deal architect

Next-gen software executives

I was pleased to see Salesforce has appointed Parker Harris to its Board and promoted Keith Block to co-CEO. I have long been a fan of Parker – just brilliant and a nice guy to boot. I think the enterprise software industry has been incredibly lucky to have him, Stan Swete at Workday, Larry Ellison at Oracle, Hasso Plattner at SAP, Soma Somasundaram at Infor – some of the best enterprise architects all converge at the same time. Similarly executives like Keith, Bill McDermott at SAP, Tom Siebel now at C3 and others have taken sales to new heights in the last couple of decades.

But readers know my view is we are approaching the end of Cloud 1.0 apps.  We will need additionally some new executives in the next phase. We should actually have been starting to groom them a decade ago.

Here are some teams they need, each with an appropriately empowered executive:

Business Process Visionary

I was in Anchorage, Alaska recently and noted that along with Memphis, TN it is one of the 5 busiest cargo airports in the world. Of course, I said thanks to FedEx.  Amazon is no slouch when it comes to logistics – started working with the US Postal Service on “postal injections” 15 years ago. Started putting Kiva robots in its distribution centers almost a decade ago and is now exploring drones and other automation. Amazon, FedEx and others have transformed logistics and supply chain processes. Global manufacturing has turned upside down with Apple moving completely to contract manufacturing. It is about to change again as companies produce close to demand and are rethinking automation on the shop floor. BMW’s ultra-modern plant in South Carolina is an example of that.

Startups have been teaching companies to apply data science to enterprise processes – Oversight Systems around payables and other accounting , Uptake around complex assets, Palantir around fraud detection. In fintech, startups have been transforming banking operations. Ditto with other verticals. Small businesses are using platforms from Amazon, Apple, eBay and others for their eCommerce, their fulfillment, their talent sourcing.  Less than 10% of Fortune 500 talent is on their direct payroll. Some of the remainder in on 1099s, but the vast majority in in their suppliers, their service providers, their franchises and their platforms. Talent management has become exponentially more complex with this diversity.

You know what – none of the major software vendors or their SI partners have helped with much of this. Part of the reason is they have mostly taken old processes and taken them to the cloud. They have “reskinned” their process maps with prettier interfaces,  not tried to rethink the processes for industry changes and automation opportunities. But after two decades, it is time for the application software industry to start leading again with process innovation, not just keep talking about tired old “best practices”

Customer-centric economist

Most vendors have smart CFOs who can talk ARR, Rule of 40 and other investor lingo. But most of them could also use a peer who also helps them speak to customer technology economics.

For decades now, customers have learned from multi-year outsourcing contracts. They expect benchmarking and continuous improvements when they give a vendor years of runway and control. They want to see Six Sigma and CMM type productivity improvements. Most software vendors go in expecting to raise prices when customers renew their contracts. The disconnect between buyer versus vendor expectations is startling.

Another area where software vendors have fallen short is optimizing the cost of migrations to their solution. It’s not rocket science to take someone from Point A to Point B. Its been done hundreds of thousands of times around ERP, CRM and other projects in the last few decades. But most vendors just expect customers to pay SIs to get them there.

Vendors understand Point B intimately – it’s their software. Their salespeople know which Point As to  target.  They could use an internal economist who can focus on how best to deliver the migration - with automation and with specialist staff - at scale to the customer base.

Ecosystem overseer

Most vendors have a partner management role. But it often reports to sales and has a revenue goal to help fund customer events, training and other investments. That’s certainly one role. A separate one should focus on quality and customer economics in the ecosystem. It is mind boggling that vendors let their own brands suffer based on failures and overruns in their SI partners. It is shocking how many let them violate their own commitment to multi-tenancy and no-customization proclamations.

Again, this is not rocket science. SIs have done hundreds of thousands of these projects.  A few years ago, I wrote about cloud vendors and roofers.

