that are driving this change in their organizations, and also thinking about our role as a technology company as we help them drive that change.

There will be a lot of focus on customer stories. You will see Coca Cola, Comcast and Capital One among 47 customer speakers at this event. We will also have 85 partner speakers featured. It’s our way of bringing customer stories to life.

We will also use the event to honor several local charities like the Orlando Alliance and job seeker networking sessions and Veteran Career readiness meetups.

The Executive Keynotes

I think you will hear a very optimistic tone from Aneel and Chano, our co-CEOs. There is so much change in the world that when people talk about it there can be a dystopian vibe to it. But we believe the changes we have gone through can also be uplifting.  Aneel and Chano will touch on how to elevate the human experience. Aneel will focus on how to stay connected no matter what your Return to Office plans. How to keep employees engaged and more deeply understand what is motivating them as well as what might be negatively impacting their performance.  Chano will salute the Changemakers, our incredible customers who are the driving force behind all our innovation. He will touch on the value of our Enterprise Management Cloud.  Broadly, Workday leaders will also talk about solutions, our Extend platform and plans for Industry Accelerators.

(Vinnie’s note - for those watching virtually, the graph below provides a nice overview of the keynotes)

Major product announcements

We will have plenty to please our three big buying centers – the CHRO, the CFO and the CIO.

Here are a few teasers - low code, no code capabilities in our Extend platform, frictionless finance with ML significantly improving productivity, planning at scale, and lots about ESG, supplier diversity and how we are enhancing our already rich Skills Cloud ontology with external data.

Vinnie, you will be particularly pleased to hear about our Industry Accelerators for healthcare, banking and capital markets, insurance and technology. We have developed them in close collaboration with Accenture, Deloitte, KPMG and PwC. Each partner has a really unique value proposition.

(Vinnie's note -- more detail available in the press releases below)

Monday, 9/12

1. Workday Launches New Industry Program to Accelerate Customer Cloud Transformations with Expansive Partner Ecosystem
2. Frontline Industries and Certain Geographies Show Increased Levels Of Employee Burnout Risk, Workday Report Finds

Tuesday, 9/13

1. Workday Unveils New Technology Innovations, Redesigns User Experience to Help Customers Adapt in a Changing World
2. Workday Introduces Skill Interoperability to Help Organizations Support Evolving Talent Strategies
3. Workday Innovations Help Power a New Era for the Office of the CFO
4. Workday Announces New Innovations to Support Customers in the Changing World of Work 

The Expo Floor

So, you know the Orange County Convention Center is massive. It allows our show floor to be very creative with that space with 95 booths of varying shapes and sizes. The bigger the sponsor the bigger the booth space.  Think of it as interconnected spaces. So if someone is focused on finance,  they will be able to quickly see where they need to go. We will also have industry specific areas, and featured areas for our partners. 30 Workday Ventures portfolio companies will also be represented on the floor. 

And, as I mentioned I will be co-hosting the Digital Experience from the floor, so come say hello!

(Vinnie’s note – Workday has invited me to meet with several of the Ventures portfolio companies one-on-one. I expect I will invite a few to present in my Analyst Cam video channel, like several of their peers have in the past)

Fun stuff

We are really excited to have John Batiste. He’s a Grammy Award winner for Album of the Year. And, he's had plenty of accolades like the Academy Award for Best Original Score for the Disney Pixar film, Soul. We also have a night where we will take over Universal Studios.

Lots more at the event - Peloton rides, 5k Run, sunrise yoga, reflection rooms, hula hoop, wellbeing groups, and one of the crowd favorites, the Must Love Dogs meetups.  The Expo floor is going to be busy.

Vinnie, I hope we have you excited about the buffet of activities we have planned.  Look forward to seeing you and so many others in person. It’s been too long!

Analyst Cam: Reveal Value

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 Martin Rowan, Managing Partner of Reveal USA, based in Chicagoland.

Their website says “Our mission is to use our knowledge of the supply chain as an indispensable link toward commercial success and social good.”

