deal architect

Forged by fire

Dennis Howlett writes about the "current levels of public angst among independent industry analysts at the state of enterprise software". He cites Raven Intel, Josh Greenbaum, Upper Edge, Brian Sommer, Jarret Pazahanick and me pointing to different problem areas in the market.

What's interesting is most of them are in my upcoming book, as are many other industry observers like Holger Mueller, Frank Scavo, Cindy Jutras and Dennis and his colleagues at Diginomica. However, in total they probably make up 50 pages in the book. 40 customer case studies make up 250 pages. In many ways, the customers are more critical than the analysts. As I write in the intro to the book

"All were brutally honest about what they did or did not like on their projects. Vendors will cringe when they read some of those comments, but other customers should benefit from their candid feedback. A point worth making is that vendors are likely to home in on the negatives in comments about their competitors. Trust me, all of them have similar warts."

Here's the reality. 20 years of cloud computing, yet 80% of customers are still hanging on to antique, on-prem solutions. Certain segments of the market like HCM and CRM have decent coverage - most operational areas do not. We are being delusional if vendor executives and analysts together do not scream out loud and say "something is not right". I pointed out a few areas in my note 'Polishing Brand ERP'.  My colleagues have other issues.

Vendors love praise. Some of them live for the stream of tweets they get at their events. Not sure that helps them close deals. Very few buyers are on Twitter, and only when they are in evaluation mode (once every couple of decades) do they read streams about vendors they decided against. They do listen to analysts, consult with them and read their long form reports. Especially balanced reports which point the good and the bad, and then allow them to make their complex decisions.

I was part of the analyst corps at Gartner from 1995 to 2000 which can take credit (and blame) for advising clients on 000s of ERP and related SI decisions. Ask vendor execs who dealt with us then - we were a terror. But if they are honest, they will also acknowledge that we made the market stronger and the solutions durable enough to last as long as they have. Current vendor executives would similarly benefit from a much more vigorous back and forth with analysts. As the saying goes "the strongest steel is forged by the fires of hell"

Having said that, I was pleasantly surprised at the openness I saw at SAP while writing the book. I write in the Acknowledgments

"Next, I want to thank Stacey Fish at SAP. While many others at SAP were helpful, she was my go-to contact and arranged for me to talk with several SAP customers and executives. In a world where software vendors only want to publicize positives, she allowed me "unfiltered access" to these executives.  I told her to help SAP put its "best foot forward." What I expected was plenty of marketing; what I also got was plenty of conversation and candor."

I would love to see similar conversation and candor from other vendors. I cannot force it from them, but I will continue to talk to their customers. I have gotten used to the heat in the forging shop.

Is vendor information flow too lumpy?

Charles Phillips, CEO of Infor recently hosted a virtual fireside chat. It’s something I have encouraged him to do in the past. It was only a half an hour or so and one of my analyst colleagues said it had a feel of “declaring victory after 5 years”. I passed on feedback to his AR team that he should do similar every quarter or so, and pick a different topic to drill deeper into – an industry or geography or a specific product area.

I miss Stan Swete’s updates every time Workday had a new release (they are up to release 31). He would crisply march through new features and also give a quick update on the state of the company.

What I am getting at is I would like vendors to do more phone briefings, not just present at longer in-person events. This is especially true of smaller vendors like Zoho, FinancialForce, Ultimate and many others. It is not that easy for analysts to fly to day-long events for each.

While I would prefer these in a group call, I am happy to take individual briefings as well. With the caveat that these are briefings to add to analyst body of knowledge, not a commitment to write something right away on the briefing topic.

The other feedback I have received from several clients is how removed events are from product reality. There are 50 shades of grey when it comes to features and maturity. What they present to us in analyst briefings under NDA is often are not available to purchase till 3-4 years later. What is shown in user conferences is 1-2 years out. What you get in response to RFPs and competitive evaluation demos is a more realistic representation of current state of product. It is only during implementation that you realistically understand maturity of that release and the quality of implementation resources familiar with that functionality. Finally, it is only when customers periodically talk to each other about their experiences do you get a feel for the real quality of a particular release. That’s another reason we need a more continuous information flow and conversation with vendors about “as-is” not just a “to-be” state presentation common at vendor events.

Of course, I can hear AR reps at vendors groan. They have a tough enough time coordinating information flow even in the current state of affairs. More continuous conversations with pesky analysts?

