deal architect

Burning Platform 108: New Frontiers for Enterprise Applications – Part 2

For the 107th and 108^th episode of Burning Platform we hosted Brian Sommer of Techventive.

In Episode 107 he presented on 3 recurring themes he is hearing from customers and vendors  - War for Talent, ESG and AI.  For my turn in this episode I provide a 25 year retrospective of cloud applications and describe massive untapped opportunities as we Re-globalize, as Industries morph dramatically and customer base migrations scream to be turbocharged

Re-Globalization

Starts around 1.52 in video below

I tackle lots of idle talk around de-globalization, de-dollarisation and de-industrialization of Germany. I discuss how MNCs are rapidly churning their country portfolios. How several vibrant new economies are the new “Tigers”. How static software vendor functionality and global presence increasingly shows them stuck in the “Old World”

Brian explains that global expansion is expensive in the traditional software sales model. The reality is hyperscalers continue to lead the way with massive global investments and  a new class of software vendors is more adept at digital channels and will support the changing globe far more effectively

New Industry Landscapes

Starts around 16.50

I discuss how the pace of industries converging and morphing has increased given all the economic shocks of the last few years. Lots of vertical edge applications have become viable and now a new wave of AI use cases is coming which will leverage industry specific operational data.

Brian believes SIs are better positioned for verticals with their account control and large investment mindsets. He says most applications vendors love to enhance their platforms with new waves of technologies. They actually find developing new applications boring; He could well be right.

I believe a new wave of vertical application vendors will emerge. And customers will increasingly build v buy such applications. The reality is one way or another there are major market chunks waiting to be won or lost. Well-designed vertical applications have shown themselves to be very sticky with revenue streams stretching decades.

Customer Base Migrations 

Starts around 30.50

I present the depressing graphic that customer bases have migrated at a very slow pace and we have ended up with a “reverse shark fin”

Brian explains that is fairly common tendency with laggards in most customer bell curves. I counter that many vendors have unusually large 50 to 80% of their customers on very old versions. Even the risks of not being in audit compliance or projecting a negative recruiting profile have not motivated them to migrate.

It’s time to leverage GenAI, RPA, accelerators, conversion factories and other automation to dramatically lower the time, cost and risk of such migrations  

Every one of the three opportunities I present is massive. However, it will take a fair amount of focus and investment. Who will step up? The next few years should see a lot of churn and chaos. Or if you see the glass as half full, lots of new opportunities

 

Thoughts from SAP TechEd, Bangalore

SAP did a very nice job bringing TechEd in Bangalore, India to analysts and other registered users around the world. They had a preview for analysts on Monday and had keynotes on Thursday and Friday conveniently timed for viewers who were several time zones away.

There were a slew of announcements, especially around GenAI and other AI , growing BTP product functionality and growing customer base for the development tools.

I was particularly fascinated by the Vector Engine, Datasphere and the Build Code discussions.

Juergen Mueller, the CTO simplified vector talk – which honestly, I mostly associate with pilot communications with air traffic controllers. We live in a 3-dimensional world and vectors allow for representation of many more – hundreds and thousands of - dimensions. As Juergen explained “The embedding function maps semantically similar text to vectors close to each other in a high dimensional space. Running a semantic search, then simply becomes a nearest neighbor search and that vector space with 1536 dimensions. So where it differentiates is you're not searching content, you're searching for condensed semantic meaning.” It should hopefully allow us to go beyond today’s excitement around LLM’s powering text and document-centric sources to include many more structured and unstructured data formats.

Datasphere promises to unify all your data into a single semantic model. Over the years, customers have been exporting SAP data into data lakes. SAP’s delays in integrating many of its acquisitions encouraged some of that thinking.  Competitors have also been encouraging customers to bring operational data into their supposedly “more user friendly’ analytical tools.  From my early conversations with SAP customers there is plenty of excitement around Datasphere

Build Code brings generative AI and Joule copilot capabilities to ease/speed up development of new applications and extensions to SAP applications. There was plenty of talk around how that would accelerate low and no-code development.

However, reality struck me when Juergen jokingly said “I didn't know if I will have a headache tonight thinking about the space that has more than 1500 dimensions”.