I said

Cloud vendors are doing themselves a disservice by going in with service partners who remind the CIO of the last “roofing job”. They need a newer ecosystem of partners who use automation for the migration, the integration, the testing – the roofers who use conveyors and digital cameras. They need roofers who are done in 2 days. Partners who treat it as a repeatable, predictable job not treat it as a work of art. Then watch CIOs talk to their peer neighbors and start making the move one after another. And watch the neighborhood start to shine.

So congrats to Parker and Keith. But we will also need a new and different set of executives as we move into a new phase in the software industry

‘Tis the season for software lawsuits

Oracle, SAP and Workday have all been hit with lawsuits in the last few weeks for very different reasons as I describe below.

But first a preface – lawsuits draw a lot of attention but it’s usually wrong to extrapolate too much from them. Couple of perspectives on that:

- A vendor once asked their attorneys to brief me on the first day of their trial on an IP related lawsuit. My reaction was – wow, they must feel really confident to brief me months or years before a likely court decision. My second reaction was in fairness I should allow the other party to also brief me. Then I thought about it – the jury would not read or be allowed to what I wrote before it made its decision. And in good faith I could not pretend to tell my readers and consulting clients how exactly this jury may lean. Especially a jury of lay people listening to a complex IP case.  So I ended up not writing anything about the case that day or much even later.

- I have been “close to the action” on several cases as an expert witness and they are rarely open and shut cases. The attorneys are incredibly smart, but often don’t work full-time on software industry cases. So, there is sometimes a learning curve.  They are masters at simplifying complex topics to make them understandable to juries. They have to however, keep a safe distance from the expert, so the judge is sure you are truly independent. So, even though you are being paid by  “the same side” you are guessing why they take certain positions or ask certain questions. You usually have copious amounts of evidentiary data to work your way through, but cannot use that for any of your future writing or consulting.

Long and short – whatever you read in the public domain in an article or a post about any software litigation, the actual, gory details are likely quite different.

Having said that, it is interesting that at least 3 very different enterprise software related cases are currently in the news. My commentary is below with no inside knowledge in any of the cases.

Investor v Tech Vendor

City Of Sunrise Firefighters’ Pension Fund has a filed a suit against Oracle. It says “Oracle drove sales of cloud products using threats and extortive tactics. The use of such tactics concealed the lack of real demand for Oracle’s cloud services, making the growth unsustainable (and ultimately driving away customers).”

Audits are an unfortunate but common occurrence in the enterprise software world. Oracle has a poor reputation when it comes to this, but many of its peers are as guilty. While a small fraction of customers cheat and others involuntarily fall out of compliance, it is also a common way for sales fields to make their quarterly or annual numbers. Having said that, many customers have learned to “punish’ such vendors by freezing them out of future business many times what they end up paying as a result of what they consider unfair audits. Also it is starting to show up in a slow number of cloud software implementations as I wrote here – many coerced sales just end up as shelfware.

The filing says “These tactics alienated and angered the Company’s customers, which in some cases have not only refused to purchase Oracle’s cloud offerings but have also looked to terminate their existing business relationships.”. One of the best things that could come out of this lawsuit would be if they could “name names” and show what I have been saying that customers do punish vendors for such behavior. That could force a rethink at many vendors that such short term revenues come at a very hefty price.

Tech Vendor v Tech Vendor

Teradata is accusing SAP of theft and anti-competitive strategy: “SAP could not have so quickly developed and marketed HANA in the first place without its theft of Teradata’s trade secrets. Now, using the fruits of that theft and its position in ERP Applications, SAP is attempting to foreclose Teradata from supplying EDAW solutions to many of the largest corporations in the world.”

I am not sure what to make of this. Usually, you hear murmurs in the industry about some impending action but this appears to come out of left field.

I have not been a big fan of SAP’s HANA strategy in my books and blogs. I think the database has distracted it from application leadership. But did they steal in-memory and columnar database IP from Teradata?

I want to see how Teradata attorneys can succinctly explain arcane optimization algorithms to a jury. Also how they refute SAP’s considerable prior art when it comes to analytics – their three tier architecture in R/3 which allowed it to support multiple databases and understand how users access certain fields more than others , Business Warehouse going back to 1997, its Business Objects acquisition in 2007 and its Sybase acquisition in 2010 and many other elements. In The New Polymath, in 2010 I had written about work at the Hasso Plattner Institute in Pottsdam which I believe was the genesis for what became HANA.  Not saying one side has more merit than the other, but it will mean looking at a lot of documentation to say who developed what and when before the other did.