Come on, while most of us do not have the endless bank of fables Brian Sommer has access to, we are full of all kinds of useless trivia. We are pretty fun to converse with. Try us

Influence v. Intelligence

I am writing this on a flight home. Been gone 12 days in 4 hotels, 7 flights, 20 Uber rides. Have not checked two bags in a long, long while.

A friend asked me if I was ok since I have not posted on this blog in those days. I said yes, there was an entry a day on New Florence. And on this trip I have picked up tons of content. In scripted scenarios vendors are demoing at a consulting client which is modernizing its shop floor. In mind-expanding keynotes at Cognizant Community ranging from technology in healthcare, in the warehouse, to that in financial services and in conversations with executives from a wide variety of executives. And learning about vertical analytics at the Anaplan Hub event.

My reaction has shown up in advice to the client, in comments on the Cognizant Events mobile app and will also show up down the line in two blogs, books, social media, more consulting and presentations. It’s omni-channel in content world. And a reality check that not everything shows up in instant social media for all to see.

My accountant has long been used to the ebbs and flows in the channels we play in. Over the last year, the consulting channel has been vibrant. Lots of ERP customers are embarking on a 20-25 year refresh cycle. Many first-gen SaaS contracts are coming up for renewal. Outsourcers are pitching digital transformation projects. Lots of interest in a variety of automation technologies I covered in Silicon Collar. Even the vendor events I go to are changing – they include new names like Anaplan and Uptake. Briefings include those from new vendors like Aera and Workspan.

Our revenue mix changes from quarter to quarter with the pull and push of technology markets and our channels.What has not changed much is most vendors want influence, not intelligence. Some even get upset when we cannot make time for their events. But in the months following they don’t bother to check in. Bi-directional conversations don’t appear to matter. Just listen to what we have to say and write and tweet nice things about that. That’s influence in their minds.

The really smart ones want to mine all the other stuff we are exposed to and may cite somewhere, sometime in one of those channels. They don’t want to wait for that intelligence to show up in the public domain.

I chuckle that most vendors will gladly show analyst research (so long as it is positive) to their customers. But they ignore that very mother lode when they strategize about their own products.

I did not understand that when I was at Gartner. I don’t even today. In the mean time, far more important things await – like cleaning out the two bags I checked in

Ten thousand points of influence

A decade ago, I wrote this post which talked about the thousand points of influence in every technology decision. My goal was to highlight attention on the fact that most vendor AR, back then, was fixated on Gartner magic quadrants and Forrester waves whereas there were plenty of bloggers who influenced deals. AR folks were even less familiar with boutique firms like Strativa in vendor evaluations and Net(net) in vendor contract negotiations.

I had heard an ambassador say that after the Soviet Union broke up, his peers had a tough time adjusting to the fragmented E. European landscape. Something similar had happened to technology analysis.

That has gradually changed. The Enterprise Irregulars did not exist back then. Irregulars is an improper moniker today for this group. There are not too many enterprise vendors they do not follow regularly. Names like Diginomica, Constellation, Deal Architect are much more recognized than they were a decade ago. Most vendors have caught on to the blogger and social media phenomenon.

Except that they have not.  Many measure bloggers on number of tweets from their events as a proxy for influence. In reality few enterprise buyers are on Twitter. Also social media has led to a plethora of “pop analysts”. Many work for vendors and could not spell independence if you spotted them the c,d and n’s. Others have so much politics in their streams that you wonder if they are rehearsing to become political commentators for Fox or CNN or covering technology. Few have written a 20 page paper in years, much less a detailed report or book where they interviewed hundreds of customers. Few consult with or even talk to buy side executives and practitioners on a regular basis and have little fact-based realism in their work. But they sure can brag about the followers they have on Quora and Instagram.

And you also see how other parts of the vendor organization often still lives in the past. Example - procurement groups which sometimes mistake independent analyst or boutique consulting firm to mean independent contractor and cause tons more paperwork for all parties.

There have been so many other changes in the last decade. My New Florence blog, not lacking for sources of innovation for its 4-500 entries a year, regularly mines magazines which were long ago supposed to be dead. My six books have cataloged hundreds of technology vendors and innovative customers that do not show on Magic Quadrants. My advisory work has changed dramatically – much more about cloud economics, ring-fencing legacy applications, automation of processes and digital transformations. 