Their client base ranges from global companies like BP to local Chicago-based companies with two common threads - they run SAP and they run some kind of a supply chain. “So, they make, buy, sell, distribute something - whether it's minerals, petroleum, petrochemicals or consumer goods.”

With 160 projects over the last couple of decades. he says he can actually guarantee results for clients - inventory reductions, turns and service level improvements, process efficiencies and product production throughput increase.

I like the client maturity model and the operational use cases he shares. And the sherpa metaphor he uses to describe how they help clients scale mountains.

Nicely done in 20 minutes.  

Burning Platform: Experience, Inc.

In the 74th episode of Burning Platform, we host yet another author, Jill Popelka, President of SAP SuccessFactors. She kindly took time out of her book launch schedule to summarize themes from Experience. Inc.

She describes the inspiration for the book - her observation of the “loss of human connection” during the pandemic and the need to double down on improving experiences for employees, The book is a guidebook to business executives on how to deliver those.

She covers major takeaways from the book – employees need purpose, agency, a sense of belonging, recognition and what she explains as a “storm home”

She also talks about how technology can help improve employee experiences and talks about the SuccessFactors opportunity marketplace which employees can use to discover new learning and development opportunities within their companies. She also discusses their Workzone which fosters employee belonging and with tools like Appreciate drive recognition.

The book is already a best seller. Get your copy at Amazon here

Sapphire Preview: Next-Gen SAP

It’s been a wild decade so far - COVID, accelerated climate change focus, now a Russian-triggered energy crisis. Throw in supply chain issues, mass resignations, diversity and other crises, and Churchill’s famous quote “never let a good crisis go to waste’ comes to mind.

So, I have been asking every vendor what have you done to take advantage of the last two years? More importantly, what have you done to help your customer through these shocks and chaos?

At its Sapphire event next week, I expect I will hear plenty from SAP. Sure, lot of it will focus on S/4HANA, RISE and cloud properties. But one on one, I have heard plenty more.

It started last September when I approached Peter Maier to present on various verticals in the Analyst Cam series. Here is the index to the presentations SAP executives made.

There was a big difference in what I heard from SAP compared to most other vendors. They were talking thematic trends which cut across multiple industries, geographies and business processes – Direct to Consumer. Circular Economy. Everything as a Service.

Similar is happening in their ecosystem. The SAP.iO Foundries have been organizing bi-annual cohorts of startups in their 10 global accelerators based on themes. Here are some I profiled in the Sustainability and Circular Economy cohort.

I have seen presentations on an Industry 4.0 automation center and a Retail customer experience center. I will see a few more at the show floor at Sapphire.

So why is all this different? It’s not horizontal,or vertical or geographic positioning. It is what I call orthogonal. In comparison, most vendors and my fellow analysts are still talking market categories which were born in the 90s. (So is SAP – they still need to make their numbers). All those recessions and crises later and we are still talking an ancient language. I personally take blame for acronyms like ERP!

I went back to Peter and to Thomas Saueressig and I said you are doing something very different. Their response was we could show you much more. So, over the last couple of months I have had a chance to interview many of their thought leaders around Energy Transition, Digital Health, Smart Government, Autonomous Enterprise and many other themes.

I have heard more about the hydrogen fuel cells, nuclear fusion, LNG logistics from them than I have from any other vendor. Not just high-level ESG metrics, operational details. Patient-driven Data Networks. Industry Networks which tackle direct Tier 1 and 2 type suppliers not just paper/pencil and MRO suppliers.

Next, they are introducing me to customers and partners who are working with them to create next-gen applications. I am learning a ton and the content will be released in book and other formats. The important thing is SAP is speaking a brand-new language and helping customers survive and thrive in this crazy decade we find ourselves in.

The 1920s started off well but ended badly for most countries. I have a feeling we are reversing course in the 2020s. We are paying it forward. Things can only get better. But we all – especially my side of the aisle - need to get used to a very different script. It’s about new energy, new medicine, new algorithms.

Let’s not let this mother of all crises go to waste.

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: 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.