In writing my book, Silicon Collar, I saw plenty of examples of how machines make human workers safer, smarter and speedier. I also became more aware of poor implementations where the man-machine balance is broken and leads to worker and customer dissatisfaction. On New Florence I have started a series with some of those experiences.
Larry Ellison joked at Oracle OpenWorld he was told Fusion applications would be developed in 4 years. They have taken over a decade.
Snicker all you want. The flip side of that is Oracle started developing cloud apps years before most others. While IaaS and Amazon got a lot of attention during OOW, the winner for me was the breadth and depth of cloud apps and related talent. It will take competing vendors just as long to build something this big and wide. Oracle now has a multi-year lead over them.
Steve Miranda showcased a customer panel which today no other cloud vendor could match in the range of ERP, HR, CX and SCM functionality – and in industry coverage. There were several other customers in other sessions and in the halls.
The analysts got a rapid fire update from each of those functional apps areas. Not just the apps. you got the sense for the executive depth in each domain at Oracle.
Not just transactional systems, Oracle has started to innovate, first with a series of Work/Life apps in the HCM space for years now, and at OOW with its Adaptive Intelligent Apps.
Having said that, I would like to see Oracle make some adjustments. It has been sending mixed messages for a while.
- It has lulled its legacy customers to stay on-prem with the continued promise of Apps Unlimited. There is little urgency for them to move to the cloud
- As more SIs start to work with Oracle, it needs to push them to showcase more automation in their projects – especially since the cost of migration from on-prem to cloud is a gating factor for many customers
- Oracle comes across still coveting the on-prem maintenance revenue stream. Keeping the Rimini court battle going may please some hawks but sends wrong signals to customers.
- Oracle’s vertical practices need to show similar moves to cloud apps. For many customers, the horizontal cloud apps – HCM, Financials – are just not enough
While Oracle take many of these steps? Not sure. It is a large, complex organization - but to me it should. Now is the time to push the pedal on its cloud apps lead.
Workday’s annual user conference, Rising is in Chicago next week. The European version is in Barcelona in a few weeks.
It’s always an enjoyable event with “The Citizens of the Cloud” - some of the happiest customers in the world. Founders Dave Duffield and Aneel Bhusri showcase an entertaining keynote, and this year I am looking forward to hearing a talk from Peter Diamandis, one of the most positive futurists. After all the pessimism I heard in writing Silicon Collar, I could use the revelry and optimism.
I caught up with Leighanne Levensaler, SVP Products and she kindly gave me a sneak preview of what we can expect next week
Pace of Innovation: Aneel and Dave will kick off the keynote by discussing the company’s rapid pace of innovation – throughout the conference it will be illustrated how Workday is uniquely able to deliver features and functions at a pace like never before. Because of this, they have the ability to quickly move forward with new areas of technology investment across the platform including content creation and data storytelling, creating a more intelligent system, and collaboration and deeper analytics. So we’ll see some reflection in why their earlier decisions made around an having one unified system - built from the ground up - as well as Workday’s customer approach, are driving fast development and bearing fruit like the market hasn't seen. This is essentially what will continue to differentiate Workday moving forward.
Customer Success: Many sessions will showcase what customers are doing with Workday, from the main stage to breakouts. Workday customers Airbnb and Hitachi will share their experiences in the customer keynote session – as very different global, disruptive organizations, they are similar in thinking about how they can best prepare for the future through growth, culture, and the evolution of business practices. Throughout the event, whether it's finance, HR, payroll – Workday will be highlighting the stories of live, happy customers who are driving great business value and results.
New Products: Workday made big promises last year about their intent to build new products in the learning and planning space, and even earlier shared intent to develop a system for higher education, so we’ll see if they will deliver on these next week at Rising. As with past product offerings, Workday has emphasized its ongoing mission to re-imagine broken processes and cumbersome, outdated systems that are often disconnected from how organizations want and need to operate. These are systems that people try to avoid, or when forced to use, do so begrudgingly. They deflated resources and energy of organizations because they fostered redundancies, inefficiencies, and confusion.
Workday believes these systems need to be reinvented to mirror the way people actually want to work, which is what it intends with all of its products, to help customers improve engagement across their organizations, enable people to grow their skills to fuel purpose and progress, and find ways to cut confusion and meaningfully contribute.
New Advancements in Data and Analytics: Workday will also showcase its progress to date on the acquisition of Platfora. We’ll hear about the advancements their teams have made and roadmap around bringing in operational data into the hands of managers.
We will also see some interesting features and forays into new territories in the data space - Senior Vice President of User Experience Joe Korngiebel has some tricks up his sleeve that will be sure to wow the audience and customers – showing how they are delivering a more intelligent Workday system and new offerings that enable customers to do so much more with the data they have.
There you go – sandwiched between Oracle’s bold assault on Amazon last week and Salesforce’s ambitious Einstein AI announcements the week after, Workday wants to say along with Arby’s “We have the Meats.”
It struck me when Infosys CEO, Vishal Sikka talked about his acquisition of Panaya in his keynote this afternoon, how little attention SAP has received at Oracle OpenWorld this year. In fact if SAP was not hosting TechEd this week, the silence would have been even more noticeable.
Larry Ellison spent much of his keynote today talking about Amazon’s databases, RedShift and Aurora, not HANA. Oracle ERP, HCM and CRM teams have mentioned Workday and Salesforce a few times, but not SAP S/4, BYD or SuccessFactors.
Quite remarkable considering how much back and forth there used to be in prior OOWs.
It’s not like Oracle will convert many SAP ECC customers over, but Oracle’s decade of investment in cloud applications, and now cloud infrastructure clearly gives it the confidence to look ahead and focus on a new set of competitors.
As Steve Miranda previewed last week, one of the more interesting announcements this week at Oracle OpenWorld is around its Adaptive Intelligent Applications. Steve had said
“Basically, what we're doing is leveraging our data cloud, which I know you're familiar with (having profiled BlueKai), together with machine-learning algorithms and incorporating that into our transactional applications to derive better BI/better decision-making, and frankly, a new category of applications. The first one which we'll launch and demo is our next best offer, next best action - essentially a recommendation engine off of our cloud commerce.”
In addition to lots of data and lots of compute power in their cloud, Oracle also believes its domain and industry apps knowledge and its “decision” science (Oracle Labs, vertical groups as in Smart Factory and IOT areas) – the 4 “pillars” position it well as machine learning grows in the enterprise space.
Some of the apps being planned in this category are
Smart Offers and Actions
Best Fit Candidates
Best Value Freight
Optimized Payment Terms
While Oracle has plenty of data to leverage for the first app, especially around consumer marketing data via BlueKai, it’s not completely clear where it will source data for other announced apps. The timing of release of the apps was also a bit unclear from the initial briefings, and I am sure there will be industry and geography cuts at many of these apps.
BTW, in my recent book, Silicon Collar about automation and impact on jobs, I point out AI has gone through 10 hype cycles since 1950 when Alan Turing defined his famous test to measure a machine's ability to exhibit intelligent behavior equivalent to that of a human.
So it is good to see a major vendor start to talk about specific use cases and put a bit more business context around the current buzz around machine learning.
Three things were striking about Larry Ellison’s kickoff keynote at Oracle OpenWorld last night
a) he was at his late night host best – I must have been a sight as I burst out in humor every few minutes
b) he must have spent the week reading all the press releases Oracle issues during this event. My friend Holger Mueller said he counted at least 18 new product announcements during the 2 hour talk
c) Amazon Web Services got a lot of attention.
It’s not a bad strategy to be associated with a market leader like AWS (and Larry also invoked Workday and Salesforce as leaders in applications), but to me the opportunity for both the “lift and shift” and “private cloud” strategies Larry talked about, is far bigger than what Amazon is targeting
Look at hosting in Oracle’s customer base. Those running PeopleSoft, JDE, EBS and countless other packages in the Oracle family use some form of internal data center or external hosting with IBM, HP and many others. That’s a captive market for Oracle IaaS to explore. Even more promising are SAP, Infor and countless other legacy customer bases who are today mostly using AWS or MS Azure in dev/test mode or as “burst” capacity.
Oracle, however, faces several challenges as it pushes deeper into the IaaS space
a) Be prepared for massive CapEx investments. When I interviewed Microsoft in 2010 about their Azure data centers, they had already invested several billion in their infrastructure. 6 years ago! Amazon, Google, even Facebook have made similar large CapEx investments
b) Expand its team of data center experts. If you look at how the DC design science has evolved in the last decade, its been about resiliency at scale, next-gen thermodynamics, global site selection expertise to optimize latency, tax benefits, energy economics, physical and information security. Oracle will have to up its game
c) Rethink business models. Would Oracle have – voluntarily – shared 50+ price cuts over a decade with its customers like AWS has? May be, if you ask its Sun customers, but not so if you ask its enterprise software customers. Will Oracle step up to much more stringent SLAs? Sure it can, but it will need a significant organizational culture shift.
I think the opportunity for Oracle around IaaS is huge – but so are the challenges.
Silicon Collar is off to very nice media reviews, Amazon reader reviews and many nice emails from readers. But in many ways it has also touched a nerve. Some are irritated with my optimism. I find they fall into three camps
a) “Things will be really bad” – the guru
These tend to be technology savvy academics, analysts and economists who are convinced acceleration in computing corves will lead to massive job losses. In this ZDNet column I summarized a century of examples across sectors where we still have tens of millions of postal, secretarial, grocery and other jobs decades after automation was supposed to have destroyed them. In the book I have a chapter called Circuit Breakers to Over Automation which describes how societies only gradually absorb automation. I don’t see that changing anytime soon. Automation does cause erosion of jobs, but that takes time, and it also creates a new generation of jobs
b) “Things are already bad” – the guilty
These tend to be people who talk about workers “left behind”. No denying there are many of those. You would be blind to not see the homeless or those that just stumble from job to job. This group of pessimists, however, focuses mostly on poor and lower middle class and wants more social programs for them. They keep talking “middle class squeeze” – blaming corporations and the “one percenters”. For whatever reason, they only have a foggy notion of the solid core of middle class – plenty of accountants, attorneys, architects, engineers, healthcare professionals and many others. They also don’t want to believe data like
if you leave out the top 5%, the rest reported $ 6 trillion in AGI or $ 8 trillion in income to the IRS
for 3+ years, the BLS has reported at least 4 million unfilled jobs every single month
c) “Things are already bad” – the angry
This group tends to discount all data, especially government sourced as propaganda for President Obama and by extension, Hillary Clinton. Their narrative is things will only get better if we have a change in government. I don’t have a problem with that (I am politically independent), but I do point out progress has been non-partisan under both parties
Since 1990, average value of new US home has nearly doubled
Since 1990, we have never had a single year when median annual family income has been under $ 50K
our workers have $ 25 trillion in retirement assets
I am not on a crusade to turn everyone optimistic, but I sure hope they give the book a chance to provide an alternate point of view.