It’s not just AR groups and procurement. Competitive Intelligence groups have not evolved. The reality is IT vendors are now just a small part of the technology landscape. I know companies which spend way more on design firms like Ideo and contract manufacturers like Foxconn than they do on IT strategy and outsourcing firms.  Their VP of Products has more of a technology budget for making products smarter than does the CIO. Ditto with the Chief Marketing Officer.

Thousand points of influence? I was off by a factor of at least 10 a decade ago. Which actually leads me to empathize with vendor marketers who have to navigate this complex landscape. The world is way more complex than 4x4 graphs and tweets.

Predictions, Redactions

At their annual Gartner Symposium event in Orlando today, Peter Sondergaard predicted

"AI will be a net job creator starting in 2020"

To that, Jason Hiner at TechRepublic snarkily commented

“Gartner's research chief couldn't have opened the company's flagship conference with a more astounding proclamation if he had claimed that next year's event would be held on the International Space Station and Gartner was offering free rides.”

Actually, I agree with Peter – I wrote  a whole book, Silicon Collar which looks at a century of automation and how humans go through panic attacks every couple of decades about automation and impact on jobs. Automation tends to target tasks, not complete jobs. In general, it transforms jobs, not destroy them. And societies have “circuit breakers” which slow down rapid mass adoption of automation technology as I wrote here. 

What I would I have liked to hear from Peter was “we were too pessimistic just 3 years ago”, when he said from the same podium

"Gartner predicts one in three jobs will be converted to software, robots and smart machines by 2025...New digital businesses require less labor; machines will make sense of data faster than humans can. By 2018, digital business will require 50% fewer business process workers."

And I would liked him to say “we really fxxked up” when we predicted that by next year (2018)

• 20 percent of business content will be authored by machines.
• more than 3 million workers globally will be supervised by a “robo-boss.” 
• 45 percent of the fastest-growing companies will have fewer employees than instances of smart machines.

In contrast, Oracle Co-CEO Mark Hurd shared with the OpenWorld audience a few hours later some of the “mean tweets” as he called it about some of the predictions he has been making about the cloud market.

Later in a Q&A, I joked with Mark that as an industry analyst he would have the luxury of hedging and assigning a probability to his predictions and then never publicly having to audit or redact his predictions

Thousand points of influence

It’s been a decade since I wrote this post in which I said

We all have our roles to play - but put yourself on the grid of 1000 and see what steps, decision makers, and influence impact you have on a technology buying decision. I do it all the time on transactions I help with. It is a humbling experience to see how little I individually - and for that matter all other influencers and advisors - have in the decision.

I am smiling when I read Tim Kopp’s post taking potshots at analysts like Gartner and Forrester. To start with I like his investment in G2 Crowd and its crowdsourcing of buyer ratings of technology products. I like the fact that they are focused on “mid-market, emerging categories and SMB software solutions.” I particularly like it since my Enterprise Irregular colleague, Mike Fauscette, is Chief Research Officer at G2.

But Kopp is stretching his point if he thinks companies just rely on Magic Quadrants or Waves – or if he thinks they will just rely on the G2 ratings in the future.

And like my other EI colleague, Jason Busch points out even Gartner has plenty of peer based, in some ways a more qualified crowdsourced, input. As a Gartner analyst I took thousands of client calls a year and that was our “finger on the pulse” of the market.

Technology buying and selling is a complex dance which may some day be done by machine to machine negotiation, but not anytime soon. Try doing that when vendors have hundreds of “engines” each with its own licensing units – users, employee count, virtual machines,  revenues etc. And have learned to make a significant revenue stream from audits to trap customers who don’t comply with such arcane licensing rules. Try doing that when buying organizations need multiple signoffs for anything costing more than $ 1,000.

Frankly, more than its Magic Quadrants, I worry more about Gartner’s planning assumptions which clients factor in their decisions. In writing my last book, Silicon Collar about automation and impact jobs I was dismayed with several of its wild projections. I hope Gartner mans up and acknowledges that these projections for 2018 will not come true now that we are only a few months away

• 20 percent of business content will be authored by machines.
• more than 3 million workers globally will be supervised by a “robo-boss.” 
• 45 percent of the fastest-growing companies will have fewer employees than instances of smart machines.
• Digital businesses will require 50% fewer business process workers

But back to technology evaluations - with so many people and complex jargon and legalese involved in a technology transaction, it is naïve to expect we will shrink the “thousand points of influence” any time soon.

Is Gartner slicing the bologna too thin?

