deal architect

Burning Platform: SAP Sapphire 2023 Sneak Preview

In the 88th episode of Burning Platform, we host Clare Henry of SAP. Nice of her to take time out of a hectic week with last minute prep to provide us a curtain raiser on the Sapphire event next week in Orlando.

Her key points and some of my comments:

• The event theme is “The Future-Proof Imperative”. That certainly resonates given the repeated shocks from COVID, Ukraine crisis, climate change urgency and massive digital transformations that most enterprises have been through in the last few years. It certainly came through in the Business as Unusual book we helped Thomas Saueressig and Peter Maier research and write last year.
• CEO Christian Klein will be joined by CMO Julia White and customers, for Tuesday’s opening keynote. The show floor will play a big part in that session and will feature Farm to Consume scenarios. That should allow SAP to showcase its strong agribusiness, commodity trading, CPG, sustainability, traceability and supply chain credentials.
• Thomas and Juergen Mueller will keynote the innovation keynote Tuesday afternoon. I am especially looking forward to what they will share about their approach to AI throughout the SAP portfolio.
• Scott Russell will keynote Wednesday morning. I look forward to an update on the RISE with S/4HANA initiative. Knowing him, sure it will have wide global coverage.
• Serena Williams will keynote Wednesday afternoon. She is such an accomplished athlete and now an entrepreneur, mother and overall role model.
• Clare promises virtual attendees are in for a “first class experience”. Sounds like the events team has put a lot of thought into digital experiences. They will be competing with the closing celebrations on Wednesday at nearby Universal Studios!

It was also nice of her to ask me to share some of my experiences from previous events. See if you smile at my reminiscing.  Of course, I am an amateur compared to folks like Paul Kurchina who can draw on 30 consecutive years of Sapphires. In a side note, I told him I am just a padawan – I will bow to the Jedi Master when I see him😊

Clare has a useful reminder for in-person attendees. Pack some comfortable shoes for walking up and down International Drive and the convention center. Also as someone who lives just 90 minutes away, I would recommend some sunscreen and light wear. The mornings and evenings have been comfortable for May but the afternoon humidity is already stifling.  

Finally, I too have a reminder. I am hosting at the ASUG booth on Wednesday 1 pm, a conversation with Peter Maier about the book mentioned above, Business as Unusual.

Hope to see many of you in person! In the meantime, enjoy this session with Clare. Her excitement shines through and should get you psyched for the event.

Analyst Cam: SAP Verticals – Public Sector

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Ulrike Kleifeld, VP Strategy, Global Public Services and Chris Atkins, VP Global Digital Transformation at SAP.

Ulrike starts off with some of the challenges government bodies face in nearly every country. The COVID pandemic accelerated digitalization in every industry but also exposed how much the public sector lags. This was followed by the Ukraine war and other geopolitical crises. We have economic burdens from the pandemic, and the energy crisis has only added to that. Disruptions have been coming in waves and governments are struggling to adjust to that “new normal”

They also address the loss of trust in government. I ask if it is lack of trust in politicians v  government agencies. They say there is a view that government is not agile or farsighted. Ulrike says “on the one hand we want governments to be cautious and risk-averse with tax payer funds, but we also need to help them accelerate their execution capabilities.”

Chris walks through the functional scope of their solutions across the value chain from policy and planning to public finance to supporting programs and services – the citizen facing part. He shares several customer examples. About the State of Arkansas he describes the amazing outcomes the project delivered: “they were able to achieve a 95% reduction in accounting processes, from a time perspective, going from four weeks to one click for many of their processes, a 91% reduction in cost allocation process from six months to 10 days. And, yes, you heard this right, a 1,150% improvement in creating their budget reports, what used to take days now take them minutes. And for the first time ever, they were able to submit their federal quarterly reports on time.”

I like that he represented multiple countries and the “end to end value business model for how they deliver value to their citizens”

Talking of different countries, they all have their own demands around data sovereignty, security clearances etc. Ulrike mentions one “In the US, we have the NS2 cloud, which is on US soil run by US personnel in a special secured environment that is FedRAMP certified.”

They do a really nice job covering a lot of ground about this complex but vital sector in about 20 minutes. 

Burning Platform: Org agility, global talent, Generative AI in HCM

In the 87th episode of Burning Platform, we host Steve Goldberg and Pete Tiliakos of GxT advisors. We discuss a wide range of HCM topics. Between them they have 7 decades of HCM experience in a variety of roles.

We start with an area which is Steve’s passion – organizational agility. I like his anticipate, adapt and act framework. Many enterprises invest heavily in listening to external signals, but neglect internal ones from their employees.