Oracle OpenWorld, its annual marquee event which starts on Sunday, can be overwhelming. This year, the agenda shows more than 1,800 sessions spread across 12 venues in and around Moscone Center. That section of San Francisco shuts down to cars for much of the week. The sessions cover Oracle’s ever growing product portfolio, Industry solutions and partner presentations. Then there is no shortage of bands and parties.
This year I reached out to Letty Letbetter in Analyst Relations and requested her help customizing a SaaS-heavy agenda. She is arranging for SaaS specific executive and customer meetings during my time. She also arranged a sneak preview from Steve Miranda, Executive Vice President, Applications Development. Here are some of the topics we covered. Look forward to more from him next week as Oracle will be out of its “quiet period” by then
SM: Larry Ellison and other executive keynotes will highlight our cloud products across the board - applications, infrastructure, platform, data as a service. You will hear how we got here through years of investment and steady progress across the board. We believe that significant investment has led to our strong growth rate (Oracle reported Q1 FY17 GAAP SAAS and PAAS Revenues were up 77% - see here) but also differentiates us going forward. It wasn't like, hey, the world changed and we took our existing stuff and hosted it. We built for the cloud and in the cloud from scratch.
On the applications side, the SaaS sessions, you will hear that same tone but represented much more in terms of customers. So my general session will have several brand-name customers - Vodafone, Clorox, GE Digital, Pella and Profound Medical. They are all running different aspects of the cloud - ERP, core manufacturing, financials, SCM, sourcing automation, marketing and service.
The first question to each will be - tell us about your company, tell us what you're trying to address, but what I really want to get to is the second part which let's say are a tougher set of questions, that I get every day from our customers, in terms of their movement to the cloud. As an example, I get security questions every day from customers moving to the cloud. So my questions to the panel will focus on customers considering the cloud and potential challenges to their move. And customers with real experience on live cloud products can directly talk to those questions.
Examples: Vodafone, you have cloud security concerns, have data residency concerns, because you run across Europe. How did Oracle address that? Second is the speed of innovation and agility. GE Digital, a new division within GE, how are we keeping up with what you need? What are you after? Another will be customization in the cloud. The Pella Corporation, can you tell us how were you customized before and what have you done to simplify business processes, how our cloud software allowed you to configure where you used to customize, and how you've used PaaS as an additive part to that?
Most of these customers are larger companies. Profound Medical will represent smaller brands. They happen to be running our manufacturing app as well. Throughout the conference this year you will see bigger brand names. Last year you probably saw a larger volume of smaller companies. This year you will see the trend of larger companies also moving to our cloud.
“Adaptive Intelligent Applications”
SM: We are excited to launch an amazing new category of applications. You will see them in Larry's kickoff session on Sunday. I’ll give a demo. It is a new set of applications we are launching called Adaptive Intelligent Apps. Basically, what we're doing is leveraging our data cloud, which I know you're familiar with (having profiled BlueKai), together with machine-learning algorithms and incorporating that into our transactional applications to derive better BI/better decision-making, and frankly, a new category of applications. The first one which we'll launch and demo is our next best offer, next best action - essentially a recommendation engine off of our cloud commerce.
If you think about how we use our data cloud today for marketing, we track, as you know, cookie data, mobile phone data, actual credit card purchase data, and we have what we think is the richest ID graph in the world, so that's an ID graph to match your cookies and your activity with your email address, with your social handles etc., and better able to serve ads to you, either online or offline via email. We are taking that same capability to recommendation engines in the commerce space. This is different than what you might see from some e-commerce stores who, if you've shopped there before or if you have an account there, or if you're a loyalty card member, they can recommend based on previous activity. With ours, you need not have any previous activity whatsoever on the site, or even if you shop for things on other sites, we will have that information and be able to give you the best recommendation and the best starting launch page. (Steve then proceeded to do a quick demo him sitting in CA and me in FL. I don’t want to blow his surprise, so you will have to wait to see it Sunday)
As you know (from my recent book on automation, Silicon Collar), there is a lot of talk about machine learning. There is quite a bit of best-in-class open source software but we think the two things that will differentiate us now and long-term. First is the data which we use to tune our machine-learning algorithms. We think we've got the richest consumer, real-time, continuously updated, data set in the world, to tune those algorithms with. Second, we'll be able to deliver these things not in an abstract manner - here's the data set and here's a learning algorithm. We will deliver it in conjunction with the applications so that you have smart and adaptive applications based on not only your internal data but your external data.
Sure, our competitors are going to talk about it (Salesforce is expected to announce its Einstein AI offering at Dreamforce next month) but I have no idea how one will build a machine-learning tool without a data set on which the machine can learn from. I think they will have an interesting time responding to us and it will certainly be a competitive area for us.
You will hear about a number of industry specific innovations. In financials, we have brand new support for public sector with budgetary control encumbrance, and we have a brand new module for revenue management around IFRS support. In HR, we've continued the innovation in terms of globalizations as well as public sector, and a brand new app similar to our lifestyle apps you have seen before, a new one around corporate giving and corporate donations, so tracking both at the employee level and having corporate programs do that incorporated with their HR system.
In both HR and finance, we will introduce our cloud-based student system. In core manufacturing, we've expanded portfolio to include newer planning functionality. In logistics, we just announced the acquisition of LogFire, so we will talk more about warehouse management applications. In CRM you'll see a host of new features for Telco, Financial Services, CPG, and health care as well.
Lost in all the noise about the “middle class squeeze”, angry workers “who have been left behind”, and that 6 out of 10 Americans say the “economy is on the wrong track” is another story which has not been widely reported. The US has created a new-gen labor economy which the rest of world will gradually adopt.
No single person designed this “thing” or trademarked it. Some have called it the gig or indie economy but that barely touches on the broad dimensions I will describe. No politician has taken credit for it — so far.In fact, few even know about it.
I found it through pattern recognition I did for my new book, Silicon Collar. I was looking for trend lines on how societies gradually absorb automation (see my ZDNet post for a summary), and I stumbled across this remarkable new organism.
First some context.
In the 50s, a company could stay on the S&P 500 list for 60 years, today they barely last 20 years. With that shortened corporate life span, the concept of corporate lifetime employment and pensions are a pipe dream. Actually only 4–5 generations in all of human history enjoyed that lifestyle (and honestly many did not enjoy the bureaucracy which came with it) so it was an aberration. Our agrarian ancestors did not avail , neither will our digital descendants.
And it’s not just US companies — German, Japanese, Chinese face the same pressures. But the US has adapted a bit better.
Our companies have moved to what I call in the book “Clover-leaf organizations”. Management philosopher Charles Handy was prescient when he wrote in his 1989 book The Age of Unreason about the three leaves of the “Shamrock Organization.” I continue in the book
“You could argue that if Handy had written the book today he would consider a four-leaf clover as his defining metaphor, with the fourth leaf covering machines, robots, and other automation as another source of the “talent”
Actually, clovers can have many more leaves. The Guinness World Records says one was found with 56 leaves. If you look at all the ways organizations utilize talent these days, Handy’s three leaves have many derivatives, most enabled by advances in technology.
Apple has several thousand employees who develop products which are then sold in its retail stores. Its contract manufacturer, Foxconn, employs thousands of employees and robots in its manufacturing plants in China. Those plants also have interns and other staff hired through third-party recruitment firms. Apple’s third-party logistics providers like Fedex have a similar mix of man and machine.. There are also millions of associated jobs that are not on Apple’s payroll around the apps, music, movies, books, and other items in the Apple ecosystem. Just around apps, Apple claims to support a broad community: “Nearly three-quarters of those jobs — over 1.4 million — are attributable to the community of app creators, software engineers and entrepreneurs building apps for iOS, as well as non-IT jobs supported directly and indirectly through the app economy.”It also says, “The iOS app economy has created 1.2 million jobs in Europe and 1.4 million jobs in China.”
I provide other examples in the book. But look what that has done for our workers. We have a choice of 840 occupations the Bureau of Labor Statistics (BLS) is tracking. The list will be updated in 2018 and I expect it will be longer and have more STEM influence. Our workers are getting 2nd, 3rd, later acts in life, No other country has so many new gen opportunities — franchises (about 10 million jobs), platforms (Apple, Amazon fulfillment, eBay work at home, Uber etc — about 20 million part time for now but rapidly changing ), new services — alternative healthcare, ethnic groceries, pet/child care etc.(another 5 million). I am not even including Silicon Valley type entrepreneurship opportunities in energy, space, food, IT etc.
In this new gen economy, machines will play a much bigger role. Amazon has delivered 50 price cuts around its AWS in the last decade. Could not do it without a heavy mix of machines. UPS averages 1 accident per million miles of driving. Could not do it without all kinds of telematics in their trucks. Foxconn has delivered billions of high-quality Apple and other devices. Could not have done it without precision machinery and bots. Machines will take our best new gen workers and make them exemplary.
But our corporate policies have not kept up. Very few organizations have a complete map of all the talent they are leveraging. That’s remarkable, considering that for many companies 80% to 90% of their talent (like Apple above) is now “off balance sheet” — not directly on their payroll. Companies have insanely long interview processes when employees are changing jobs every few years.
Our public policies have not kept up. We need portable benefits and safety nets for their new work life. Government data on the changing labor market is outdated. The BLS classification mentioned above is not due till 2018. Once a decade in this fast moving world? Our politicians keep hammering Apple, GE and others to bring jobs back. Which of those “off balance sheet” jobs? I am seeing extreme thinking like Universal Basic Income in preparation for jobless futures. There will be plenty of jobs — just very different ones.
No wonder, many of our workers have not kept up and are bewildered and angry.