It’s tough to reconcile enterprise complexity with promises of citizen developers.  I am hearing similar promises from hyperscalers and IBM that turbocharged DevOps will be the killer app from GenAI. The rapid adoption of ChatGPT has fired up the imagination of every enterprise vendor – we have to make our tools way more consumer friendly.

Like our solar system, enterprise landscapes continue to expand exponentially.  After 25 years of cloud applications you cannot find decent choice for most cells if you look at a grid by country/by industry.   

I wished I had gone in person to Bangalore. There were TechEd strategy sessions that were not streamed I would have like to have watched. But even more I would have liked to have visited with many Indian outsourcers and tried to understand how they are using GenAI on their own projects.

As an industry we have done several million ERP and CRM implementations, global rollouts and upgrades. Vast number are around SAP products. Which means we have at least 10X the number of artifacts – test scripts, parameter configurations, data conversion code, training modules etc. Can we populate LLMs and generate fairly decent first versions for the next 10,000 or 100,000 customers, rather than reinventing the wheel each time? Can you imagine the labor savings we could deliver?

I did several trips to Bangalore and other Indian and E. European cities in the first few years at Deal Architect I founded in 2003. I took C level customer executives on due diligence trips to many vendor campuses. May be time to start doing more of that.

We are staring at a massively different enterprise landscape. New DevOps tools. And very promising roles for everyday developers.

Time for new approaches.  

Burning Platform: Insights from Fall 2023 Industry Events

For this 104^rd  episode of Burning Platform, we host Pete Tiliakos of 3Sixty Insights and Jon Reed of Diginomica. I invited them both as we approach the end of Fall slate of Industry Events to get a distillation of perspectives from 25 or so events the three of us were privileged to be part of.

It is a rapid-fire 40 minutes and we broadly go over 5 topics. As smart analysts are prone to do, we have strong opinions, we disagree on several points, and take off on some tangents including one on the potential global scenario of “de-dollarization” starting around 31.00

The first section summarizes our “sentiment” and the attendee vibe we picked up from the events. Vendor AR and event managers will get some good, if contradictory, nuggets from this segment

Starting at around 9.15 we discuss the barrage of Generative AI coverage at most of the events. Lots of use cases and other angles here you may not have previously considered

Starting at around 18.50 we ask whether vendors are too focused on AI and not enough on transactional, vertical, localization and other customer needs including what Pete calls “blocking and tackling”

Around 27.20 we discuss economics of software projects. It is a timely discussion because there are expectations of premium AI pricing in the midst of the reality that IT budgets are under macroeconomic pressures. BTW, my episode with Geoff Scott, CEO of ASUG earlier this week also covered the economic angle extensively with a focus on the SAP customer base.

At 34.00 we have a broader conversation around automation and future of work, beyond AI and RPA technology.

Very insightful – no wonder both Pete and Jon are repeat guests on my episodes.

A new business model for AI?

This post is inspired by Frank Slootman, CEO of Snowflake. In an interview with CNBC he commented

“AI is not going to be cheap. I mean, somebody's paying for these wonderful Nvidia results. There needs to be a business model that's associated, you know, with the technology. One of the great things about Search, when it showed up was not only that it was great technology, but they also had a business model that paid for it.  We need that here as well. Otherwise, it's fun and games, and it's an expensive hobby, that's not going to last…”

He was alluding to another Nvidia blowout quarter. Jensen Huang, CEO of Nvidia explained some of the trends driving their demand

“The world has something along the lines of about a trillion dollars’ worth of data centers installed in the cloud and enterprise and otherwise…And that trillion dollars of data centers is in the process of transitioning into accelerated computing and generative AI.”

This of course, begs the question – Is ALL the data in ALL those data centers fodder for processing with Nvidia products? They could be - but not necessarily at today’s premium prices. This documentary does a nice job describing Nvidia’s evolution from gaming chips to a powerhouse in generative AI. It touches on “premium” use cases in healthcare, design etc. that nicely leverage his technology.