Customer v Tech Vendor

Sacramento City Unified School District has filed a suit against Workday and Sierra-Cedar for a payroll and finance implementation gone awry.

Project overruns and failures are not unusual around ERP software. In SAP Nation, I had a chapter which cataloged year by year of major project failures in the previous 15 years. And I knew many more where the customer settled botched projects in private. What is different here is so far Workday and its partners have largely kept their noses clean, The amounts involved are fairly manageable at around $ 5 million. Of course for a school district, that is a lot of money but I am used to seeing many 9 figure failures.

Complex as each of those 3 cases are likely to be, they will be child’s play compared to the EU v Google antitrust investigation which has gone on for almost a decade and will likely morph some more.

Like I said earlier though, don’t expect simple summaries from me or others on how and why they get settled. The devil is in the mounds of detail and often that is precluded from being publicly shared.

Digital – with Impact

This is the third in my midsummer updates around cloud computing, renewables and digital transformations.

Over the last few months, I have been collaborating with my colleague, Brian Sommer as he works on a book titled “Digital with Impact”. Both of us saw the practice of Reengineering start off with much promise in the early 90s, only to lose steam in a few years. Companies bought into the false promise, encouraged by SIs, that packaged software available then would give them “best practices” and “reengineering in a box”. Many are still stuck with circa 1970 business processes and the on-going burden of those expensive systems. Both Brian and I worry something similar may be happening with today’s digital projects.

As Brian says “Today, digital isn’t simply a replacement for analog, spoken or other aspects of consumer or business activities. Digital in today’s business vernacular is about BIG change – not small changes at the margins.

Business leaders don’t need more encouragement to ‘go digital’. No, they need a path to define and achieve their transformational goals. That path comes in four phases: They survey the landscape and get quite educated on new technologies, competitive threats, new opportunities, etc. (SEE). Next, they synthesize this knowledge into a new to-be vision of the firm (THINK). Their next challenge is to make a frank assessment of how well their firm can complete this vision and what new resources or adjustments they will need to make (RECONCILE). Finally, these firms acquire the people, funding and more to make the change a reality (TRANSFORM). “

He is a firm believer that doing a software replacement with today’s cloud technologies is necessary, but usually inadequate for impactful digital projects. Most enterprise vendors have not kept up with new trillion dollar markets that have emerged in the last two decades, and do not have a big enough digital “vision”. Here are some examples of their myopia:

Products have became smarter with sensors and satellites and software. Who has largely driven this? Contract manufacturers like Foxconn, Flex and Jabil. Foxconn itself employs many times the staff large IT services firms do. Consumers have become increasingly digital and social. Who has largely benefitted from this? In sheer dollars, it is Google and Facebook. Cloud computing has taken off. Amazon and Microsoft have taken over infrastructure markets that were IBM and Oracle and HP’s to lose. Mobile computing took off. Who benefitted? Players like Apple, Samsung and Google. Industrie 4.0 and IOT took off to the benefit of large asset makers like GE and Siemens. Enterprise vendors have done little to verticalize. CIOs are doing their own modernization with micro-services. These vendors claim to be process experts – talk of “best practices”. Guess what, the next wave of process automation is being led by customers who are trying out drones and robots and RPA with specialist solutions – read Silicon Collar to see how little a role these vendors have played.

So, a bold digital strategy calls for assembling a broad team of vendors, not just pinning hopes on those who have done well in the past with back office processes or with IT infrastructure. 

It also helps to probe to see how vendors themselves are changing. Digital transformations at their customers significantly impacts their own product mix and business models - often traumatically. In the last few months I have had a chance to talk to two vendors – Cognizant and SAP - about their own digital transformations.

Rajeev Mehta, President of Cognizant, the outsourcing firm told me “We actually took our revenue guidance (to Wall Street) down in 2016. And we started seeing the impacts of our clients demanding, wanting to start looking at transformation. We started seeing our existing legacy footprint under threat."