Shame on us, collectively. We have seen it coming several times in our lifetimes. Cities like Pittsburgh, Detroit and others have gone through near death experiences and have come out very differently. We need to do the same in our individual lives. Reinvent, continually, not keep pining for the past
A friend of mine wryly observes there are only 9 lifetime jobs left. They are in Washington DC. And most lucky to get it, have to wait till they are in their 60s. As we are seeing with a candidate trying for the job today, the recruiting process is extremely painful.
In turn, however, we have ended up with a remarkable new labor economy, that our parents would have drooled to be part of.
The timing of the columns was coincidental, but leads to the question - why do we have such divergent views and emotions on the matter? Dennis wrote his after listening to a presentation by Martin Ford, author of Rise of the Robots. Martin is one of many pessimists on the topic, joined by many others I had written about in this post – Sum of all Fears.
My view on the other hand is conditioned by my research for he book, Silicon Collar. By researching a century of automation, I was taken aback that tens of millions of grocery, secretarial, postal and other jobs continue to survive decades after we would have predicted they would be gone. That led me to write a chapter in the book on 5 “circuit breakers to over automation” that societies have to slow down job destruction. So, my data points show a trend line of “evolution, not revolution” when it comes to jobs evolving as machines become more prevalent in the work place. I am not panicked.
The other learning from my book was the millions of “next-gen” jobs our economy has created in the last decade or so. There are nearly 10 million jobs in the franchise sector. There are as many in new service sectors such as alternative health care (acupuncturists, herbalists etc), ethnic food stores and others. And there are even more, certainly part time ones in the platform economy – in the Apple apps ecosystem, in the eBay work at home model, in the Uber model. Additionally, I see a next gen of energy, space, transportation , technology and new job categories emerge as STEM disciplines change every aspect of our economy.
Finally, and most importantly, I saw a remarkably pragmatic approach in most businesses I interviewed for the book (in over 50 work settings across industries) about the need for both man and machine compared to wildly pessimistic viewpoints from academics, analysts and economists.
People are going to believe what they want to believe. I shudder to think if the pessimistic camp can lead someone as seasoned as Dennis to such a panicky conclusion and to radical proposals like Universal Basic Income, what they are doing to to lay person and the general mood out there.
I will do my part to combat the irrational pessimism but it sure feels like a tsunami out there.
These days , far removed from the origins of Greek mythology, it is easy to feel sorry for Sisyphus as he pushes a huge boulder up a hill, only to watch it roll back down. He is cursed to repeat this action over and over again. Talk about cruel and unusual punishment. But read the ancient texts, and you are reminded, it was a punishment for previous actions.
I often feel SAP has become a modern day Sisyphus. They try so hard – all the positive vibes coming out of SuccessConnect last week, my friend Tom Raftery helping them polish their IoT message, a Millennial CIO at a legacy software company and much more.
Yet, everything is a huge struggle. HANA is making slow progress, S/4 as I predicted in SAP Nation 2.0 will not be much of a factor till it is flushed out over the next several years. In the meantime, SAP has to carry the huge burden of an ecosystem ten times its size. Makes Sisyphus’s boulder look tiny.
As with Sisyphus, you have to feel sympathetic, but you also have to stop and ask how it got there. The ecosystem did not grow to $ 300+ billion a year overnight. The endless stream of spectacular project failures have been going since the mid 90s. Yet, all SAP has wanted to do is sell more, not clean up the messes of the past. For years before I wrote SAP Nation, I told just about every SAP and partner executive they needed to fix things. They would attempt small fixes and hope the rest would go away. So for years now they have talked about consultant certification, when the total cost is driven by countless other elements. They needed to continue to enhance products for the maintenance dollar, fix the upgrade cycle, lasso in their telco, application management and hosting partners, and do much more.
I thought they had turned the corner when CEO Bill McDermott acknowledged at SapphireNow in May about “pointed feedback received from customer CIO’s as well as from SAP Board members.”
Now I am not so sure – they are back to hyping new stuff and pestering customers for new revenue, and not responding to customer questions about value from previous revenue.
So, customers are mopping up the mess themselves using the strategies I describe in SAP Nation like Ring Fence, Two Tier ERP, Third Party Maintenance. In such a customer environment, it is doubly difficult for SAP to sell more of its new products.
The boulder it has to keep pushing is something SAP alone can chip away at. May be some day it will.
No, I am not echoing Clint Eastwood. My P is much more damning — we are a becoming a generation of pessimists.
I have just released my new book, Silicon Collar. It is meant to combat widespread pessimism about machines killing millions of jobs. But beyond the technological angle of my book, I saw all kinds of pessimism driven by inequality, student debt, and a variety of other factors
I am an immigrant to the US. I came here four decades ago, drawn by the powerful force of American optimism. We have it in our DNA. Alexis de Tocqueville observed at the beginning of the 19th century that Americans “have all a lively faith in the perfectibility of man”
So, it bothered me as I wrote the book to see so much pessimism. Because much of the pessimism is based on half truths and twisted facts.
Yes, we have moved away from our parent’s lifetime employment, plates for 25 years of service and their pensions. In exchange, though, we have gained a remarkable labor economy.
Never before have Americans had so much choice in occupations. The Bureau of Labor Statistics (BLS) classifies workers into one of 840 detailed occupations, in accordance with the 2010 Standard Occupational Classification (SOC) system. CareerPlanners.com does an even more granular listing of job descriptions, and lists 12,000 separate jobs. Given the growing influence of STEM in our economy, the 2018 SOC should have significant updates. FastCompany’s projection of jobs in the next decade includes Urban Farmers, Neuro-Implant Technicians and Virtual Reality Experience Designer
Never before have Americans had the opportunity for second, third and later acts in their careers. We are changing jobs every few years. And doing so in ways our parents would drool over. Our parents did not have franchise opportunities which today keep 9 million Americans busy. They could not become platform participants. Today Amazon, Apple,eBay, Google, Uber and many others allow millions an opportunity for supplemental income. Stop by a local Whole Foods and flip through an issue of Natural Awakenings, a publication which carries ads from practitioners in the growing “alternative healthcare” market. This includes acupuncturists, yoga instructors and herbalists among others. This represents an entire services sector that did not exist a couple of decades ago. I could go on.
Never before has technology made work so safe, smart or speedy. In the book, I have examples from 50+ work settings in just about every industry where robotics, machine learning, drones, wearables and other technology are acting as “colleagues” to humans and doing our dull, dirty and dangerous tasks. I also provide example after example from the last century of how society only gradually absorbs automation. No need to panic about jobless futures any time soon.
We are letting politicians get us angry about the “one percenters”. Look carefully at IRS data. If you ignore the top 1%, the rest of us report $ 7 trillion in Adjusted Gross Income. That’s after adjustments, which means even us less fortunate still report a big pie of $ 10 trillion of income. Not that dire.
We are letting politicians get us angry about immigrants taking our jobs. Look carefully at BLS data. For the last three years, it has been reporting at least 4 million unfilled jobs in every monthly report. Add to that the virtually limitless number of jobs that platforms and other new sources of work can support. Not at all dire.
As an analyst I have been trained to not counter emotion with emotion. All I can ask my fellow citizens is to look at the facts, not at the rumors and fear mongering.
And to keep believing in the American Dream. You don’t have to be an immigrant to do so.
They say the modern day author is cursed because he/she has to compete with short attention spans and many competing forms of content. I say the modern day author is, in reverse, blessed with all kinds of instant feedback. Imagine how long it took Ernest Hemingway to get feedback from fans and critics!
I am pleased to already see a wide range of discussions and perspectives from the select few I shared a media review copy of Silicon Collar – Amazon released it on Kindle today.
Bill Kutik, a long time observer of HCM and work trends is fascinated with all the examples of machines as colleagues I present in the book in his review at HR Executive Online
Kathleen Goolsby took a very effective “I am a worker worried about machines” approach as she interviewed me for SandHill
Dennis Howlett looked at policy/political angles as he reviewed the book at Diginomica
Jon Reed pushed and probed at many of the points in the book in this podcast
Joe McKendrick brings out much of the optimism in the book at Forbes
Dave Vellante questioned if we should not be worried as automation increasingly targets white collar, cognitive tasks in this SiliconAngle interview
Look forward to many more reviews and comments on this hugely important topic for all of humanity, and to each of us individually
The question jumped out at me in this article about the wide open spaces in Mongolia. It’s a question a nomadic herder asks. It may seem quaint to us these days but it is something that was accepted for generations. In my new book, Silicon Collar I point out
For eons, many of us have derived our self-esteem from our work lives. In fact, many of us continue with names which reflect the trades of our ancestors. It could be the Chinese Chong (derived from bow maker), the English Weaver, the Egyptian El-Mofti (from Arabic for legal expert), German Baumgartner (related to orchard), or the Indian Bhattacharya (from Sanskrit for teacher)—and there are thousands of other names derived from occupations in various societies.
In contrast, I point out the breathtaking choices of occupations we have these days and the chance for most of us to get second and later acts in our careers
Never before in history have we had so many career choices. As we saw in Chapter 10, The Bureau of Labor Statistics classifies workers into one of 840 detailed occupations, in accordance with the 2010 Standard Occupational Classification (SOC) system. CareerPlanners.com does an even more granular listing of job descriptions, and lists 12,000 separate jobs.
We are also not staying long in our jobs. Anecdotally, you hear the average American holds seven jobs in their careers. According to the BLS, the average person born in the latter years of the baby boom (1957-1964) held 11.7 jobs from age 18 to age 48, and nearly half of these jobs were held from ages 18 to 24. While many think the BLS data is skewed, it is at least partially corroborated by Census data. The typical American worker's tenure with his or her current employer was 3.8 years in 1996, 3.5 years in 2000, and 4.1 years in 2008.
I also point out how dramatically machines and technology are changing jobs before our very eyes. Bill Kutik, long time observer of HR trends in his review of the book writes
Vinnie has a stunning case study on University of California, San Francisco Medical Center. It includes a short reference to medical-records automation, where we've all experienced the painful digital divide.
My doctors in their 60s spend so much time typing on their laptops that I wonder if they're listening to me. Meanwhile, my latest doctor in his early 40s somehow enters the same data, and I don't even notice. He's my GP and even answers my e-mails within 20 minutes through his hospital's patient medical portal, where I can also see all his notes and my test results!
Amazon is releasing the Kindle version of the book Friday in time for Labor Day weekend. I could not think of a more fitting tribute to our remarkable labor economy. Yes, we do not have our parent’s life time employment or pensions, but we have so much more choice and we have technology which is making work safer, speedier and smarter. Enjoy my celebration of outstanding workers and the machines which help them excel.