I burst out laughing when I saw Gartner’s Magic Quadrant for “Single-Instance ERP for Product-Centric Midmarket Companies.” Talk about a mouthful. When I was there in late 90s, we worried about segmenting markets too narrowly. Apparently, in the last 15 years, that worry has gone away.

And even then that MQ does not include vendors like NetSuite, Plex and others who do sell to mid-market, product centric manufacturing and retail/distribution companies. Presumably that’s because of the fine print which says to be included vendors have to report at least 20% of their revenue in each of 2 out of 3 major global regions.

So, where to next?

Will they use “more than 5 global data centers” as a filter and leave out Workday (which has 2 each in NA and in EMEA) from some MQs?

You wonder how brutal the filtering process was when only 17 out of what it identified as 7,400 SAP service/channel partners were included in the MQ for those services.

Or worse, will Gartner have to resort to external channels to explain why for example Oracle was not included in their recent MQ for BI reporting tools?

When I was at Gartner, clients were already complaining our definitions and segmentation were confusing. Now, they must need a Master Data Management tool to keep up with all the MQs.

Come to think of it, Gartner probably uses a MDM tool to keep all their stuff somewhat coherent. Wonder which one from their MDM MQ they do use? Hopefully, not one from the Mobile Device Management MQ

A decade of the Enterprise Irregulars

Two decades ago, Selling Power magazine had Gartner executives on the cover with the byline “When the Gartner Group says “buy”, the market listens”. Given the magazine’s audience, the focus of the article was Gartner’s well run field organization which the article cited “over the past five years.. has grown from 40 to more than 500 reps”. I remember being proud to read CEO Manny Fernandez quoted “We do not sit on the fence…We've had clients who have canceled our service because they're unhappy with what we've written about them - and that's okay."

Gartner is still very influential, but that milestone reminded me of another one. The Enterprise Irregulars, a group I am now part of, will celebrate its tenth anniversary this year. The group – a loose coalition with no dedicated salesforce -  is a reminder the analyst market has changed dramatically.

Many readers know of the EI site and the blog posts there. You may not know its origins. Two visionary SAP executives, Mike Prosceno and Jeff Nolan, saw blogging grow in importance and invited a group of independent bloggers to the 2006 SapphireNow event. It was bold, and risky. In fact Nolan announced it in a blog post titled “When everyone has a suitcase nuclear weapon”. That small group, inspired by Sherlock Holmes’ ragtag team of young intelligence agents on Baker Street, named itself the Irregulars to contrast ourselves from the Main Street analysts like Gartner. The group has added and lost a few members over the decade, but most readers do not know much about the depth and breadth of the body of work of its members.

EI members have founded or are key contributors to sites like Larry Dignan at ZDNet, Phil Wainewright at Diginomica, Susan Scrupski at Change Agents Worldwide,Tom Raftery at Redmonk, Phil Fersht at Horses for Sources and others. Less than 10% of what they write (or what I post on my two blogs) shows up on the EI site. Our editor, Zoli Erdos somehow manages to homogenize our disparate content.

Even more impressive is how they have mastered changing channels of getting the word out. Many of us came from Gartner, Forrester, IDC etc – the traditional analyst world and have adjusted to the world of videocasts and social media. Ray Wang tweets from more places around the world than any other human. Jason Lemkin hosts his immensely popular annual SaaStr event reflecting the new world of ARR and multi-tenancy . Dion Hinchcliffe’s presentations are art form. Michael Krigsman hosts the weekly CxO executive talk show. Jon Reed is always leading the way with his videocasting.  Charlie Bess has been active in robotics competitions for years. Paul Greenberg and Denis Pombriant are serial book authors. Brian Sommer, Naomi Bloom and I do an annual prediction videocast sponsored by Workday.

Very different from analyst/media firms is the fact that many EIs are technology executives (like Thomas Otter at SAP, Jason Corsello at Cornerstone OnDemand and David Kellogg at HostAnalytics) , entrepreneurs (like Ramana Rao and Ross Mayfield) and investors (like Evangelos Simoudis and Anshu Sharma). They bring a practical perspective to many of our internal debates.

Talking of debates, we have plenty of them. Not surprising given our roots we have a disproportionate number of current and former SAP employees, consultants and advisers. Yet many of EIs provided input to my SAP Nation books – as Manny would say no sitting on the fence here either.

Get to know the EIs - check out the much longer list of EI bios here And use them as a benchmark for the morphing world of technology analysis and intelligence.

Year-end musings: Of Marketwatchers and Sheep

Third of year-end posts I am running this week.  The other two were about enterprise software and outsourcing trends.

