I liked Marc Benioff's recent comments particularly around Oracle and TikTok
“Because I’m mostly worried about the companies that aren’t making aggressive moves. I’m calling CEOs who are friends of mine who are in paralysis and who aren’t making moves, and I’m saying, Look, you’ve got to get into participation. You’ve got to get out of paralysis and into participation. Larry Ellison is the master of relevance. This is a move to make him relevant. This is so important.”
I am afraid, though, Marc's definition of "relevance" will mostly be viewed from the lens of M&A and other financial market moves. Marc himself stays relevant at a societal level, is usually responsive to customers (I emphasize the word usually because a number of customers grumble about how SaaS vendors have become as greedy and inflexible as on-premise ones), Salesforce has been regularly showcasing its vertical moves.
He leads by example but I would like to extend his definition - based on what I have heard from my interviews with countless C level executives as they have pulled heroics during this crisis.
If you have a large on-premise customer base, how did you help your customers with their WFH and sustainability moves and their requests for maintenance relief?
It's pretty clear on-prem applications were a pain as they required back flips around VPN provisioning, rapidly scaling up or down as companies moved tens of thousands of employees to WFH. As climate change becomes more of a "burning" issue it is clear that hypercsalers like Amazon, Google and Microsoft have far better PUE and other metrics than the data centers most on-prem applications run on today.
So, in Oracle's case while Zoom has helped (and TikTok's workloads will help further) its cloud infrastructure cred, I would ask what it did for its large PeopleSoft, Siebel, JD Edwards, Business Suite and other on-premise customer bases. I have long believed and told have them they should have "lifted and shifted" their application customers to OCI, instead of trying to convince them to move to Fusion or NetSuite. I wrote this back in 2016. Also, was Oracle easy to deal with as CIOs who were in badly hurt sectors or countries asked for maintenance relief?
Not just Oracle, I would like to hear similar from SAP, IBM, Infor, Microsoft and others with large on-prem customer bases.
How did you help your customers with what I call vertical "edge" applications?
We have seen what I call vertical "edge" functionality help companies survive or even thrive as their markets changed literally overnight. I would like to hear examples of how vendors helped with examples like:
- Telemedicine in healthcare
- PPP loan processing capabilities and mobile apps in banking
- Distance learning in higher education
- Drive-thru processing in food service and retail
- eCommerce and robotic warehousing in retail
- Last mile delivery in groceries, restaurants even car buying
- Remote home buying and digital mortgages in real estate
How have your analytics capabilities kept up with massive changes in the last few months?
I wrote this while listening to SAP's Data and Analytics summit last week, but I would like to hear from every vendor how their analytics have responded to
- chaotic, broken down supply chains, massive eCommerce and last-mile logistics spikes and significant opportunities for next-gen supply chain analytics and IoT mining,
- a relentless stream of continuous planning as CFOs updated forecasts and scenarios almost hourly.
- healthcare planning heroics as we opened pop-up clinics, expanded diagnostics and ICU capacity overnight, scrambled for PPE inventory, parachuted medical personnel from wherever, accelerated clinical trials for vaccines.
- citizens who have seen countless public health visualizations on COVID positives, hospitalizations, fatalities etc. from Johns Hopkins and other sources. (btw, the term "single source of truth" that is bandied by analysts is cause for caution these days as media has cherry picked this health data in its reporting. The need for pandemic modeling agencies similar to the National Hurricane Center has become obvious. )
- an explosion in video content from telemedicine, streaming TV, digital real estate, countless Zoom sessions and related emergence of a new generation of video analytics
- WFH productivity, gaming and other metrics
- intense focus on diversity and inclusion HCM metrics
- more precise outage mapping and storm tracking given the spate of forest fires and hurricanes this summer, and sustainability metrics as climate change becomes more of a "burning" issue
- trading data even for a much more Wall Street-savvy cohort of Millennials thanks to sites like Robinhood and due to unprecedented market volatility
- a new wave of polling data and sentiment analysis in the US elections
- data from sports with seasons which will definitely show asterisks - without fans in stadiums, teams in bubbles, shortened playoffs etc.
- a changing competitive landscape as vendors like Snowflake and Palantir are getting a lot more attention given their massive IPO/public listings.
If you are "services-heavy", how have you adjusted to a travel challenged economy and changes to your business model?
Brian Sommer and I discuss in this Burning Platform episode the impact on SIs and outsourcers as travel is increasingly challenged and few customers want outsiders at their facilities.
As a result, many vendors (and customers) are moving to more outcome based and away from headcount and timesheet based contracts. I would like to hear more about that evolution. I am also hearing more buyers express concerns about security and privacy of employees of their service providers as they themselves WFH. How are vendors responding to those concerns?
Not every vendor is talking much about how they have evolved in the last few months. Many are just hoping the bungee snaps right back so they can go back to selling what they had in the bag in January. That could well happen, but for now, it would not meet my definition of "market relevant".