While analysts are predicting doom and gloom from automation to other sectors, they themselves continue with a labor and paper intensive model based on dated, static tools like Magic Quadrants and Waves which were designed in previous decades.
Ditto for many academicians who believe MOOC (massively online open courses) will not affect them significantly. Ray Lane, introduced in Chapter 1, who sits on a couple of university boards, does not agree:
“I am not talking Carnegie Melon, which had close to 20,000 applicants for a class of 1,500, or Stanford which is probably twice that. They'll be fine. Stanford could charge $100,000 a year and people will pay it. It's not price sensitive. But way too many other universities are creating their own content, they're teaching in their own classrooms. So at 3,000 sites in the United States, there's a teacher creating a class in physics and teaching physics. We are moving to shared, digital models like a Khan Academy, Coursera or Udacity."
Guess who is excited about such knowledge work automation? The very consultants from Deloitte Consulting, TCS, and others who did the reengineering and ERP projects, many of them disasters, in the first place. And if knowledge automation is so promising, why are these consultants not adopting it for their own people-intensive operations? Similar to the accountants we discussed in Chapter 7, these firms depend on pyramids of young consultants.
Perhaps, the medicine of all these pundits should be taken with a heaping spoonful of "Doctor, Heal Thyself!"
My new book, Silicon Collar, which will be released in Kindle format on Friday, is on balance a positive book about the impact of automation on jobs, but as I write
“While the practitioners I interviewed were positive about the new technologies and their impact on work, a number of academicians, analysts, and economists are worried sick about the new machine age and envision a jobless future. Their pessimism, amplified by politicians, is leading to widespread gloom on the street. Internationally, it is even leading to referenda about whether citizens should be guaranteed minimum incomes, irrespective of work status, in anticipation of such jobless societies.”
I read tons of pessimistic books and papers as part of my research.
“Google the words "A world without work" and you find articles in The Atlantic, the New York Times and the Washington Post. Google "When machines take over" and you find a cover issue of The New Scientist, and stories at BBC News and The Telegraph among others.”
I tend to have a positive outlook on life and can understand how many don’t share that sunny point of view. But in many cases the analysis of many of these experts is glib, even sloppy. I take on many in the book, but here’s a couple.
Two Oxford U researchers studied data from the US Bureau of Labor Statistics and concluded “according to our estimates, about 47% of total U.S. employment is at risk.”. So I looked at their analysis in detail.
“The professors had calculated a high 0.79 "susceptibility to computerisation factor" (with 1.0 being the highest) to heavy truck and tractor-trailer drivers. This, when the U.S. trucking industry says driver shortages could reach as high as 175,000 positions by 2024 (even if the industry adopts autonomous trucks, regulations will likely require a driver as a backup). The professors had assigned an even higher factor of 0.84 to cartographers and photogrammetrists (who deduce measurements from images), which the BLS projects as one of the fastest growing occupations over the next decade. They had assigned a yet higher 0.94 factor to accountants and auditors, whereas hiring at U.S. public accounting firms jumped to reach record levels in 2013-2014.”
Another is my former employer, Gartner. Peter Sondergaard, Head of Research, told the audience at the firm’s 2014 Symposium/IT Expo:
"Gartner predicts one in three jobs will be converted to software, robots and smart machines by 2025...New digital businesses require less labor; machines will make sense of data faster than humans can. By 2018, digital business will require 50% fewer business process workers”
“Many people just picked up on Sondergaard’s "one in three jobs will be converted" statement. The fact is that Gartner issues hundreds of similar predictions each year and rarely audits them for future accuracy. It usually assigns a probability to them, as an indicator of its confidence in such a prediction, and the Sondergaard statements did not indicate any such hedge.”
“While Gartner had a timeline for its projection, the Oxford professors did not even attempt one.
Similarly, few appear to have asked the Oxford professors whether it is all doom and gloom. What about new jobs from the automation and new digital businesses? J.P. Gownder, an analyst at the research firm Forrester, is one of the few to have analyzed the Oxford work, and he estimated that "new automation will cause a net loss of only 9.1 million U.S. jobs by 2025.” His numbers are well under the roughly 70 million jobs that Frey and Osbourne believe to be in danger of vaporization.”
All this negative talk is leading to the “sum of all fears”
The reality, however, is that when Oxford, MIT, McKinsey, and Gartner talk, the person on the street and even business executives typically just read the headlines, and when all of these big brands agree on something, it solidifies readers’ overall impression—in this case, pessimism.
It is as Winston Churchill once said:
"Why, you may take the most gallant sailor, the most intrepid airman or the most audacious soldier, put them at a table together—what do you get? The sum of their fears."
Rather than combat emotion with emotion, it just lead me to more research
I found inspiration in something I had heard from Bill Joy, one of the cofounders of Sun Microsystems. Joy, who was once described by Fortune as the "Edison of the Internet," had this guidance: “If you cannot solve a problem, make the problem bigger. If you draw a bigger circle, you start to see several systems you can work on.”
In the case of this book, drawing a bigger circle meant looking at how automation has gradually rolled out over the last century and not just in the last few years.
September to November brings many enterprise events – Oracle OpenWorld, Workday Rising, Salesforce Dreamforce and others. I am looking forward, this year, to updates on core ERP, HCM and CRM functionality, but also hope to hear more around:
a) Use cases around emerging technologies
Sure there will be plenty of talk around Internet of Things and Artificial Intelligence. I am hoping to see customer use cases and plans to productize apps in these areas
b) Vertical functionality
Hope to see more specific feature sets aimed at specific industries not just presentations on “plans”
With my new book, Silicon Collar, I have a heightened interest around automation, so hope to hear from vendors about business processes they have delivered standout automation around. From their partners I hope to see concrete steps to automate their own labor intensive operations, not just talk about what they can do for clients.
Should be an exciting season. Look forward to seeing you at some of these events either in person or on social media.
I am releasing in time for Labor Day weekend, Silicon Collar — an optimistic perspective on humans, machines and jobs. I studied how automation — machine learning, robotics, unmanned autonomous vehicles, white collar bots, exoskeletons etc. –is changing the nature of work in over 50 settings. I looked at work in accounting firms, in banks, on the battlefront, in digital agencies, in garbage collection, in the oil patch, in restaurants, in R&D labs, on shop floors, in the warehouse, in wineries and many more.
I spanned the gamut from handsomely compensated basketball players to much more modest garbage collectors. I concluded “we are no longer white, blue or brown collar workers — we are all Silicon Collar workers since technology is reshaping all our workplaces”
I found all kinds of outstanding workers benefiting from technology. There’s UPS drivers aided by its telematics driving on average with less than one accident per million miles. There’s Foxconn employees working next to its bots and precision machines who have delivered billions of Apple and other devices. There’s Amazon data center employees who have delivered over 50 price cuts over the last decade.
Never before have we had so many choice in jobs. The Bureau of Labor Statistics classifies workers into one of 840 detailed occupations. CareerPlanners.com does an even more granular listing and lists 12,000 separate jobs. And they do not even include all the entrepreneurial, franchising and other gig economy opportunities we have.
Never before have we had a chance to get second, third, later acts in our careers. In the book, I catalog many who keep evolving and thriving. Never before have so many technologies converged to make work safer, smarter and speedier.
And yet, I saw unrelenting gloom and doom about jobless futures. Research from “big brands” — Oxford U, MIT, Gartner (my former employer), WEF and many others — says machines are poised to displace tens and hundreds of millions of jobs. And when so many of the brands agree (and cite each other and increase the decibel level), the person on the street feels the chill.
The problem is much of their research needs to be taken with a grain of salt (and I challenge it in detail in the book). I looked at several sectors — grocery chains, knowledge work, the US Postal Service, automobiles — over the last century and how technology impact affected jobs.
Technologists are used to Moore’s Law and fast-moving computing curves. Societies adopt automation much more slowly. I found “evolution not revolution”. How else to explain why there are still 90,000 bank branches each with several jobs just in the US even after decades of ATMs and Mobile banking? Why do we still have over 600,000 U.S. postal jobs in the face of all kinds of digital communications, when the USPS has automated in the form of kiosks and logistics tech and when the high end/higher margins of the market have been taken over by Fedex and UPS? Why do we still have so many grocery checkout jobs in face of the UPC code/scanner patented 65 years ago and self checkout available for years now?
We get excited about driverless cars. Nearly 50% of cars sold globally last year were stick shift. How many decades before they decide to give up their way of driving? Mazda with its “Zoom Zoom” slogan is counting on humans continuing to love to drive for a long long time.
Seven decades after Sir Alan Turing outlined his test — can a machine would convince a human 70% of the time after five minutes of conversation that it is human, our machines still cannot pass his test. We get excited when a machine beats a chess grandmaster or when Amazon Echo understands us, but we are still not there. Machines can do certain tasks, not complete jobs. And even as they improve, customer adoption cycles continue to be snail-like slow.
In the book, I have identified several “circuit breakers to over-automation”. All the panic about machines becoming our overlords is misplaced. I see machines as colleagues who take over the “3D” tasks — the dull, dirty and dangerous ones and allowing us to move to much more creative roles.
Beyond the fear, politicians have been stoking the anger factor. Anger against the top of society, and anger against the bottom including immigrants. In that anger, we are forgetting that we collectively filed tax returns with the IRS with total Adjusted Gross Income at nearly $ 9 trillion. Which means pre-adjustment, we have a pie of $ 12 trillion to share. That’s just in the US — there are many other healthy job economies around the world. There’s plenty to go around. We need to keep making the pie bigger, not just sulk.
The big aha from my book research : yes, we may not have life time employment, plates for 25 years of service, or pensions that our parents enjoyed (or in many cases suffered through). However, we have ended up with many other positive things in return. More choice in occupations, more second and later acts, and all kinds of technology which is making work safer, smarter and speedier. And we are still to see new jobs emerge as we tackle our Grand Challenges in energy, deep space, healthcare and many new frontiers.
Warren Buffett said in his annual investor letter earlier this year “The babies being born in America today are the luckiest crop in history.” I happen to agree. We have nothing to fear but our fear of machines and our anger which is blinding us to a remarkable set of work opportunities.