My recommendation would be vendors poll their customers for use cases where they are willing to pay premium pricing. And think broader - the investment is not just going be around the GPUs, LLMs and other plumbing. Vendors will need to accumulate data around high-value applications. That will call for hiring unique domain experts and accumulating plenty of domain specific data not easily accessible today in the cloud. It is squirreled away somewhere in those trillion dollar worth of data centers, and even worse in corporate spreadsheets.

Let’s face it – the vast majority of enterprise data in the cloud today is back office accounting, HCM, procurement and basic CRM data. If you expect premium pricing, it will likely come from operational data unique to verticals and countries. To access that data, you will have to acquire specialist vendors like Oracle did with Cerner. Not cheap – Oracle paid $28 billion for a small fraction of largely US patient-specific data and it will have to navigate HIPAA and other privacy constraints around that data. Another option – come up with incentives for some of the most innovative customers in each domain to share their data to train your machines. Either way be prepared to invest.

For many vendors, their predictive AI may offer more value to customers than generative AI. If you can preclude unplanned shutdowns of expensive assets with preventive maintenance AI or you can reduce production and logistics footprint, waste and scrap through better demand forecasting AI,  that may be exactly what your customers need.

I like Frank’s call for a business model for AI. I think vendors should start with finding out what customers are willing to pay for as “premium” use cases, then work backwards and figure out whether/how to acquire the premium infrastructure, domain knowledge and the data to train machines for those ambitious use cases.

That would be a business model better aligned with customer value and far easier to sell.

Globalization – time for a fresh look at a complex topic

I was in 4 countries recently, and it reminded me I had been to each as part of my book tour a decade ago for The New Polymath. It also reminded me I had started the book with “sprezzatura” and ended it with “shoshin” – not exactly words you hear every day.

Sprezzatura is a term from the Italian Renaissance that would translate today to “being cool” – showing a confidence even when tackling complex assignments.

Shoshin loosely translates from Japanese to a “Beginner’s or Child’s Mind”. It is a Zen Buddhist concept of looking with wide openness when studying a subject.

I certainly felt both terms at work during my conversation with a friendly German immigration officer at Frankfurt airport. Flipping through my passport he asked “first time in Germany?” I said no, been here at least 25 times. “Always to Frankfurt?” No, Berlin, Hamburg, Cologne, Hanover, Munich, Fussen….”Only travel to Germany?” no, been to 75 countries. His eyes visibly widened. The more we talked the more I admired his curiosity. The more I talked I also realized I was trying to confidently answer his questions but he had no trail to confirm my statements. They were on 9 expired passports in a safe. Some visas like the Israeli had been issued on a piece of paper, not on any of the passports.

With travel opening up in the last year, I have started traveling more outside the US, listening to global strategy experts, reading more books about regional trends. It is a brave new world, post-COVID and Ukraine crisis, where we need to balance curiosity versus the confidence that comes from previous experiences.

Lots of change – and even more noise

What is particularly striking is the plethora of bold commentary you hear. COVID driven travel restrictions and supply chain chaos have led to the “collapse of globalization”, many say. The Ukraine war related energy crisis has led to terms like “deindustrialization of Germany”. Political rancor and large deficit spending in the US is leading to terms like “dedollarisation” – spelled with an “s” it suggests an even more imminent US decline. China’s one child policy has left it with a dead-end in the form of an aging, noncompetitive workforce, others say.  BREXIT, many say, signals the end of the UK.

MNCs like Shell have long had internal analysts which shape their global strategies – in their case, “Scenario groups” have been looking at global trends since the early 70s, when the OPEC oil shock took much of the world by surprise. Their team, their website says, has expertise in fields like “economics, politics, energy analysis, climate policy, socio-cultural change and competitive intelligence.”

Other MNCs leverage think tanks and geopolitical analysts (similar in some ways to us technology market analysts) like Ian Bremmer of Eurasia, Shaun Rein of China Market Research Group and Peter Zaihen among others. There is a ton of global intelligence available – demographic, industrial, energy, agricultural, climate and other data, military assets, political trajectory etc.