That led to a revisit of their 2020 go-to-market strategy. That turned out to be fortuitous as an activist investor, Elliott Management started clamoring towards the end of 2016 to implement what they called a "Value Enhancement Plan".

I am working on a case study which describes the organizational, product mix and other changes at Cognizant, but one of the outcomes from their internal transformation is:

“Operating margins have improved steadily and the activist investor, Elliott Management divested their interest in Cognizant in May 2018, after a 50% jump in stock price just 18 months after they pushed for their reforms.”

I am working on a similar case study about the digital transformation at SAP. Christian Klein, COO and  member of the Executive Board of SAP SE, told me “we are tackling the whole value chain of SAP. We are looking end-to-end, so marketing, sales, finance, service and support, cloud operations, the cloud infrastructure. All of this has to work in harmony end-to-end. That's the first aspect of our transformation.  Next, we are infusing machine learning, IoT, predictive analytics, all this kind of new technology to also bring the intelligence into play to scale and to also get some synergies out of that.”

“It's about adapting business processes to the new digital age. It's about fixing the data architecture. Last, but not least, it's about change management, and taking the people with you because, at the end, everything that we do in the cloud, in system side impacts, in our case, our 90,000 employees and our 360,000 customers, so change management is a key aspect.”

Benni Blau on his staff shared with me details of ten projects they have internally worked on, and the success metrics they can show across marketing, sales, finance and other business areas.

There will be lot more on these and other case studies in Digital with Impact and SAP Nation 3.0 books in the next few months. 

Long and short. Don’t just do small d – digital. Do it with a broad team of vendors. And prioritize vendors who have been doing their own digital transformations and can actually show results from such efforts.

Renewables: The “great dual challenge,”

The new General Electric  is a shell of its former self as it sheds most of its business units and its industrial coverage is down to its aircraft engine, renewable, and power plant businesses. GE CEO John Flannery has called the three “highly complementary businesses poised for future growth”. Yes, each is based on turbine technologies, but I can see how green zealots cringe when they see the association between fuel guzzling planes, coal and natural gas-driven utilities and wind turbines. It is, however, the reality as GE sees it.

The Washington Post has an article on BP and how the oil giant was “forced to shrink to greatness”. It shows how the US government almost put the company out of business after the Deepwater Horizon explosion and how the rest of Big Oil shunned it. It has trimmed down and is starting to invest again.  Renewable investments may reach $500 million a year, a tiny fraction of BP’s $15 billion or more in capital spending. Its big bet is on natural gas and that utilities will increasingly move from coal to gas.  CEO Robert Dudley says “This is not a race to renewables. It has to be a race to reduce emissions,”The “great dual challenge,” is to do that while generating enough energy to lift people out of poverty and absorb population growth.

You could argue that GE and BP are not ardent supporters of renewables, but how do you explain the situation in Germany? Foreign Policy says

For years, Germany’s Energiewende, or renewable energy transition, was held up as a best practice for other nations to follow. After all, in just 15 years Europe’s biggest economy turned a third of its electricity generation green by subsidizing investments in solar energy and wind power. In doing so, it added 300,000 jobs to the economy. Even while it was in the process of phasing out nuclear power, Germany managed the transition while its factories hummed along, the economy posting record growth and trade surpluses. In the late aughts, Merkel was dubbed “the climate chancellor” for her engagement on behalf of the climate.

Yet, in spite of spending hundreds of billions of euros on subsidizing renewables, Germany will struggle to meet its 18% renewables target for 2020. The country continues to rely heavily on its coal and lignite, and more recently on natural gas from Russia.

Progress is more visible in smaller countries like Denmark (especially with wind), Kenya (especially with solar) and Iceland (with geothermal).  If you include hydro power in the renewables bucket (many hard-core green fans argue that dams cause ecological damage so aren't as as sustainable) Norway, Canada and Costa Rica are shining examples. The little island of Palau has announced plans to move completely to solar power in the next few years.