In writing my book, Silicon Collar, I knew I would need to address the pessimism of many academics, analysts and economists about automation leading to jobless societies. I also found myself getting in all kinds of policy issues around Universal Basic Income, immigration, student loans, minimum wages, and ethics surrounding technology among other topics. In his generally favorable review of the book, Dennis Howlett wishes I could have focused more on policy issues.
I was thinking just a year ago, Dennis likely would have wondered what a technology, innovation focused author was doing even wading into policy issues. The reality is technologists are becoming more active in all kinds of policy and political issues.
Marc Benioff has been particularly vocal about same sex and equal pay matters. Elon Musk, Steve Wozniak and others have expressed concerns around ethics surrounding artificial intelligence. Mark Cuban has been vocal about Donald Trump. Peter Thiel presented at the Republican convention more supportive of Trump.
I was pleased to see Jeff Immelt, CEO of GE take on Bernie Sanders in an op-ed. (btw, I have long considered Immelt a technologist. In The New Polymath, I wrote “His predecessor, Jack Welch, earned the nickname “ Neutron Jack ” for his focus on efficiency; Immelt will likely go down in history as “Proton Jeff, ” as he encourages positive vibes toward all kinds of technology.”). On the other side, I was just as pleased to see Tim Cook of Apple, while less direct than Immelt publicly react to Trump.
Tim O’Reilly, the prominent tech publisher, has been writing about what he calls “Evonomics”. I am not a big fan of Universal Basic Income, ( a no-strings-attached payment to each citizen whether they work or not), something a number of countries are evaluating. I think UBI is too fatalistic that jobless societies are just around the corner. when my research shows automation only gets gradually absorbed by societies. Still I respect the fact that a venture capital firm, the Y Combinator, is trying out a UBI trial on its own.
I live in Florida and don’t always agree with my colleagues in Silicon Valley on a number of these issues. But it is good to see technologists more involved in policy discussions. Our industry has a large number of smart, savvy and mostly thoughtful folks. We can contribute valuable insight on a number of policy matters. They are too important to just leave to our politicians and bureaucrats.
My excitement for the manufacturing Renaissance comes out loud and clear in a paper I wrote about NetSuite’s manufacturing customers here
“The agenda (at the WEF in Davos) this year was “Mastering the Fourth Industrial Revolution”. The first three revolutions came with introductions of mechanization, electricity and IT—today, Big Data, the Internet of Things, robotics and other technologies are allowing for another revolution.
The WEF is usually ahead of the curve when it comes to such thinking. In this case, however, its cue came from a concept called “Industrie 4.0”, which Germany’s industrial base has been pioneering for a few years and is now becoming a theme across the world. China is looking way past Industrie 4.0 as it plans for future manufacturing with its “Made in China 2025” initiative. In the US, the conglomerate GE has generated excitement with its ambitious initiative called the “Industrial Internet”. Workers at airport hangars, wind turbine farms, hospitals, and many other settings are seeing the growing impact of smarter GE machines that generate loads of data used for optimized operations and predictive maintenance. Japan continues to innovate with 5S lean manufacturing and other methodologies.
The bottom line—the world of manufacturing is evolving at warp speed, and an industry that was supposedly dying as the world moved toward services is back with a vengeance”
In my upcoming book, Silicon Collar, I showcase automation at Plex’s manufacturing customers and quote its CEO Jason Blessing addressing them
“Many of you in this room, the Plex community, you're doing these things. It dawned on me the magnitude of what we're doing together. What we're doing, the Plex community, is someday going to be taught in classrooms. In a sense, we're the pioneers who are leading the Fourth Industrial revolution—leveraging technology to make manufacturing plants more intelligent, safe, and efficient than ever."
I had a chance to catch up with Jim Shepherd, Group VP of Strategy for Plex about the recent acquisition of DemandCaster. I have asked to speak to some of the 10 joint customers, but the initial positioning is promising, as cloud vendors continue to verticalize.
DemandCaster adds cloud-based sales forecasting and inventory planning software to Plex’s strong manufacturing functionality. Too many vendors offer more general purpose BI and planning tools. DemandCaster’s founder Ara Surenian and his team bring a engineering, manufacturing and logistics pedigree.
The other thing I like about DemandCaster is the emphasis on “affordable” and a focus of replacing the “giant spreadsheet”many customers use . So much more attractive for the mid-sized manufacturer than tools which emphasize “Advanced” and expect significant premiums for that branding.
More when I get a chance to talk to some customers.
A CIO in an email congratulating me on my new book, Silicon Collar, wondered if SAP was relieved this one is not on “the Nation”.
They don’t need to worry about another book. They have their hands full.
Several mid-level SAP executives have announced plans to leave in the last few weeks. In the SAP ecosystem that’s pretty big news.
SAP does not need to worry about these departures either, they have their hands full.
To get an idea on what I mean by hands full, go back and listen to McDermott’s keynote at SapphireNow in May. He “openly admitted that he ditched his original keynote content 15 days before Sapphire. The reason cited was some pointed feedback received from customer CIO’s as well as from SAP Board members. Instead, the message was one of acknowledgement that SAP was not listening and responding to customer feedback. McDermott therefore declared that empathy would be the number one message delivered.”
There are literally thousands of SAP customers who are trying out one or more of the 9 diversification strategies I had outlined in SAP Nation – ring fence with clouds, two-tier ERP, third party maintenance etc. In the multi-city tour I did for Rimini earlier this year, I met many other SAP customers who are planning similar moves.
SAP has its hands full, and it needs its partners to help here. Not by marketing more, but helping incumbent customers dramatically lower their cost of operating the software.
Yes, overtly, SAP can talk about steady earnings in its quarterly calls, but the foundation is increasingly shaky.
And my book is about something much bigger than SAP. It’s meant to counter a different kind of pessimism. SAP has far more tactical things to worry about.
I hardly ever write political posts on this blog. This is an exception – somewhat.
For starters, I am middle of road politically. Right leaning economically as many small businesspeople are, left leaning socially. I tend to fall in line behind my C-in-C no matter which party they belong to. I will do the same whoever wins in November.
However, in writing my recent book about automation and jobs I have been deeply affected by all the pessimism about jobless futures. It has taken every fiber of optimism in my body to write Silicon Collar, which ended up as a positive book about how we need to relish having machines as our colleagues and peers.
In my research, I had plenty of opportunities to feel very good about our jobs/business economy. We filed tax returns with the IRS with total Adjusted Gross Income at nearly $ 9 trillion. Which means pre-adjustment, we have a large pie of $ 12 trillion to share. That’s just in the US – there are many other healthy job economies around the world.
Never before have we had so many choice in jobs. The Bureau of Labor Statistics classifies workers into one of 840 detailed occupations. CareerPlanners.com does an even more granular listing and lists 12,000 separate jobs. And they do not even include all the entrepreneurial, franchising and other gig economy opportunities we have. Never before have we had a chance to get second, third, later acts in our careers. Never before have so many technologies converged to make work safer, smarter and speedier. Yes, we may not have life time employment, plates for 25 years of service, or pensions but we have ended up with many other positive things in return.
As Warren Buffett said in his annual investor letter earlier this year “The babies being born in America today are the luckiest crop in history.”
And yet, I saw all kinds of pessimism and discontent about the economy. While the book takes on many academicians and analysts for irresponsibly creating this pessimism, our politicians are also to blame. The UK has already paid a heavy price, the US may do so next.
They are nit picking on each other. They should be spending more time telling us how they will improve on the economy we have rather than writing it off.
Let’s all make them focus on that over the next 100 days. Trump and Clinton are both old school businessman and politician respectively. I want them to consult with Jeff Immelt, Tim Cook, Elon Musk, Mark Cuban, Colin Powell and others who are much more forward looking, globally savvy executives.
Fellow Americans, let’s keep them honest. Let’s use their rallies, their debates, their websites, Twitter and other social media to keep them focused on what’s important to us and our families. Enough of the pessimism and focus on each other! It’s an incredibly critical 100 days.
I have long admired NetSuite. They are cloud pioneers going back nearly two decades. CEO Zach Nelson helped in countless ways when I wrote The New Polymath
I was hoping they would stay independent a bit longer. In May, after SuiteWorld where I saw their progress in High Tech, Retail and a few other verticals, I wrote “At this stage, I believe NetSuite has one of the most evolved industry strategies in the cloud application world.” In SAP Nation, I wrote about several 2-tier implementations that NetSuite was making a mark around. With 30,000 customers NetSuite already had a steady base, but I also saw it “breaking out” into many new markets.
Still, it is good to see NetSuite executives and staff rewarded. Oracle is picking up a fine asset. Positioned properly, it should supplement Oracle’s own, more horizontal, Fusion products. Is it too expensive an acquisition? I don’t think so - not in a world where LinkedIn was prized thrice as much.
I look forward to learning more from Oracle about the next chapter at NetSuite.
Just about a decade ago, I ran a guest column from Sridhar Vembu which was striking in that he promised to invert the traditional software model which typically invests 10 to 15% of revenues in product, and 50 to 60% on sales and marketing.
He said “From the perspective of most software vendors, more than their product, their marketing and sales process is their key "value-add" - from a customer perspective we may as well call it the "value-padd".”
Sridhar had recently launched the Zoho Office Suite, personal productivity tools in SaaS format, and you could have dismissed his words as those of another ambitious entrepreneur. Last week, his team had a chance to show off to a small group of analysts what they have quietly been developing and selling in the last decade, and the progress is impressive. No longer just an Office 2.0 player, it is a broad ranged ERP and CRM player with 30 modules, 20 million users and a petabyte of customer data (BTW the entire presentation during the day used Zoho’s home grown tools).
More importantly, how they have done it is even more impressive.
Zoho uses a “pull” sales model which allows them to keep sales and marketing costs at a fraction of what many competitors need. Granted they are selling more to the SMB market but the savings are dramatic. Additionally, they are using partners to verticalize. Over the course of the day, they had 3 partners present their customized CRM aimed at insurance brokers, travel operators and solar panel installers. They claim 1,200 partners around the world which help generate a quarter of their CRM revenues.
Zoho has a highly optimized development engine. They provided several examples of R&D staff at competitors compared to what they needed. In some cases, they need less than 5% of the headcount. Across their 30 products, they have 100 small development teams. Other than firewalls, switches and routers the infrastructure is open source. They invest heavily in scaling up Postgres rather than use Oracle on EMC gear.