When you read the cross-currents across this mountain of data, most individual projections tend to be overly simplistic. Incumbent powerhouses, be they corporations or countries, rarely just roll over and die. They decline slowly and, in many cases, bounce back. Japan has started to grow nicely after a couple of decades of relative stagnation. Most companies have also become way more agile post-COVID and Ukraine. German industrial companies have moved aggressively away from Russian gas with moves to gas from other countries, to metallurgical coal, to their lignite and increasingly a focus on hydrogen as a fuel. The 2023 Fortune Global 500 list shows the power of incumbency – “The companies’ revenue adds up to more than a third of the world’s GDP. And 68% of that revenue is concentrated in companies in Japan. Greater China (including Taiwan), and the U.S.”

A wave of “re-globalization” – a gradual realignment

MNCs are not static. I am seeing more reallocation of resources across countries than I have ever seen before. Supply chains are moving to “China+1”. Sanctions against Russia have forced even more sourcing diversity for fuel, fertilizers, minerals and other commodities. High inflation in places like Argentina is causing a move to neighbors.   

Emerging economies are generating their own MNCs. In fact, Saudi Aramco barely missed being ranked number 1 on the Fortune Global 500 list – only $7 billion less revenues than Walmart which has held that rank for a decade. Companies from other rapidly growing economies – India, Indonesia, Nigeria, Brazil among them are joining the next wave of MNCs – servicing their own large markets and focusing on markets western companies have traditionally neglected

There is also a surge in digitally savvy governments. Assisted by proliferation of mobile technology and hyperscaler clouds, entrepreneurs and SMEs in places like Kenya and Estonia are flourishing. We are seeing more real-time digital tax compliance, digital citizen services and other innovation in the public sector around the world. Many governments see AI as a strategic investment focus.

An exciting time for technology vendors

We have come a long way from the time when “two-tier ERP” meant global subsidiaries were on very different software on LANs and AS/400s versus those at the HQ. We have moved to a world of hyperscalers like MS Azure, AWS and Google Cloud which have democratized DevOps across the world. We have moved to a world where Eva Zauke of SAP talks about “585 local versions (including support for payroll processing in 104 countries) as it supports 200+ million users at 440k customers worldwide.” At a smaller scale – both functionally and regionally – vendors like Zoho and Papaya Global are allowing SMEs to think beyond their borders. In the next wave of AI and ML, operational data needed to train machines will be increasingly localized and verticalized.

Not every vendor is keeping pace. It will take the investments the hyperscalers have made with presence in most major markets while meeting local data protection guidelines. It will take localization like SAP has done across so many country tax regimes, currencies and languages.

Here’s why every vendor needs to re-think global opportunity. Forget all the glib talk and simple projections. There are vibrant markets around the world. Someone else will step up to service them if you don’t.  

Time for lots more curiosity and yes, the confidence which comes from new investments and customer validation. much more than previous experiences.

Fall research agenda

As summer comes to an end – never feels that way in Florida, but I digress – I am looking forward to a packed Fall. Have two big projects, several industry events, a list of video recordings and other items to juggle on the agenda.

Some major goals – in line with the on-going research agenda I shared earlier in the year here, where I said we are seeing a pivot in the software industry

Enterprise AI

AI and ML have been evolving for decades. I hope to hear from vendors about all branches of AI, not just Generative AI. We all heard endless talk about GenAI in the first half of the year. We also heard why vendors believe they are entitled to premium pricing. I want to hear about specific and hopefully differentiated use cases to justify those premiums. Also, examples of customer payback and ROI for that premium.  There is so much talk about “ethical AI”. My definition is I want more candor about how much data volumes vendors are training their machines with. And how they have handled the thorny issues of customer permissions and GDPR compliance around such data. What audit trails and other risk mitigation they are providing their customers around the AI results. In other words, much more detailed conversations at a use case, not just a conceptual, level.

Verticalization and Globalization

Vinnie Vertical is always prodding vendors to showcase what they are doing around industry specific operational applications, especially at the edge of massively changed industries. That’s not changing. However, the shocks of the last few years did not merely transform industries, they have shaken up whole countries. In my travels this year, I have seen seismic changes across many of them. I am pushing vendors to showcase how their MNC customer base has evolved and also what they are doing around rapidly emerging economies. And how their AI training data and use cases are becoming richer as a result of more vertical and global data.