We next talk about what they learned from the Unleash event in Vegas a couple of weeks ago (where they presented more fully on the agility topic) and the Zoho event last week. I make the point that Zoho may not be a major HCM player today, but the exemplary bond between employee and employer some of us saw in Chennai in March gives them a significant test bed to try out and package innovative HCM practices.

Pete’s expertise is around global talent pools and related payroll and HCM matters. So we spend time talking about opportunities especially in fast-growing emerging economies.

We next talk about the excitement around Generative AI and some early use cases in the HCM realm

Finally, we talk about the perennial question – how do we make the HR function more strategic to their organizations? Steve makes a strong point. HR is a total enterprise responsibility, not just a functional responsibility.

So nice to spend half an hour with these veterans. Pete is another type of veteran – he is a former US Marine. Both are also fun guys to hang around. You will enjoy their perspectives.   

Time for a pivot in enterprise software

On Saturday, I watched the Berkshire Hathaway annual shareholder meeting. Warren Buffett was less than optimistic: “During the last six months or so, the “incredible period” for the US economy has been coming to an end”

Earlier in the week, in a welcome letter to analysts for the Zoho event in Austin,  Vijay Sundaram , Chief Strategy Officer pointed out

‘The SaaS model, as validated during the pandemic, will stay and thrive. But many providers won't. We believe that the next 10 years will be influenced by the recessionary conditions that have begun. Venture capital will now chase AI—the new shiny object—leaving less capital on the table for SaaS. Valuations will drop for the vast majority of companies that remain unprofitable and cannot feed the growth-at-any-cost monster. The industry will restructure as value shifts back to customers.’

It's hard to argue with either, but I am sure Buffett will find diamonds in the rough even in a challenging economy, and Zoho is doing well with its very different business model especially in emerging economies that are growing even as Western economies are slowing down. As Peter Maier of SAP, who I am moderating in a session at Sapphire next week, would say as his recent book does – it’s time for Business as Unusual.

In the doom and gloom in tech these days – valuations are down significantly; layoffs are up significantly,  there are at least four market segments which still show strong growth potential.

Vertical “edge” applications

A whole bunch of vertical edge applications became viable/necessary as a result of “shocks’ from COVID, Ukraine crisis, massive digital transformations and impact on every sector. They include servitization driven CPQ (to handle product, various services, spare parts, financing etc.) in industrials, smart insurance using new risk analytics, telemedicine in healthcare, curbside pickup and smarter ecommerce returns processing in retail, EV charging management and billing in auto etc. We are tracking over a hundred “edge” application areas. Most of them we could not have imagined 4-5 years ago – industries have been reshaped so rapidly in recent years by those shocks.

Emerging economies

On the recent trip to India I spent time in 7 states across the country. I saw a very different energy and pace. They are in a hurry to make up for lost time during COVID and to match China’s speed. We have long talked about “two-tier” ERP opportunities around subs of multinationals around the world. That opportunity is still wide open. The bigger opportunity now, though, is with fast growing, midsized local enterprises in not just BRICS countries, but also Indonesia, Nigeria, Chile and many others. However, they need different functionality, go to market and price points than selling in the West.

Generative AI

We are still in the first innings of what machines can dream up based on massive data we can train them on. And most vendors are still focused on the plumbing – should we use tools from Microsoft, Google, IBM and others or cobble together our LLMs using open source components. The winners. to me, will come from those who focus on differentiated use cases and gather mountains of relevant data.  All the more reason to invest in industries and geographies which differentiate you.  

Low code custom development

The vertical and geographical solutions I describe above are needed today. Many buyers are not willing to wait years. Others are tired of the cost and pace at which enterprise solutions are delivered.  They have started to arm their domain experts with low code solutions to at least get version 1 of the functionality in place. Too many software vendors think the low code tools are their differentiator. This is a bigger opportunity for service providers – again, those with deep industry and geography credentials.

Each of these markets will require new investments, not spray painting of existing solutions. Does not mean existing ERP, CRM and other markets will go away. But repaving older cow paths does not generate adequate ROI, especially when so many analog processes are screaming for digital innovation.  

Time for a pivot. Time to think Business as Unusual. New frontiers await.

Analyst Cam: SAP Verticals – Aerospace & Defense

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Torsten Welte, Global VP and Head of Industrial Business Unit for Aerospace & Defense at SAP.

As you see in the image (and much more in the video ) below, the coverage is mammoth but as he says it's only the "guys that make the toys, not play with the toys". SAP's Travel and Transportation Group covers the airline operators, the Public Sector group covers space agencies like NASA and ESA, SAP's SuccessFactors and other units cover the human side of these large customers.

I tell him I am envious he gets to go to Paris, Farnborough and other airshows. The technology in modern spacecraft, avionics, eVTOLs and naval equipment he covers is drool-inducing and the design, manufacturing, monitoring, maintenance, earned value calculations, contract management have all evolved to keep up. Torsten talks about smart factories, digital twins, augmented reality, robotics, ML-enabled inspections and more as part of the solutions SAP and its ecosystem is delivering.