There is also good news from the state of California. Assembly Bill 32 pushed the state to reduce emissions by 2020; California did it in 2016, dropping from 1990’s 431 million metric tons to 429 million metric tons.

The next big hope is China which is said to be investing $ 360 billion (mostly in wind and solar energy) during the five-year 2016 to 2020 period.

Renewables are making nice gains in the utility sector, but that is not being matched in transportation (tankers, trucks etc.) and heating – which together account for 3/4 of global energy consumption.

A number of fan boys keep arguing otherwise, but the disappointing German experiment in particular tells us the BP comment about “the dual challenge” will be our reality for the foreseeable future.

Renewables are a bit like Artificial Intelligence. Every few years we get excited with progress but you look a few years later and the adoption progress is uneven.

The end of Cloud history?

In 1989, Francis Fukuyama, then deputy director of the State Department's Policy Planning Staff (he has since taught at Johns Hopkins and Stanford among other institutions) predicted the fall of Communism and the world beyond in an article titled “The end of history”. In 1992 he elaborated his thoughts in a book. His view was optimistic – that Western democracy had prevailed and would survive as the “final form of human government”

Margaret Thatcher, one of the major contributors to the Fall of communism, and conservative herself is said to have reacted to Fukuyama’s article thus “The end of history? The beginning of nonsense….” No doubt, history marched on – there were wars in the Middle East, the EU and China both emerged as major global powers, Russia has not exactly disappeared.

Cloud computing is entering its third decade (NetSuite was founded in 1998, Salesforce a year later) and in many ways we can say it has won out over on-premise computing. And we can like Fukuyama say it is the end of cloud history, but how will the next decade and beyond play out?

Based on my research and consulting the last few months, we could see at least five scenarios emerge: 

a) Next-gen enterprise apps continue from current market leaders

The current crop of leaders – Workday, Salesforce, Oracle may continue to go from strength to strength. To SAP’s credit it has through its cloud acquisitions managed to survive the onslaught of those three and others and is poised to lead again. As I wrote a few weeks ago, it will take a next generation of apps with changing UX of voice interfaces and digital assistants, a lot more integration of automation like drones, robots, wearables and functionality which reflects today’s business practices not those brought forward from client/server world. This is a challenge for the incumbents. They want to keep selling what they have versus developing their next-gen of apps, and may give SAP a chance to get to leadership again. Having said that. in the last couple of decades, SAP has missed out on several trillion dollar markets as I wrote here. All these vendors are somewhat myopic – they keep looking at each other as competition and ignoring the white space around them.

b) A verticals led market

In the first two decades of cloud apps we mostly saw financials, hcm and crm functionality – horizontal across industries. Major chunks of functionality – utility billing, insurance claims processing, electronic medical records, retail merchandising,  manufacturing execution and countless others have stayed in client/server and prior architectures. By my estimate that leaves 80% of the market uncovered and opens opportunity for a new set of vendors (or outsoucers like Accenture) to come at enterprises with industry functionality partnered with horizontal functionality available  in the market today.  In other industries, large customers may themselves port their legacy industry applications to micro-services architectures.

c) Portfolio of technologies from multiple vendors

My colleague, Brian Sommer and I have looked at several business processes which the current apps leaders offer, and even there there are enough SMAC – social, mobile, analytical and cloud components you can use to craft far better purchase to pay or recruiting or shop floor capabilities. Customers prefer to buy versus build but many are finding they can combine components from multiple software, hardware, sensor and other vendors and create far more relevant and cost efficient processes.

d) A data led world

A radical new way to think of applications may be emerging. As John Wookey explained “And rather than ask people to type data into a system and then spit it back at them, {which is honestly what most applications do) ...ask for data and then give it back to you…you start with the idea of, here's the business objective, AND there's all the data in the world. What kind of an application would you build? The analogy I always use is Waze, which is to me, like the application that showed the best value or the best shift that will happen. When you go from a world in which you have an app that shows you red lines, yellow lines and green lines on a hard to read Google Maps, which is kind of what used to be in the traffic apps, if you remember them. To Waze. No one cares what the traffic is like in that area. What they care about is finding the best route to get home. How do I get from A to B as quickly, easily as possible. And tell me my options in doing that. And then feed me, turn by turn what I should be doing.”