Hope you have had as enjoyable a summer as I have had. Time to look forward to an exciting Fall. We are squarely in the midst of a pivot in the industry.  

Enterprise Software: Don’t stop thinking about tomorrow!

In my role as industry analyst, I have always pushed vendors to look ahead, rethink what they had in their bags over 5 years old and to cannibalize legacy revenues. Especially after the turmoil of the last few years. No industry or country has come out unscathed from the recent shocks of COVID, the Ukraine crisis, increasing climate change urgency and massive digital transformations. No surprise, as I wrote here, we are tracking 4 large software and services markets – hundreds of vertical “edge” applications, applications for fast-growing global economies, custom development using low and no-code tools and Generative and other AI.  

So imagine my surprise when I got from DSAG (the German speaking SAP user group) an email which led off with

“At SAP's annual press conference on July 20, 2023, Christian Klein, CEO and member of the Executive Board, announced that SAP's latest innovations would only be available in the cloud. Specifically, they are to be accessible only to customers using SAP S/4HANA Cloud, Public Edition or SAP S/4HANA Cloud, Private Edition via GROW-with-SAP or RISE-with-SAP contracts. This does not mean that on-premise solutions in general will not be functionally enhanced. But on-premise customers cannot, for example, benefit from major innovations such as artificial intelligence (AI) and green ledger. This also applies to larger function modules and extensions based on the Business Technology Platform (BTP). At the same time, SAP plans to increase maintenance fees. From the point of view of the German-speaking SAP User Group (DSAG), SAP is leaving numerous loyal customer companies in the lurch with this approach.”

And of course, several bloggers and journalists have piled on top of the DSAG reaction.

Huh? By our research benchmarks, SAP is one of the few vendors to have kept expanding its portfolio of vertical edge applications and global functionality. Try finding anything close with its on-prem or cloud competitors. In fact without the vertical and global functionality these vendor’s AI talk runs a huge risk – their machines and LLMs will mostly have access to what will increasingly be commoditized back office data. The next battle field will be around operational data, highly verticalized and regionalized.  BTW, AI will be lot easier in the enterprise as cloud data grows along with customer permissions – today, it is mostly squirreled away in proprietary data centers – highly fragmented and not easy to train machines with.

User groups play a very useful role in our industry and DSAG has faithfully represented the voice of the customer, especially mid-market ones in Europe, but this commentary sounded like Rip Van Winkle waking up, shocked after a long slumber. The enterprise world has been moving to the cloud for 3 decades now, and contrary to industry myth, SAP and its customers have been a major force in this transition. Some data points:

1. In my 2014 book, SAP Nation, I pointed out one of the most common strategies at many SAP customers was to “ring-fence” core ECC functionality with cloud solutions – 10, 20, 50 of them.
2. SAP, under Bill McDermott, Rob Enslin et al acquired a number of cloud properties in the HCM, procurement and CRM areas. The Ariba and Concur acquisitions have created one of the largest business networks in the industry – which SAP is increasingly verticalizing to include direct material suppliers. You think continuing to expand ECC or even S/4HANA would have easily accomplished that?
3. SAP has been delivering vertical edge applications in the cloud – intelligent returns around eCommerce, cell and gen therapy orchestration in healthcare, e-mobility and EV charge point billing for auto and utilities sectors among others
4. Countless customers are taking advantage of hyperscaler clouds as part of signing up for RISE with SAP.
5. In my 2019 book, SAP Nation 3,0, we had discussed the growing emphasis on cloud functionality and increasing talent challenges recruiting and retaining ECC and on-prem talent. Holger Mueller of Constellation had looked ahead and asked “Do you want to be in 2030…with an ERP system that cannot run machine learning, which does not have a good IOT story and so on?”

So, not sure I understand the DSAG surprise about Christian’s comment given all these signals going back so long.

About SAP’s economics – no CIO I have worked with pays full list price. There is no single enterprise software price point. Given SAP’s vertical investments and country presence it has a dominant position in many segments and can demand a premium. In many other segments it will not be able to do so. It has a very capable Value Advisory team which will have to help it justify its pricing.  I may be off base, but I don’t see a repeat of the customer pushback to maintenance price increases in 2008. That was boneheaded in the middle of a recession. This is aspirational and each customer will do their own value analysis and in case of AI, I am already seeing plenty of risk mitigation being factored in ROI assessments.