When we recorded the session, he was getting ready for the industry Innovation Day SAP hosts every year. This year it was in Huntington Beach, CA.

Torsten told me later they had “over 250 experts from the industry.  During the innovation days, the community comes together to network and exchange their best practices and learnings.  Our host company provides insights into their operations and innovations.  This year, Northrop Grumman was our host. Besides touring their facility, we got insights on the James Webb (telescope) project.  Truly an amazing innovation in technology and how it was launched in space.”

“Presenters showcased projects which tackled supply chain planning and manufacturing constraints.  It was all about visibility and operational improvements through digital. They showcased solutions to manage data to make the right decision to improve throughput, cost, optimize constraints, and stay flexible.

Very exciting to see SAP solutions helping the industry to not fly blind.”

Torsten does a really nice job covering all of that in half an hour.

Burning Platform – Even More Business as Unusual

In the 86th episode of Burning Platform, we host repeat guests, Peter Maier and Tilman Goettke of SAP. We discuss reaction to the book, Business as Unusual that Peter co-authored and both Tilman and I helped research and curate - link to the Amazon page via the badge on left.

Peter and Tilman discuss feedback about the book as they have handed out bunch of copies at book signings, podcasts and customer  events. Tilman says he is glad the book recognized only a few business executives have time or patience to read books from cover to cover. So the opening chapter has short, two page overviews of each of the 8 mega trends. The book also has "thought experiments" to engage readers. For example, what if a maker of coffee machines wants to evolve beyond selling machines to also offer coffee by the cup? What impact does that for financial streams and for sales and customer engagement? Pretty much everything changes when you try to change your business model and adopt the hot trend of "servitization".

The book offers similar opportunities to think about countless vertical applications for their companies which have emerged as a result of COVID, digital transformations, the Ukraine crisis and the climate change urgency.  Most of these are applications that we couldn't have imagined in 2019.

We also discuss new addressable markets in fast-growing emerging economies around the world. We cover the excitement and hype around Generative AI and low-code tools.    

It is nice to have Peter provide commentary in his new role around strategic customer engagements in the office of the CEO. He says amidst all this choice, customers expect very clear guidance from SAP and consistency from its massively expanded ecosystem (in the book, we included perspectives from strategy firms, Industry 4.0 robotics firms, SAP.iO Foundry startups and many others – see details in this post). He hears from customers their highest priority is their customers and their top line. He lists other customer expectations around sustainability, standardization, efficiency (especially in asset intensive sectors), vendor consolidation and related governance.  

Both say the pace of change has definitely accelerated. Peter points to the phenomenal pace of adoption of ChatGPT. He adds “all the more reason to get up early”. Tilman adds we need to acknowledge “what was science fiction yesterday is today's everyday business reality and the constraining factor is business agility”.

It truly is a thrill to have a strategic discussion with these two industry veterans at a vendor with so much industry and global depth. Enjoy this half an hour. So much change – so many new opportunities!!

I will also have a chance to share a session with Peter about the themes from the book at Sapphire in Orlando in a couple of weeks. Details to follow.

Analyst Cam: SAP Verticals - Semiconductor

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Jeff Howell, Global Vice President, Head of High-Tech Industry Business Unit at SAP.

We have all heard about the geopolitics and risks of continuing to be dependent on SE Asia for a steady supply of chips. We have heard about the chaos in the auto sector with the inadequate supply of that increasingly important component as vehicles get smarter and electrified.

Jeff takes us through a much more nuanced perspective on the complexity, the long lead times and capital intensity of the semiconductor sector. I was first introduced to him as I was helping SAP with research on the recently released Business as Unusual book (available on Amazon – click on badge on left)

Here are just a few excerpts from the conversation in the video below:

• The semiconductor industry amounts to 0.3% of the U.S. GDP, yet semiconductors are required to produce 12% of the U.S. national output. It is even more pronounced in Japan -  with impact on 30% of their national output
• If you and I decide to go into the chip making business we would need to come up with $10 to $15 billion and spend about two to three years building that production capability
• Over 400 chemicals are used in a combination of solids and gases to make those chips. Over a dozen noble gases on the periodic table are critical supplies
• Roughly 30% of the neon that's needed in the semiconductor industry comes from Ukraine
• 2 to 4 million gallons of ultra-pure water are required every day during the chip production process. Almost half of all the world's chips are manufactured in Southeast Asia. Well, a couple years ago, there were droughts in Southeast Asia  
• Every wafer produced in a typical fab generates two to three gigabytes of data and you multiply that by 24 wafers in a lot and 1000s of lots per day, it's very easy to come up with terabytes, and generate even petabytes of data every day.
• The little known fact is more than 80% of that data is never even looked at - not enough process engineers who can examine that data

He spends a fair amount of time talking about networks like Catena-X which is auto industry-centric but heavily depends on semiconductors. He cites use cases at companies like NVIDIA and Wolfspeed (a critical supplier of silicon carbide) and partners like PDF which helps companies analyze that mountain of operational data for better yields and other outcomes. He also discusses how SAP is blending financial and operational data for the sector.