We are starting to see vendors talk about machine learning – but those are in context of their current flows. Workday has Prism analytics which bring data together from multiple sources, SAP is talking about intelligent apps, but a new wave of business applications which works backwards from goals and objectives may be emerging. It could be data centric vendors like Google and others like IBM with Watson type capabilities which lead in this market

e) An infrastructure led world

The fastest growing segment of the cloud market today is that around IaaS. Amazon and Microsoft with their massive data center footprint and platform ecosystems could start through acquisitions and partnerships start to redefine the application landscape.

The problem with infrastructure led vendors is usually they think in speeds and feeds not features and functions or business outcomes. As an example, Oracle could have run away with the cloud apps market in the last decade, especially with SAP’s issues. They could have replaced hosting in tens of thousands of their PeopleSoft, JD Edwards, EBS and other customer bases with their IaaS. They have chosen to chase after Amazon. They could have listened to their legacy customer base which went to third party maintenance. These customers consistently ask for support of their customizations and improvements in ticket resolution. Oracle responds with “ours is more trusted – secure”. It’s ships passing in the night.

Yes, we are approaching a pivot in the cloud apps market. This is where the geopolitics were in 1989. The next decade and beyond will be tumultuous – exciting for some, disrupting to others.

It is the end of cloud apps 1.0.

A Midsummer Night’s Musing: Clouds, Renewables and Digital

In November, I ran a 3 part series titled “Raising the Bar” around cloud computing, renewables and digital transformations. 

Over the next few days I will provide an update on each. Each post should benefit from the vendor event season which seemed unusually busy this year, from the consulting I have been doing, from the on-going research and interviews for the next volume of SAP Nation, and from analysis of global events and twists and turns at major companies.

Each of the markets is at a pivot. It shows in changing fortunes of companies like GE and Oracle. With renewables, we are seeing the results of a long experiment in Germany and the beginning of a new one in China. With digital, we are starting to see some tech vendors open up about the impact transformations at their customers/clients are having on their operations and business models.

In the meantime, hope each of us is enjoying the summer. Hope you have found your version of Shakespeare’s contentment

“I know a bank where the wild thyme blows,
Where oxlips and the nodding violet grows,
Quite over-canopied with luscious woodbine,
With sweet musk-roses and with eglantine.”

Relational Databases: Gradually, then Suddenly?

In The Sun Also Rises, the Ernest Hemingway character is asked “How did you go bankrupt?”. His response ‘Two ways. Gradually, then suddenly”

I thought of that relative to relational databases during a meeting with Hasso Plattner of SAP in Orlando recently. There was a palpable sense of vindication that his view on columnar databases like HANA has been tested and validated by thousands of customers

“Yeah, that's mainstream. I feel good about that, ten years ago, I had an idea which really worked: streamline ERP applications to basically record only transactions.

And, for everything else there are algorithms to exploit the data….Facebook doesn't know what aggregates are. Why do we have aggregates? They have no aggregates.

Today, it's all on demand. People are not permanently rolling up and looking at rolled up data. And, if they do that, then it's fast. If they want to change it, it's instant.

That is really gratifying”

Then I read this Werner Vogels (CTO of Amazon) post

“We found that about 70 percent of our operations were key-value lookups, where only a primary key was used and a single row would be returned. With no need for referential integrity and transactions, we realized these access patterns could be better served by a different type of database. Further, with the growth and scale of Amazon.com, boundless horizontal scale needed to be a key design point--scaling up simply wasn't an option. This, ultimately led to DynamoDB, a nonrelational database service built to scale out beyond the limits of relational databases.”

He then proceeds to talk about a wide array of databases Amazon now offers, including a relational one.

I still believe relational databases are declining “Gradually”, not “Suddenly” about to hit the wall. New applications are increasingly running on non-relational options. Converting legacy applications will take a long time. Retraining DBAs, adapting systems management tools to support new databases for stringent SLAs will take time. It’s unclear if the Teradata lawsuit will slow down HANA adoption. (we met Hasso before that announcement).