Not just picking on DSAG, I am also increasingly impatient with industry analysts. As I wrote a few weeks ago “I go to too many events where we still use dated TLAs (I admit I coined some of them in the mid-90s at Gartner). Two flagrant ones are ERP and CRM. Research firms have armies of analysts who still create Magic Quadrants, Waves and other tools around those TLAs and they parachute in droves to industry events. Worse, vendors spend months responding to questionnaires from these analysts to justify microscopic changes in their annual scorecards.” And “Let’s get away from umbrella, fossilized terms. Let’s talk the language of today’s business.”    

Every customer decides its own technology footprint and path. For many staying with the true and tested is the best path. But let’s not shackle our vendors to that past. Let’s push them to keep thinking about the future. The world has changed dramatically in the last few years and the pace of change will only accelerate.

5 goals for the next 5 years

I am about to hit several career milestones – 20 years of Deal Architect, 30 years since I was at Gartner and we coined TLAs like ERP, 40 years since I first implemented a packaged application – they were called COTS back then. So naturally, people ask me or at least wonder if I have plans to retire or in reverse, try to keep up with Ray Wang’s travel schedule😊  After 6+ million airmiles, 3000+ hotel nights, 500+ car rentals across 75 countries, 9 books, 12000+ blog posts, 500+ video episodes, hundreds of advisory projects, countless industry events the body has its fair share of scars. The good news is I have several months of sabbatical time accrued and I could take a month off each year if I chose to.

The reality is I am unbelievably excited about new opportunities in the industry. As I wrote here, we are tracking 4 large software and services markets – hundreds of vertical “edge” applications, applications for fast-growing global economies, custom development using low and no-code tools and Generative and other AI.  

So I have just committed to 5 more years at Deal Architect – actually 3 with an option to extend another 2. I have seen the industry grow through countless architectural shifts. Don’t want to miss the next AI and network driven shift.

Having shared my excitement, let me also share one of my concerns. Some of you have heard me say “when I started my career, companies mostly built, not bought, enterprise applications. It’s been a glorious phase for buying v building. By the time I end my career, I hope the pendulum has not sharply swung back to building”

To make sure it does not end that way, I have set (actually refined) 5 goals to help, in a small way, shape the industry trajectory

Re-imagine business processes

Some of you have heard me say that if Bezos had run a RFP for software for Amazon’s fulfillment centers, he would have ended up with a traditional WMS which had been migrated to the cloud. And they would have likely needed 10x the workforce to fulfill the massive scale of orders they have grown to. Instead, as I wrote here after a tour of one of the centers, Amazon completely re-imagined the old warehouse pick, pack, ship mindset. It's now stow, pick, pack, verify, and in their lingo, SLAM and "chaotic storage". Kiva robots and miles of conveyor belts bring work to employees, not the other way round. Scanners, scales, sensors monitor and facilitate the worker - what size box to assemble, cut right length of packing tape, apply shipping labels etc.  Ditto for BMW’s global SUV manufacturing plant in S. Carolina, Uber’s ride share app, Rolls-Royce Aerospace’s “Power by the Hour” and many others who rethought traditional processes and business models.

The enterprise software industry has been blessed with brilliant architects – Ellison, Plattner, Harris, Chakraborty among them. It has lagged in a similar balance in process visionaries. Its service partners are better at implementing applications as delivered, not leveraged to re-imagining the process flow and UX in the first place. The good news is Gen AI is allowing the industry to rethink applications. But that’s necessary, not sufficient. Software alone cannot eat the world. Robotics, scanners, satellites, drones, sensors, mobile phones all need to be factored. A blend of digital and physical is necessary to re-imagine ecommerce returns, EV battery infrastructure management, telemedicine and many “newer” applications which have become essential in the last few years. The West can also learn from new digital processes and massive scale of mobile technology in markets like China, India and Kenya among others – see some thoughts from Thomas Otter of Acadian Ventures in the Burning Platform episode. 