The recruiting and employee development model is dramatically different. Average tenure of employee is 10 years. 146 out of 150 managers have never worked anywhere else. Most executives we met wear several hats. None of their business cards have titles. They waste very little time in team meetings. 20% of their engineers do not have degrees. Focus on promise more than formal education helps Zoho recruit in India against the giant outsourcing firms where the majority of his development is done. In a side conversation, Sridhar told me he expects to increase developer productivity even more dramatically in the near future.
The model is self-funded. Sridhar can point to many VC funded competitors who he says end up with a high cost/high-margin addiction which is deadly in the long-run. He points out Microsoft, Amazon and a few other very successful companies have largely been funded from cash flow.
I could go on but I will run an interview with Sridhar over the next couple of weeks about the strikingly different ways he has built the company.
Over and over, throughout the day, I kept asking myself what if the rest of the software and outsourcing industry were to adopt some of his principles. Contrast not just to other VC funded software competitors, but also to most Indian outsourcers who have lost what made them attractive – continuous improvement and productivity that their CMM Level 5 certifications promised.
As I have done with previous books, I will excerpt about 10% of Silicon Collar over the next several weeks in prep for the book release early September. Amazon is taking advance orders for the Kindle version here.
On New Florence, I will excerpt from the 50+ settings - in accounting firms, on the basketball court, in banks, on the battlefront, in digital agencies, in the oil patch, in R&D labs, on shop floors, in wineries, in the warehouse and many more how automation – machine learning, robotics, unmanned autonomous vehicles, white collar bots, exoskeletons etc. – is changing the nature of work. That’s the “machines as our colleagues” angle of the book
On Deal Architect, I will excerpt the historical angle of the book. That looks at automation over decades - in the grocery industry, in the automobile industry, in knowledge work, in the US Postal Service among other sectors. I found "evolution, not revolution" and use that to confront the pessimism about jobless futures coming out of academics, analysts and politicians.
In the meantime, here is the Table of Contents. Enjoy the excerpts.
I spent a couple of days at Infor’s user conference in New York this week. I did a podcast with Jon Reed of Diginomica about the event, and have included excerpts from that conversation and added some other thoughts below.
JR: You've been covering this company for a long time. What do you think?
VM: Let's approach it two ways. One is, how is Infor different from some of the other ERP players like SAP, Oracle, and so on? Then, where are they on their journey, the vision they painted?
If you look at Infor and compare them to SAP, Oracle, or even the cloud players, they have 3 or 4 very significant differentiators. One is they're into a number of verticals that others either don't seem interested in or just haven't played in. Infor is interested in retail, interested in healthcare, interested in hospitality, services. Not just manufacturing or distribution type markets (during the conference I had breakouts with Infor execs from retail/distribution and from manufacturing verticals.The customers in the audience and who were on stage included a wide array of industries and geographies like Albuquerque Public Schools, CERN, First Transit, Hackensack UMC, Kirin Breweries, Sanford Health, Travis Perkins, Whole Foods and Zahid Industries)
A second one is, when you look at cloud infrastructure, 4 years ago they decided, "Why are we putting money into a data center? Why don't we go with Amazon Web Services?" So that's been a significant differentiator for them. As Charles Pjillips, the CEO said a few years ago, "Friends don't let friends build data centers." He's taken some of the money that he would have put towards the infrastructure and plowed it back into application functionality.
JR: You've been a critic of certain ERP vendors that have perhaps overspent on data centers.
VM: And not gotten much for it as a result because they are poorly run and are undersized and so on.
Another way Infor is different is, they have a number of human services that they proudly show off. They've got the Hook & Loop digital agency. (the conference highlighted Hook and Loop Digital which I had written about earlier) It could be a design agency that any customer could hire if they need to. They have a Value Engineering team that does a very sophisticated analysis of payback. They have a group in Cambridge who are Data Wizards. Every software company needs some talent, but they always try to hide the human aspect. But Infor has been reasonably visible about a lot of their human services.
Which leads me to my fourth point. If you walk around the show floor here, you don't see Accenture, you don't see too much IBM, you don't see the big outsourcers here. That's another big difference here. With my SAP Nation thinking, I like vendors that don't surround themselves with too much off the labor intensive model. So, those are 4 things where I think Infor stands out from some of the others.
JR: There's a perception of Infor as sort of a holding company for ERP graveyard products. Infor actually has way more even than Oracle that are under its umbrella somehow. Is that now an unfair stereotype?
VM: That's a good segue to my second point and about progress toward their vision. I think it's still a fair stereotype because close to a hundred thousand customers, most of which are still under legacy brands like Baan or Syteline in ERP and Epiphany in CRM
JR: Names you haven't heard in years, right?
VM: You can look at it as half full or half empty, right? Those are all customers waiting to be migrated or those are customers that are just brain dead. I'd think those customers are waiting for easier migration. So Infor announced at this event, a deal with BackOffice Associates. They specialize in moving on-premise customers to the cloud.
Now does Infor have everything ready in the cloud? No, but they're thinking through a lot of those issues better than I think other legacy vendors that have a significant on-premise customer base.
JR: Their next generation product is known as CloudSuite. It can get a little confusing because they throw their CloudSuite label around a little bit. But before this conference, they announced a general availability of financials and supply chain. Which is big, right? Now I asked Charles Phillips yesterday how many customers. He was a little careful about his answer, but that's legit because it's a new product. Where do you think they should be? How will you chart their progress from here?
VM; I think they need to accelerate both of their product availability in the cloud and migration of their legacy customers. One of the themes from this event in talking to other analysts is, there are very few references. They haven't really migrated a large percentage of their customers. That is a challenge. That is something they need to tackle.
JR: You think migration tools are a key part of it? Making it easier?
VM: First making sure the product is ready. And then the migration. They have so many different initiatives going on and so many different verticals that the risk they have is they're making too many announcements and not enough product availability and not enough references.
JR: What I think you find a lot of times with these next gen releases is that the classic, sort of large enterprise customer is not the first one to move, right? Like a lot of times it's edge cases, smaller shops. We did a interview earlier today with a public services company, basically a water company in California. 150 employees. They had made the move to financial so they hadn't gone live yet, so not a classic ERP customer, right? What was interesting was just kind of pressing him on functionality gaps and hearing that he's pretty happy with the functionality he was finding in the financials. This is a Lawson user. Now Lawson is run in Cobol, so it's ... The backside of Lawson is a little archaic, but the functionality is pretty deep in the financials area there. When you hear something like that, it makes you think that they may be further along in that regard than you might expect as far as the depth of functionality.
VM: But that's just one ... You're looking at a horizontal product on financials. I'm hearing from Infor about their Whole Foods driven retail merchandising strategy. I'm hearing from others at Infor about their hospitality strategy. I'm hearing from others about their healthcare. They have a lot of irons in the fire and the risk is these are all announcements at this point, or onesie-twosies in terms of customers. They need to do a better job prioritizing 7-8 of those initiatives and driving them home.
JR: Right. When you can bring people on stage who are essentially winning in their industry, that helps. Is the product there though? I'm not convinced the product is completely there in some of those areas.
VM: Yeah, like when Whole Foods is fairly well along and they have 2 or 3 other big brand customers. That's going to position them very well in the retail and grocery sector.
JR: When they started talking about digital transformation, my bullshit detector went off. That's only because every show I've been to this year, you name it, that's sort of the griddle cakes that are being pushed on stage, right? Yet, a lot of this is real, right? Like this is not just a marketing fantasy. What is your take on that part?
VM: A customer who is embarking on a digital transformation journey, can go to a Cognizant or an Accenture to help them build that vision. Or they can go to a Ideo, a design firm and say, "Where do we start? New products or enhanced customer experience?" So there are different paths they can take. I think Infor's view is, "We have a digital agency called Hook & Loop. We have vertical expertise in so many areas. We've done a lot of value engineering work. We've got the building blocks. Come to us. Maybe we can show you how to embark on that." Now, they don't want to be a consulting firm. They'll qualify the prospects and see if they are interested in building with them, next generation solutions for that industry. That combination happens when a customer is very interested in a deep transformation, not just a "I want to do sentiment analysis and that's my definition of digital transformation." But a deep business model change, a smart product strategy and so on. Infor wants to position itself as "Think of us. Don't just go to McKinsey or Accenture because we've got some unique assets."
JR: I don't know, Vinnie, if I'm an Infor partner listening to this podcast, I wonder how I fit into this picture.
VM: You have to walk on the show floor and it's not like SapphireNow. There's Ciber, there's HCL. There just isn't that much big, big money around Infor. If you want the $ 50 million projects, keep doing business with SAP.
JR: There you go. The author of SAP Nation speaks up. Okay. You know, it's funny, I didn't think we were going to be able to avoid SAP on this podcast. Just to wrap the digital transformation piece because that was one of their major announcements was that they're going to be providing digital services through Hook & Loop. Do you feel that that theme resonates with customers? In other words, in this industry, is digital transformation more of a vendor creation or is it a reality for customers that they need help with?
VM: I think it varies by industry. Retail, for example, everyone is scared to death of Amazon. Digital is a clear burning platform. You go into insurance, maybe not quite as convinced about that. So it varies from industry to industry. Infor's challenges is, that is a very strategic project. A digital transformation gets boardroom level, CEO level, visibility. Would a CEO approve somebody saying, "I want to go use Infor rather than using McKinsey for the initial project." Or "I want to use Infor rather than Accenture." Good news is, Infor’s not looking for 5,000 of those projects. They're looking for 1 or 2 in every industry. I think they can be pretty well positioned.
JR: All right. Well, they say they're doing another Inforum in 14 months, so we'll check back and see. I'm looking forward to continuing this conversation.
My new book is nearing the end of the editing process and is headed to the design agency. It should be released by middle of September.
Here’s a synopsis:
“Never before have people had such a broad choice of occupations – and the opportunity to try on so many employment hats over the course of a career. Never before have so many technologies converged that are making jobs safer, smarter, speedier, more interesting and more compelling.
And yet… while it should be a Golden Era for the workplace, there is extreme pessimism in many quarters about dystopian futures due to the supposed job-killing impact of an array of automation technologies: robots, drones, autonomous vehicles, white collar bots, 3-D printing, and many more.
Meanwhile, the job economy is dysfunctional, with millions of unfilled employment vacancies combined with a restless, fearful, even angry workforce.