But I am now prepared to say that the “Gradually” decline is starting to accelerate.

Hey Amazon, Google, Microsoft, IBM, Oracle…

… a nice opportunity to show off your machine learning capabilities – specifically with transcription help for my next book.

I tend to interview lots of executives for my books. For each of my last 6 books I have tried some speech-to-text technology – various versions of Nuance Dragon, Siri etc. with very little impact. I keep going back to human transcription services.

With ML having matured so much – and voice interfaces starting to show up in so many applications – would love to have the transcription be automated this time. Over the next 3 months I will likely have 100 audio files to transcribe.

Many of these files will be captured from a speakerphone on a Zoom recorder, and I will be able to upload those MP4 file. So, there will be some degradation due to the call quality. Also many of the speakers will have German, other European, Indian and other accents and will use tech jargon. But the conversations will be in English.

Amazon, you have the inside track. We use your KDP platform to publish the Kindle version of books. Having said that, the first use of AWS Transcribe did not produce very good results.

Google you also have an inside track. Most of these MP4 files are stored in Drive. I got excited when I saw the GCP  Speech to Text conversion, but my conversations are longer than a minute. Can you help with longer conversions?

IBM, Microsoft, Oracle – same offer to try out Watson, Azure and Oracle ML services on my project.

Look forward to your support!

SapphireNow: Event Scorecard

Readers know I prefer going to vendor analyst summits compared to user conferences. I feel like I am intruding on customer time and access to vendor execs at the latter. But in many ways, SapphireNow last week managed to bend laws of gravity and as a result I really enjoyed the conference. Here is a post-mortem:

Pre-briefings – A-

I offer vendors the opportunity to provide a sneak preview on the blog. In the past Oracle and Workday have availed of that. I offered SAP that opportunity but we could not make that post happen in time. In exchange, however, SAP had a series of pre-briefings under NDA. A full day in NYC, and several phone calls in prep for the Orlando event. Impressively, they actually listened and modified some of their presentations based on our feedback.

Customer Access - A

I was blown away by the number of customer meetings SAP set up either one on one, or in small groupings of analysts. The one negative is that filled up my agenda and I could not attend some customer sessions or meet folks on the show floor I would have liked

Vendor Executive Access – A+

Having time with vendor executives tends to be elusive for analysts and media at user conferences. Yet, I was with Hasso Plattner in the same room three different times for a total of 4 hours! That’s a new record for an event. Other executives were available for several sets of panels or small group meetings. And the SAP AR staff tried really hard to set up even last minute meetings we asked for. I hate to think how exhausted the poor executives were given the customer meetings and social activities they are also expected to grace at such events.

Hotel and conference logistics – B-

Even for a Floridian, Orlando this time of the year can be miserable so I really appreciated staying at the Hilton with a covered walkway to the Orange County Convention Center. I also appreciated being warned the wifi at the OCCC was poor and the keynote theater a bit cramped so I watched couple of the keynotes in my hotel room and took screen shots of slides. BTW Shame on the OCCC - SAP has been a loyal, highly visible patron for a decade now and to not have decent wifi is inexcusable. I hope the SAP events team have an SLA with the OCCC and get some credits for future events there. As a balance, the catering at the OCCC was surprisingly good. Well stocked coolers and coffee stands and the meal buffets had enjoyable diversity. The open floor layout which has become standard in most industry events these days hurt SapphireNow this year. We had too many meetings where people had to scream to be heard.

Social activities – A

The best evening by far was a small group dinner our AR coordinator, Stacey Fish organized. I skipped most parties but enjoyed some quiet time at one that Franck Cohen threw with some of his friends from Cirque du Soleil. I tend to avoid concert night – usually past my bed time to be terrorized by the strobe lights and throbbing subwoofers. But I went this time to humor my daughter who has grown up with Justin Timberlake. Stacey managed to get her a ticket. The logistics of ferrying the audience to the Amway Center were impressive. The show itself : I was pleased to see everyone having a good time, but yes I did miss my nap and I was terrorized by the strobe lights and booming subwoofers

Will SAP lead the next generation of enterprise applications?