I recently saw The Big Short. Well done, actually funny, adaptation of the book. With so many things in the movie that make your  jaw drop you could easily miss the cameos where characters from Standard & Poor’s, the SEC and The Wall Street Journal act casual or even defend the growing mortgage loan crisis that brought the global economy to its knees.

It reminded me of Chapter 11 of SAP Nation titled Market Watcher Omissions. During my book research, I was stunned to find so little coverage of trillions in spend, much of it wasted. I reached out to analysts, journalists, user groups, academia, regulators and other marketwatchers for my research.

As I wrote

“..I had a gnawing sense of “How was this allowed to go on and on?” The initial IT failure of the Obamacare-related Healthcare.gov got a relentless amount of media, political and business scrutiny. That was reported as a $1 billion project (even after the overruns). In contrast, the SAP economy has had significantly more write-offs and waste. Why has it not seen anywhere near the scrutiny? 

It’s not just around SAP. I have heard in the last few months a couple of tech executives call financial analysts “sheep”. There is little independent scrutiny of results and some vendors are known to feed them “suggested questions” to ask of competitors.

As I continue my research on automation and impact on jobs for my next book, I see so many glib, anecdote based comments from analysts and bloggers. There is so much labor statistics data out there, I wish they would do their homework before they just opine on stuff. Then there are analysts who relentlessly tweet from industry events basically regurgitating what tech execs are presenting on stage. That passes as analysis?

I think we would all do well to emulate Michael Lewis, the author of The Big Short, Moneyball and Flash Boys among others. He does lots of research – for months and years – takes strong positions, bases his stories around real life but previously undecorated folks like Billy Beane and Brad Katsuyama.  His books have tremendous impact, yet I like the fact that he is happy to be be still called a “journalist.”  No high falutin’ terms like analyst for him. And I doubt anyone would dare call him “sheep”.

Not your father’s influencer relations

I was reviewing Duncan Chapple’s latest influence quadrant and thinking how much the analyst relations world has changed since my days at Gartner in the 90s

a) Vendor product portfolios have exploded

Microsoft needs a “One Microsoft” initiative to bring together its wide array of consumer and enterprise tech. In the last decade SAP has made nearly 50 seemingly disconnected acquisitions. That has led Mark Hurd, CEO of competitor Oracle (itself very acquisitive) to sarcastically observe, "I guess we could buy a Dairy Queen."  How does vendor AR coherently present such a portfolio to analysts? And to how many analysts in each firm? I heard one firm sent 40 analysts to a vendor event last year. 40!

b) Left-field competitors are everywhere

HP’s infrastructure outsourcing has been tormented by Amazon. Accenture’s application outsourcing/BPO is being cannibalized by SaaS vendors like Salesforce – and soon will be challenged by machine learning and process automation. TCS’s offshore model is being challenged by crowdsourcing and rural sourcing. Samsung competes with appliance makers, Google may soon with car makers. Analysts do better when markets mature and a core group of vendors emerges. If you have read my New Florence blog for the last decade, the recurring theme is the “aha” from places and people where you least expect it.

c) Vendor marketing is often misaligned with AR

How does IBM AR explain why Watson and Smart Solutions have been on TV for years now and still contribute only a small percent of its revenues? How does the SAP AR person try to explain with a straight face what “Does your business have a soul?” commercials have to do with its customers? Or try to explain that hot air balloons are good imagery for cloud computing, just ignore the hot air part? Then you have idiotic tweets and other social media gaffes from channel and other partners. AR no longer controls the message. 

d) The “analyst” has morphed

Enterprise software markets follow Diginomica, outsourcers follow HfS – neither firm existed a few years ago. Frank Scavo can balance his research with his consulting and benchmarking practices. Ray Wang presents to hundreds of executives every month. Through my advisory work and my book interviews I have had far richer conversations with business executives than I ever did as a Gartner analyst. There are so many of us “small guys”. Not just small -  but with access to a large number of executives. Vendors struggle with this proliferation of smaller firms – a bit like Gulliver in Lilliput. The administrators at Oracle and others have taken the word “independent analyst” to literally mean “independent contractor” with all the paperwork needed for IRS compliance. Cannot blame them, but it sure complicates AR.

Long and short – I am looking forward to hugging a number of AR folks during the Fall event season. Their job has become increasingly more difficult. The least I can do is sympathize. So long as they don’t expect me to start writing puff pieces