Tackling this complex weave of forces, Mirchandani blends several distinct voices in this book – the innovation enthusiast, the industrial historian, and the policy analyst. Assembling a vast collection of voices, examples, and perspectives , he catalogs in detail over 50 jobs that are being transformed by technologies – spanning the gamut from handsomely compensated basketball players to much more modest garbage collectors.
He next turns historian and looks at automation over decades - in the grocery industry, in the automobile industry, in public accounting, in the US Postal Service among other sectors. He finds "evolution, not revolution" and uses that to confront the pessimism about jobs coming out of academia and politicians.
With his analyst hat he looks at how employers, regulators, unions, and workers have all confused the labor economy. He concludes we should not be worried about machines. We should be far more worried about man-made damage.
The end result is an optimistic read on the changing nature of work, a celebration of outstanding workers, and the machines which are making them even better.”
As with previous books, I will excerpting from the book on this and the New Florence blogs over the next several weeks.
Several readers told me they liked the format of my last book. They found it ideal for a cross-country or cross-ocean plane ride. This book is similarly fast paced. Hope you enjoy, but more importantly, I hope it helps you offset the doom and gloom that surrounds us.
SAP’s new marketing tagline – run simple – is not only grammatically incorrect, it’s grossly inaccurate. Nucleus analyzed the experience of SAP customers and found varied – at best – satisfaction with existing solutions and great reluctance to adopt SAP’s latest applications. Six out of 10 existing customers wouldn’t buy the same solution from SAP again. When asked if they would consider a future solution, in all markets except ERP those same six out of 10 indicated they would not consider SAP’s future offerings. Perhaps more telling, for SAP’s core ERP market, 9 out of 10 customers indicated they would not consider a future investment in S/4HANA and appear to be following a slow tapering-off strategy as they evaluate other opportunities in the market.
In a FAQ, Nucleus added
Many customers provided more colorful assessments of SAP (SAP = “Stupid-Ass Program”) and its partners, the relative success of their deployments, and their view of SAP’s commitment to their success. While amusing and enlightening, we determined many of these more colorful comments might be viewed as more incendiary than supportive of an unbiased analysis
I am waiting for a turnaround to write SAP Nation 3.0. I would love to write a positive book in the trilogy. The way things are looking that turnaround may not happen for a few years.
In the mean time, I see SAP customers are driving their own version of turnaround. The 9 strategies I outlined in Volume 2 like Ring Fence, Two-tier ERP and Third Party Maintenance continue to gather steam.
“Never has there been a greater coalition of the establishment than that assembled by Prime Minister David Cameron for his referendum campaign to keep the U.K. in the European Union. There was almost every Westminster party leader, most of their troops and almost every trade union and employers’ federation. There were retired spy chiefs, historians, football clubs, national treasures like Stephen Hawking and divinities like Keira Knightley. And some global glamour too: President Barack Obama flew to London to do his bit, and Goldman Sachs opened its checkbook.
And none of it worked. The opinion polls barely moved over the course of the campaign, and 52% of Britons voted to leave the EU. That slender majority was probably the biggest slap in the face ever delivered to the British establishment in the history of universal suffrage.”
Almost as remarkable is the fact that in the US two candidates from extreme ends of the political spectrum – Trump and Sanders - have picked up over 25 million votes in the primaries.
There is a definite anti-establishment sentiment in both democracies. And much of that is centered around a backlash against globalization. From the New York Times
“Trump, Sanders and those in Great Britain who ran the Leave campaign are tapping into an anger and anxiety that is clearly festering. Working-class folks in the United States are similar to working-class folks in Europe. And a lot of those working-class people feel as if the international economic system is not working for them and strangling the middle class.”
We cannot and should not ignore this as just some racist, old fart sentiment. The numbers are too large, the discontent too vocal.
Can we unwind globalization? No. Even the harshest critic has to acknowledge no generation ever in the history of mankind has seen so much product variety from everywhere at incredible prices and access to travel to remarkable places. It’s the other p - people, especially the volume of people, different from ourselves we are not comfortable with. It crosses cultures. Trust me, I have traveled to over 60 countries – it applies anywhere in the world. In small numbers people different from you are a curiosity. In large numbers, they are considered a threat.
We have to manage the people volume and spread it around the globe.
The U.S. has had a quota of a million legal immigrants a year over the last couple of decades. However, the majority of these immigrants are admitted based on family reunification, not talent. They are the spouses or parents of talent-based immigrants. Instead of giving preference to talent, we have created new “lanes - added H-1B, L-1, and other types of "temporary" visas, or in the case of the agriculture and construction sectors, allowed a flow of undocumented aliens. Next, the annual H-1B limit the government announces is allowed to be exceeded with an uncapped flow of nonprofit and governmental researchers. Students on F-1 visas enrolled in STEM (science, technology, engineering, math) fields of study from accredited educational institutions in the U.S. are allowed to work for as long as three years as part of "practical training." The Center for Migration Studies, a New York City think tank, estimates we have 10.9 million undocumented workers. Many others believe we really do not have a good handle on how large that number is. The politicians keep talking about "comprehensive immigration reform" and "building walls," but the flow continues. Even for a country of immigrants, this has been unpalatable to the general population.
In the EU, the issues are different. In the US, people are mobile. It is estimated 1 in 40 Americans moves across states every year. In Europe, it is much, much slower (interestingly, the English are the most mobile there) but the East Europeans are changing that dynamic. Then there is the floodgates of refugees. Too much, too fast.
But that’s nothing compared to the other changes we need. China has its Made in China 2025 initiative, India has its Make in India. They also need a Sell in China/India and Work in China/India versions. Ditto for Mexico, Brazil and many other countries. Trade has been too one sided. Labor flow has been too one-way. Their citizens should be allowed to enjoy the same benefits of globalization – more product variety, better pricing, access to more places.
That will mean we have to encourage our small businesses to export more. It will mean we have to encourage our young to go work in Chongqing and Pune and places they could not find on the map today.
We cannot roll back globalization. We have to adjust some elements, but more importantly we have to spread it around the world. Ironically, we need to take globalization global. It’s way too unbalanced today.
This continues our interview with the new CEO of Unit4. Part 1 ran yesterday.
The Unit4 brand is much stronger in Europe than in North America. What's your vision for changing that?
In fairness, North America is already around 15% of our revenue. In 2015, we grew licenses by 20% and doubled our bookings in the region. Doubling bookings is not something too many of our competitors can claim to have done in the region.
We certainly have appetite for more growth. However, we also have to factor that it is expensive to grow brand recognition in North America. Many European companies have burned their fingers attempting North American expansion because it is a rather complex market. It's probably more homogeneous than Europe but still there are huge differences between east coast, west coast, and whatever, the states in between and so on and so forth.
Yes, we are reminded of that every four years as we go through the US Presidential primaries how diverse this market is
We are being selective. North America higher education, public sector - especially in Canada-,Professional Services are very promising. I would love to be in a position to do massive airport advertising, but we're still working on getting the cash for something like that.
How do you see your competitive landscape changing in the next couple of years?
I would say we have three different types of competitors. We have, of course, to compete against the big ERP players, like Oracle, SAP, Microsoft and to a lesser degree, Infor, Epicor and Sage. Next we have a set of local players that we see quite often. In the Nordics, it's predominately Visma. In the Benelux, players like Afas. Then last we have the vertical players, so in PSA we face Deltek. In higher education we see Ellucian, Jenzabar, Oracle, Workday and Tribal Group. In not for profit we're meeting Abila and even more verticalized special players. I think that there is no significant change to be expected there, at least for in the next two years.
What we definitely will be seeing is cloud players becoming more aggressive, which will also further drive the vertical offering. Take NetSuite in what they do in not for profit, take Workday with what they do in higher education. Plus, I think there is a growing number of smaller startup firms that offer very specific best of breed functionality.
At the end of the day I don't really think that this is fundamentally changing the competitive dynamics. What's changing is the business model. We are more moving into a true as-a-service offering, not only deploying technology as a service but deploying business processes as a service. I could imagine that in a few years from now, we could be selling student success, selling better ranking for universities, selling less project risk for service organizations rather than just selling a set of functionality.
Let's talk about your product side. What excites you as you walk around your R&D lab?
I would say there are many things that excite me. If I had to focus I would focus on two things. Number one is the deep vertical expertise that we have and the conviction that we get again and again that our applications have been built from scratch for service organizations. We've launched what we call advisory councils. We have them for industries and also horizontal capabilities like corporate performance management. In each advisory council we've selected between 6 and 12 customers from Europe and the same number from North America. We spent a day with them talking about what changes on their businesses and how can we support them better with technology. The expertise that we bring to the table combined with the expertise and the collaboration that we have with our customers, this is something that I'm truly excited about.
The second thing is our self-driving ERP concept and related plans for a digital assistant. Through our partnerships, predominately with Microsoft, we clearly see that there are technology components we can use and add our own algorithms and expertise to truly build applications that are different and provide a unique consumer-like experience. We are building applications that really support people to be smarter, to be more efficient, and ultimately to be more productive.
I strongly believe this self driving concept is something that is highly differentiating. This is something that can't be replicated easily because it requires more than just technological expertise. It requires the understanding of the industry, the understanding of human behavior in business processes, and emerging technology. Combining these three elements into something that is completely new and completely different is hopefully a big differentiator for us.
Stephan Sieber took over as CEO of Unit4 in April. He joined the company in 2014, after over more than a decade at SAP, including Managing Director of SAP Switzerland and Chief Operating Officer of the region DACH (Germany, Switzerland and Austria). He was also a member of the management team of SAP Germany. I had a chance to talk to him about the first couple of months in the new job and his vision for the company.
Here is part 1 of the interview
The first months must have been incredibly hectic. Please share with readers your initial thoughts from the new job.
First of all yes, it has been hectic, but in a positive way. I am doing two jobs - as CEO and continuing my old job as head of sales. My successor as head of sales will join us n early July.
In many ways, I am executing on a strategy that has been worked on for years. When I joined Unit4 in April, 2014, I joined initially as head of strategy. I think I was quite instrumental in putting the company on the journey that we have taken.
I think my biggest surprise is seeing the massive amount of opportunity in the market. Of course, I knew that in my earlier strategy job, but I was more occupied, to be honest, with a lot of internal work developing our operating model. Then I took over sales in mid '15 and I spent significantly more time playing outside with very tangible customer opportunities and prospect opportunities. Now as CEO, I can step back a bit from the more tactical day to day business and look at the market and the company from a more strategic point of view.