It is a master class on critical components for so much of the economy and the unique systems the industry needs. Very nicely done in about half an hour – he could easily have gone much longer

Analyst Cam: SAP Verticals - Chemicals

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Matt Reymann, Global VP of the Chemicals Business Unit at SAP.  He provides an overview of SAP’s extensive work in the sector. Did you know 99 of the top 100 chemical companies run SAP? And that SAP's first customer 50 years ago was a chemical company, ICI. So, as Matt says “Chemicals are in SAP’s DNA… as technology has evolved, as our customers have evolved, we've evolved with the industry.”

Matt has example after example of innovations in the sector like molecular recycling. He shares use cases across the enterprise as in the graph below.

He also covers business model changes where as with complex industrial products, chemical companies are learning to sell their products and capabilities as a service. He also cites examples from the new SAP book, Business as Unusual.

Very nicely done in 30 minutes. His passion for the sector really shines through. And you get a really nice perspective on the macro trend in a sector which has an impact on most everything we use on a daily basis.

Burning Platform: The Best of Times, the Worst of Times

In the 85^th episode of Burning Platform, we host a repeat guest, Dion Hinchcliffe of Constellation Research. Dion is one of the most strategic industry analysts I know and he is always in tune with high level trends CIOs are factoring.

I invited him to present on the morphing world of IT services.  We discuss consolidation of providers we are seeing in many companies, near shoring and maturing of S American talent, value pricing in services, the major impact of low-code tools, the coming impact of generative AI like ChatGPT, the emergence of FinOps as CIOs re-balance public cloud loads and optimize hyperscaler budgets.

He is extremely positive - says we are at a plateau of IT productivity.

As I have written in the last few weeks I too am extremely optimistic about new application markets which have emerged as a result of shocks from COVID, the Ukraine energy crisis, digital transformations. From intelligent returns in retail to EV charging infrastructure management and billing in auto to servitization support in industrial markets to smart insurance using new risk analytics, I am tracking over a hundred vertical extensions that have become critical in the last couple of years. Also, my recent trip to India has opened my eyes to application opportunities in emerging economies which reflect their unique regulatory, language and business practice needs. Many more opportunities there.

What’s not to like?

Here’s the reality check. Somebody will have to write these new applications and support them. Service firms will happily custom write them for you but need to accept shrinking revenues from previous legacy relationships. They have resisted previous opportunities to automate their own operations and will face new pressures to do so. Customers can have their own domain experts use new low code and AI tools to write them. Many, however. have forgotten the art of building and supporting new applications. They have become better at buying applications and integrating them. But buy from whom? Many software vendors are cautious about vertical or global extensions and hope partners will write them on their platforms. Lots of wishful thinking.

Both Dion and I are optimists but it is clear new fortunes will be made and many others lost. As Charles Dickens famously wrote “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity ….”

As the recent book I helped SAP execs write, it is imperative you adopt a “Business as Unusual” mindset given the big changes afoot.

Enjoy our banter for a little over 20 minutes     

Burning Platform: A 360 degree perspective on the Truly Zoho event

Earlier in the week, Sandy Lo and Pooja Mittal of Zoho discussed the elaborate planning and intricate logistics of the week long Truly Zoho event in Chennai and Tenkasi in South India. 

In this, the 84th episode of Burning Platform, we host David Fauser, a Zoho customer at Cimco Refrigeration in Canada and Rebecca Wettemann, an analyst at Valoir. Both were part of the entire week and provide a very entertaining recap.

In a world which become virtual during COVID, we review the additional payback accrued from making the physical trip (over 15,000 miles round trip) and the investment in time. We discuss the huge investment Zoho makes in its people – schools, hospitals, cafeterias and whether that mindset can be adopted in the West. We discuss how other vendors will be benchmarked based on our visit – most Zoho customers have ERP and other applications from other vendors. The trip was made with the backdrop of a series of layoffs in Silicon Valley. It was striking to see the loyalty of Zoho employees and the wide berth their executives give their staff – each was extremely articulate and unfettered in every discussion.  

David and Rebecca came back with very different perspectives given their customer and analyst personas, but both are extremely positive about the week. Lots of entertaining anecdotes from from the trip. Well worth your spending about 25 minutes with them below.