Interview with Malcolm Frank of Cognizant: Davos and Digital
Malcolm, "Digital" is a hot theme with every outsourcer these days. Seems like you have been talking Digital for 5-6 years. Now that every one else is talking Digital, how is your thinking evolving?
When it comes to the "Digital" buzzword, I have a bit of a giggle about this. We're all going to look back a few years from now and say collectively, "Oh, that was so 2015." If you view it from the CXO perspective the term is still too ephemeral. Rarely do clients roll out of bed and say, "I have to solve a digital problem today."
You can see also see how the SMAC (social, mobile, analytical, cloud) stack has evolved in the market zeitgeist year over year. Around 2010 cloud was the rage, as it seemed everybody was marketing solutions around the “cloud” to the point where the term became meaningless. I think clients in particular got a bit annoyed by it.
Then around 2012 it was about building the social enterprise. I remember Salesforce.com focused on the concept and then a year later they pulled the plug on that and did not use the term again. Then in 2014 the market conversation seemed to focus on Analytics and Big Data.
Maybe I'm showing my age but I also struggle with the "Digital" term because I keep having visions of Robert Palmer and the demise of Digital Equipment Corporation.
All of that said, I think we're moving in the right direction. In the next couple of years you will likely see more digital solutions become crystallized and clients understand them better and how to procure them. For example, a bank will likely talk about to vendors about robo-advisory automation solutions as opposed to something “digital.”
Malcolm, I think you are being modest. For years now, you have helped guide Cognizant through its "Three horizons" strategy and you wrote the Code Halos book couple of years ago. Surely, that counts for some competitive advantage?
We think it's served us well in a couple of fronts. One is certainly in terms of establishing mind share and thought leadership because this is important to us. We're thoughtful about it as a company. We had our Center for the Future of Work. We've been at that now for 5 or 6 years. We have some very talented people as you know. That's certainly has gone well for us. It allows to see what's real in the markets and what's just talk.
Around the Code Halos book, I think the key nugget people picked up was that any person, place, or thing is going to have a virtual life as well as a physical life. It has its digital twin. We have seen a number of our clients pick up on that. It resonates with them. That clearly has been a very helpful construct.
I think a third construct that has worked well for us are both internally at Cognizant and for clients is our 3-horizon model. We hear a lot of talk today about two-speed and dual-track IT, and the 3-horizon model certainly applies to IT. Horizon 1, at least the way we have structured it applies to your core operations. These are things that are old to you and they're old to the market. The mandate there is run those better, faster, cheaper. Find ways to increase quality and reduce the cost.
Horizon 2 applies to things that may be new to that company but they are understood in the marketplace. We saw that in the automotive business with SUVs; firms like Chrysler had been making Jeeps forever. You had new entrants like a Volvo, BMW, Mercedes, Lexus, that came in about 15 years ago and said, "Hey, great category. It's understood in the market. It's just new to us."
There is a lot of activity there in digital. We see clients looking at use cases for their businesses which mirror the FANG (Facebook, Apple, Netflix, Google) vendors. That's a Horizon 2 model.
Then Horizon 3 is invention that is something that's new to you as a company and also new to the market. That's where we see a lot of our clients in banking, healthcare, insurance, and retail who are looking to reinvent their sectors. How can we think out of the box and apply digital and create completely new offers?
It's been a very good model to help clients to manage the change around them. Once you see an activity fits into one of the 3 Horizons, then you can get the appropriate model, staffing, budgets and goals to go against it. I think those are some constructs that have helped us in the marketplace to get more credibility in "digital".
Malcolm, if you think back to the 90s, "digital" back then spawned a variety of new consulting firms like Scient and Viant. In the Horizon 3 projects are you seeing a new category of competitors like digital agencies or design firms?
Yes and no. You do see some new entrants, but it all depends on how the client frames the problem. If they define it as a design issue, you start to see some of the design firms showing up. If the client is truly just trying to figure things out, they may say, "Hey, I don't want to talk to the usual suspects. Why don't I go talk to one of these new strategy houses that is focusing on digital?" Others may define it as a data problem and go "Hey, that's big data. We need to get our arms around on this data exhaust and turn it into a business value." They may go to a shop that the focuses on that.
That said, as a general trend we see the market moving back to the usual suspects, meaning larger players like ourselves who sit at the intersection of business and technology. When clients get serious about digital – in moving the needle in their companies – they go beyond issues like planning, design and understanding the new technology stack. They say things like: "I need to figure out the business process change, I need to have somebody that has a vertical industry expertise to understand the regulatory issues, I need to have somebody who understands where the bones are buried in my internal IT. At the end of the day, I may have systems of engagement or systems of intelligence that are on the digital side, but they all have to tie back to the systems of record. I need somebody who knows that." and "If I want to do it on a global scale or at least on a broad scale, I need somebody who can do that heavy lifting". We’re finding that’s increasingly how clients are framing the problem.
More in Part 2 next week
April 03, 2016 in Industry Commentary, Outsourcing Negotiations/Best Practices | Permalink | Comments (0)