The increased focus on AI is also highlighting how little enterprise data we actually have in vendor clouds especially that with customer permissions to train machines. Too many vendors glibly talk about how they will leverage “someone else’s” industry or regional data.  It will be a lot easier to re-think and broaden their own process coverage and harvest data that way.

Retire decades-old terms

I go to too many events where we still use dated TLAs (I admit I coined some of them in the mid-90s at Gartner). Two flagrant ones are ERP and CRM. Research firms have armies of analysts who still create Magic Quadrants, Waves and other tools around those TLAs and they parachute in droves to industry events. Worse, vendors spend months responding to questionnaires from these analysts to justify microscopic changes in their annual scorecards.  

We knew this risk at Gartner way back in 1995. We coined an umbrella term, ERP but knew that was a long-term path for customers not a one-time buy.  Analysts were organized by categories of buying centers  - AAS for Administrative Applications, ILS for Logistics, CIM for Manufacturing etc. If anything, we were already issuing warnings that the so called ERP solutions in the market were not really that enterprise wide and you needed to plan for a whole new category of CRM, EAM and other capabilities. In the two decades we should have coined hundreds of new categories – instead we keep using tired old acronyms.

Consumer Reports has an annual New Car issue where they nicely summarize details and scores of 300+ new, not 20 year old, makes and models. Still, do you buy the issue every year? No, you likely only do so in the year when you are in the market for a new vehicle.

It’s the same thing with analyst tools. Buyers look at them when they are in the market for a new piece of software. Oh, once every 20 years. And many have bought into the concept of “composable architectures” – they buy individual pieces of software, not complete suites, to reflect changing business needs.

 I wrote a few years ago:

a) Buyers intently look at such market assessments when they are in purchase mode. Once they move to implementation or steady state, their interest in the next MQ drops dramatically. I think that painful realization came to me in my 3rd year at Gartner.

b) In contrast vendors, especially their AR groups, intently follow each version of the MQ and lobby analysts and create a buzz around each version where they are favorably positioned.

c) Even in evaluation mode, the MQ or Wave is only one (small) influencer. Most buyers go through RFP responses, demos, reference checks, site visits, negotiations in their decision process. Many often find individual calls with the analyst who produced the MQ far more useful than the document itself.

Let’s get away from umbrella, fossilized terms. Let’s talk the language of today’s business.

Prioritize the real influencers – customers

Some of you have heard me say "In the 70s buyers turned to IBM for advice. In the 80s Andersen. In the 90s Gartner. More recently even to Wall Street for guidance. Increasingly, they turn to each other."

Over the last decade, I have been proud to be associated through my blogs and videos with a new generation of market watchers at Constellation, Diginomica, HfS, Redmonk and others. Each has been innovative presenting market trends; however, they mostly summarize vendor perspectives.

We have our fair share of customer contact through advisory projects, book case studies and many other formats we do not publicly share, but one of my goals is to increase focus on that signal source even more going forward.

Rethink ecosystems and economics

For too long, the industry definition of ecosystem has focused on implementation partners and systems integrators and more recently, hyperscalers.  A contemporary definition should also include strategy firms, automation vendors (to cover robotics, drones, autonomous vehicles etc), vertical and regional specialists and research firms, startups and more.

The other focus in ecosystems should be on dramatically shrinking the labor component. Migrations and upgrades are still too expensive, lengthy and low quality because we have not automated many repetitive steps. I am brimming with ideas including use of LLMs to ingest test scripts, data conversion code, training materials and other artifacts from 000s of ERP, CRM and other projects we have done over the last few decades. No need to reinvent the wheel at each project.  I will admit I don’t know how to convince service providers that there is an alternative business model to selling school buses filled with consultants.