Franck Cohen, President SAP Digital Core & Industry Solutions, presented the slide below at SapphireNow last week. He did not spend much time on it and I would likely have not thought much of it if he had not shown it in an earlier meeting. It is a simple slide yet could herald the next generation of enterprise apps. I have taken his thoughts and added my commentary.

Digital Age UX

I had a chapter in the 2010 The New Polymath about emerging interfaces.  It’s taken a while, but at home we are getting used to digital assistants like Alexa. In our cars, we are starting to feel haptic interfaces and get comfortable with heads up displays. On the shop floor (see this Plex keynote) we are moving to digital capture, wearables and AR/VR. (and the Kopin WhisperChip described there should make voice interfaces work even in noisy environments). During the Super Bowl earlier this year, I was struck by a Dr Oz commercial where he described how wondrous the five human senses are. The enterprise is (finally) starting to recognize that and diversify beyond the keyboard and mouse.

Automation

In Silicon Collar I described how BP is using robotic crawlers on rigs and drones for pipeline inspections, how KPMG is redefining audits with cognitive computing, how digital agencies like Grok are using CGI, how Amazon is leveraging Kiva robots in its distribution centers, how banks are using RPA and many other man-machine combinations. No profession or business process is exempt yet amazingly enterprise software has been somewhat oblivious to this automation-everywhere trend.

Next-gen processes

Today’s cloud solutions have mostly taken features and functionality forward from the last wave of client/server ERP, CRM, EAM etc. They have adapted to compliance driven changes, but not so much for business model and practice changes.  And they have mostly tackled horizontal accounting, HCM and CRM functionality.

So much has changed in the last two decades. If you are a utility your billing needs to factor net metering where your consumers are selling power back to the grid. If you are a retailer you deal with your customers across multiple channels, through countless delivery methods and have to adjust to reverse logistics like you never did in the past.  If you manufacture, your bill of materials has a lot more silicon and software as products become smarter. You have plants around the world close to your major consuming markets.   In reverse, you may also be dealing with contract manufacturers. If you are a CPG company, your marketing budget is increasingly digital and social but you still have plenty of analog spend – radio, print, billboard, events. HR processes – recruiting, training etc. – appear oblivious to the fact that only 10% of the US civilian work force now works for the Fortune 500. No, the rest are not contractors. The talent is in their supply chain, in their service firms (accountants, attorneys, advertising firms), on their platforms, in their franchises etc. We need new processes to track and develop this very widespread talent base.

It’s nice to hear Franck lay out his vision, but can SAP wake up Rip Van Enterprise Software from its 20 year slumber and catch up to modern business? It’s not like SAP’s performance has been stellar in the same period

• SAP has often been distracted by infrastructure and platforms, not applications – NetWeaver, Sybase, HANA have taken a lot of attention.
• S/4HANA is largely a re-skinned ECC. It has not pushed the ball forward on new functionality. It has not even begun to focus on industry book of record functionality.
• SAP has been timid about cloud computing. Its acquisitions – SuccessFactors, hybris etc have brought it cloud revenues, but the majority of customers are still on on-prem software. Early S/4HANA adoptions have been mostly on-prem or in private cloud
• It continues to be very dependent on its traditional SI partners who themselves missed out on the many new trillion dollar markets which have emerged in the last couple of decades.

Yet, for the first time in the last several years at SapphireNow, as I wrote here, I felt some optimism about the application vendor buried in that organization. Maybe that will spur some more action in the competition.  Oracle has appeared to be more interested in catching up to Amazon and Microsoft in the IaaS market than in growing the application footprint. Infor had a grand vision of servicing several verticals but has been slow to do so. Workday is highly focused on finance and hr, Salesforce on its somewhat narrow vision of CRM.

The biggest strength for SAP is its customer base across industries and geographies. My books have cataloged many of the innovators in that base. The opportunity awaits to turn their innovation into application features and functions.

Will SAP grab it?