Return to Polymath thinking

In 2010, I wrote The New Polymath – I defined it as “an enterprise that excels in multiple technologies—infotech, cleantech, healthtech, and other tech—and leverages multiple talent pools to create new medicine, new energy, and new algorithms.” Most of our books since focused primarily on infotech. Last year I had a chance for help two SAP executives write “Business as Unusual”. Guess what? It was also about new medicine, new energy and new algorithms. I thoroughly enjoyed the experience and refreshing my STEM education by opening up biology, geology and other science textbooks. I expect to do more of that over the next 5 years. If my wife lets me, I may even use the sabbatical time for that😊

The Deal Architect backgrounder describes us

“Deal Architect was founded in 2004 by a former Gartner analyst and PwC consultant. He had worked for 2 decades at those companies in multiple global locations. Each firm had its own competence, but many clients wanted a combination. That led to his philosophy that technology advice and research should be symbiotic - advisory clients should benefit from our research, and our readers should benefit from the practical, field feedback from our clients. Additionally. the advice and content should be ahead of the market and be global, not parochial. For two decades now, we have not strayed from that vision.”

We intend to continue to follow the course.

Of course, every few years, tech vendor leadership changes. Too many vendors miss out on large new markets. IBM and HP allowed rank outsiders with little data center experience like Amazon and Microsoft to dominate the hyperscaler market. Indian IT outsourcers missed out on the much larger contract manufacturing market to the Chinese. CRM vendors lost the digital marketing market to Google and Meta.

Someone will rise to dominate the markets I highlighted at the start. Will it be the incumbents or newcomers? I am putting in my request for a front row seat to watch that play out for the next 5 years.

Burning Platform: Raising the Bar for Analyst Summits with Truly Zoho

In the 83nd episode of Burning Platform, we host Sandy Lo and Pooja Mittal in the marketing team of Zoho and they talk about the elaborate planning and logistics it took to host the Truly Zoho analyst event in Chennai and Tenkasi in India.

You have likely read perspectives from several analysts including Brian Sommer, Jeremy Cox, Ankita Singh, Thomas Wieberneit and seen videos from Paul Greenberg and Brent Leary and others. It is not an overstatement to say it was one of the most talked about events in the industry, especially considering only 15 analysts participated.

However, the positive outcomes and experiences took months of planning, which as they say had backups to backup plans and extremely complicated logistics many of which changed on an hourly basis

Here they are summarizing many of the gory details in about half and hour and sharing some of the photos and social media from the event.

Raising the bar for analyst summits does not give it enough credit – they blew the roof off!!

 

 

Time for the tech sector to think about “Business as Unusual”

I have seen it repeatedly, 4 years in a row. In 2020, I saw it in the pandemic stress in many execs I captured in the New Normal video series. In 2021, the Moment of Service book I helped IFS with showed me the massive changes in the industrial world as it servitizes.  In 2022, the book I helped SAP with showed me hundreds of new business applications that have emerged in auto, consumer industries financial services, healthcare and many other sectors. 2023 is still early but the month I have spent in India has exposed me a group of humans who are hustling like crazy to make up for 3 lost years.

And yet, I see too many technology vendors who are not evolving quick enough. The last couple of decades have been generous to most of us. So we hope the current slowdown is a temporary recession. We try to keep selling what we have in the bag. We hire for the same roles which brought us here.

It’s time to reinvent technology vendors. Obviously there are plenty of new addressable markets - but they call for new products, not spray painting old products or hyping up ChatGPT. There are many new networks to explore as we think of ecosystems. Economics to revisit as mature markets are getting commoditized. Analyst relations to be re-examined and organizationally re-positioned.

Let me just spend a minute on the last point. Some of you have heard me talk about using analysts for intelligence v influence. With most AR groups being organizationally part of marketing they mostly want praise from analysts. They spend way too much time striving for the top right in the Magic quadrant of a mature product. They would add much more value if they would help their company explore new markets and help with competitive analysis for that unfamiliar turf.

Cannot say I blame them. Many of them report to execs who clearly love the adulation. You can see the narcissism in these exec's social media postings. It’s delusion - if they looked at their own win-loss analysis they would see they are far from perfect. Very far. 

Personally I would love to see AR groups with a dotted line to marketing and also report to R&D and to corporate strategy.

That’s just one thought around reinventing technology vendors. In the next few months you will hear more from me about other recommendations. Technology is a very wide industry so I will nuance my thoughts for software vendors v outsourcers v hyperscalers.

Let me repeat what I have said a few times recently. Business as usual - circa 2019 - is a recipe for mediocrity. The tech sector is especially vulnerable. Time to shake up every aspect of the business.