When I look at what is going on in the IT industry and how we can bring new technology to service organizations (Unit4's focus in verticals) it's just amazing to see the massive amount of opportunity that lies ahead of us. Our margin is improving quite nicely as a result of the changes in the operating model we have adopted, but even more importantly, our top line is trending the right way.
The previous CEO, Jose Duarte had a services background. You have a strategy and sales background. Is that causing any transition challenges for your organization?
I think Jose and I have a pretty comparable background when it comes to focus on sales and services. He was running a global services organization at SAP. This is something that I had not done but I was a general manager at SAP managing large regions and geographies and they had a strong service footprint as well.
Where I want to be different is to be even more specific in our vertical definitions. I think a definition like professional services is too broad of a target market. A law firm or a marketing agency or an engineering, procurement and contracting (EPC) are not comparable. I think we need to be even more specific on how we differentiate and how we help our customers to better manage their business.
Talking of your focus services industries - your higher education sector seems to be doing very well from the number of customer wins you keep announcing. Both you and Jose had identified a handful of other service verticals. Are you going to accelerate your move into some of the other service verticals, either via acquisitions or other investments?
As you know, till we took the company private in early 2014, Unit4 was run more as a conglomerate of technology firms than as a single global technology firm. We wanted to change this and make it a global tech leader with a global operating model. As part of that shift, we put acquisitions on hold and decided we would also change the style of acquisitions when we did them again. We didn't want to just acquire market share, installed base and recurring revenues. We wanted to acquire technology and also team members that help us to innovate and grow.
When we came across the higher education player, Three Rivers, it was the type of solution we’re looking for. It's state of the art. It's modern technology with mobile capabilities and embedded analytics and provides a 360 degree view on student success. It puts the student in the center of the application while allowing for multiple views of administration for the university.
Three Rivers was our first attempt at a different way to grow. From that point of view it has been a major success because as you rightfully pointed out we see the market reacting to that. We win a lot of new business. We see installed base customers migrating. We also see that we have been able to integrate this company in record time and to use the flexible platforms (for example, in R&D, but also customer support or our global deliver center in Lisbon for implementation services) to create synergies with acquisitions. From that point of view this is clearly the prototype or the poster child for what we want to do going forward and yes, you will be seeing us more active in the M&A space.
Don't forget though - we are still heavily focused on organic investments in our own R&D. Our CTO and his team are working on a completely new standalone professional service automation (PSA) solution. You could look at this PSA project almost like an acquisition that we did because we're putting additional, incremental teams, on top of the platforms that we have created.
SAP Marketing has had a rough patch. There was the obnoxious “spokesperson”, Phil that SAP had to hastily take down. There was the balloon imagery around SAP’s cloud. Someone forgot to think about the hot air connotations. There’s all the New Age “does your business have a soul?” ads that had people scratching their heads. More recently there was a 8 page color insert in the WSJ with language so banal, I was surprised the Journal even ran it.
But they have a big win with Kevin Plank, Founder and CEO of Under Armour. The backdrop of the NBA and the Stanley Cup Finals and the mini-controversy around Stephen Curry’s new sneakers certainly help. The imagery and the music are uplifting, but Kevin himself is a marketing stud and even SAP could not screw that up.
Two nits. All the sensors and displays are gleaming precise metrics so I wish Kevin’s script had given him a specific supply chain improvement metric – not “20, 30 to 40%”.
And the final SAP tag line “When you run Live, you run Simple”
What does that mean?
Face it - Any software which is not live, in production, is shelfware. In SAP Nation, if you are not Live, it could be a sign of another massive writeoff.
As for Simple, I much prefer what Kevin calls it “a big, bad technology partner”. Accept that as a compliment SAP, quit the “Simple” BS.
On Monday as I was going through the first edit of my book on automation, I heard of the whopper Microsoft bid for LinkedIn. I then read CEO Jeff Weiner’s letter to employees announcing it.
Josh Bernoff calls the letter creepy. My reaction was more specific to the para below. I asked why is a CEO whose company thrives on recruitment of human employees painting such a dystopian future about jobs? Does LinkedIn think it can provide a safe harbor from all the wreckage it believes is headed our way?
I wanted to send Jeff a copy of the early edit version of my book. My book is pro-automation – in fact it has countless examples of robotic surgeries, drones for inspections at elevations, machine learning in various settings, driverless farming vehicles and on and on. My book also points out automation is gradual – takes years and decades, and works best alongside humans, making them safer, speedier, smarter.
Jeff’s examples just repeat news story headlines. I wonder if he has analyzed any of those scenarios in any detail.
Take the Elon Musk quote. Yes, Musk has said you should be able to summon your car from across the country. Driverless car technology is evolving nicely. It has been for decades. The 1958 Chrysler Imperial first introduced cruise control to the masses. In 1992 Mitsubishi introduced the LIDAR based distance detection system, a building block of many of today's driverless prototypes. In 1999, Mercedes introduced Distronics assistive cruise control to the world. The DARPA funded Grand Challenges for driverless cars were first held in 2004.
Road infrastructure, on the other hand, has not kept pace. In fact, in response to a Consumer Reports test, Tesla has made changes to its AutoPilot feature to restrict its use on residential roads and roads without a center divider. Lane markings are widely inconsistent across our roads. Delphi, an auto parts manufacturer, took its driverless vehicle on a cross-country trip in 2015. It found that pavement markings are quite different across states in spite of uniform standards. Quite a bit of investment will need to be made in our signals, construction zones and roadside fiber to communicate with driverless cars – this when cities and counties will face a dip in speeding fine revenues when machines will be much more compliant with speed limits.
Our driving laws also need to evolve considerably. In Europe, truck platooning is likely to be an early (as in starting in 2020) use case for autonomous vehicles. Drivers will still be needed—by law they’ll have to keep their hands on the wheel. Platooning will lead to many benefits, but job losses? Not any time soon.
I could go on about driverless vehicles, but let’s next look at the Foxconn point. Foxconn is a remarkably well run company. It has delivered billions of Apple and other devices at high-quality and under unbelievable time constraints. It is always looking for efficiencies and has been trying out its Foxbots for years to supplement over million employees around the world.
Robots can do certain tasks extremely well, especially tasks which are repetitive and unpleasant to humans. But there are countless tasks where humans are still much better. Don’t believe all the hype that robots can do anything.
Japan is the leading maker and consumer of robots, accounting for half of the world's production. It has the world's largest concentration of robot engineers. Yet, these world leading experts have tried for five years following the Tohoku earthquake to use robots to clean the radiation at the Fukushima nuclear plant. So far, all the robots sent into the reactors have failed to return.
Let’s look at the McDonald’s point. McDonald’s and its franchisees are always looking for efficiencies in the kitchen, in the drive through, and other processes. Yes, because of the minimum wage hike, there is talk of kiosks to replace human cashiers. It’s already common in Europe. Will it take off in the US? Not a given. Don’t forget the consumer.
I personally use self-service technology everywhere. My research shows, however, shows many consumers are ambivalent about self-service. They have seen banks try to make money off ATMs, airlines off boarding pass kiosks, car rental companies off toll tags. Many want a discount for self service, not have corporations just use it to pad their profits. Still others are resentful of checkout machines which capture a video of their transaction. It is meant to reduce fraud but consumers worry that their privacy is also being compromised.
Here’s a common reaction from a consumer forum.”Part of the cost of an item is to pay for the service of checkout. I'm not going to waste my time and effort, and take someones job in the process, by checking myself out. If self checkout gave you a 5% discount on the total bill, I'd consider it, but otherwise, I'd rather not take someones job."
The US Postal Service has been puzzled at the relatively low usage of its kiosks even after a decade of availability.Me, I would not wait in line for a postal employee, and prefer using the kiosk, but many consumers prefer not to. I can bet you McDonald’s and other food chains will have to factor this consumer sentiment as they consider kiosks.
Finally about Walmart. Amazon distribution centers have had Kiva robots zip around for years now. Guess what, they still have hundreds of employees in these centers.
Unfortunately, Jeff’s comments are like those being broadcast by way too many academics, analysts and politicians. They are projecting computing curves to job curves. Just because computing power is growing exponentially does not mean a direct, immediate impact on job curves.
In their positions, they should be a lot more careful about what they say. Since so many of them are so confident we are moving into a jobless future, the mood of the common person on the street is pretty gloomy.
I am sorry. I refuse to support their pessimism. My book, which should be out in a few weeks will combat that pessimism in much more detail and show countless examples of well done automation – that which makes humans safer, smarter, speedier.
I had a chance to spend some time at the HP Enterprise Discover event in Las Vegas last week. I was last at the event in 2012 when HP was a $120 billion entity. Today, HPE after the spin off from its personal computer and printing businesses and more recently the sale of its business services group to CSC, is about 40% of that size.
I had expected to see a much smaller show floor. But it was just as big as four years ago , and while the majority of the booths focused on HPE’s IT infrastructure focus – servers, storage, network – I was pleased to see quite a bit of application focus.
First, the data center focus. Plenty of speeds and feeds and contemporary jargon like hybrid clouds, composable infrastructure, hyper converged, Big Data, software defined everything, Docker, Helion etc. that Ben Kepes does a nice job summarizing.
HPE’s messaging is much tighter, but I am not clear how the economics will work. If with a captive sub like EDS it could not compete with public cloud economics, how will it do so partnering with independent service providers? While there will always be large customers like Dropbox which was on stage and has been moving away from AWS, many smaller customers are going the other way and increasingly buying their infrastructure as a service. Same thing with telcos. HPE would love to sell them gear, but telcos are some of the least popular vendors with CIOs, and it will be interesting to see if HPE passes along what it learned from the frustrating last few years to them and to relatively new SIs like PwC which was prominent at the show.
More about apps. I heard “Digital Transformation” several times. (I had just been at Cognizant Community and heard a very different angle on Digital there) It was good to see focus on verticals like Legal Services (with eDiscovery and other tools), Retail, Healthcare and others. I particularly enjoyed cameos where HPE introduced us to the DS Virgin Formula E racing team. Plenty of dazzle and sustainability in that combination. A demo with a Flowserve pump (with instrumentation from National Instruments and an augmented reality app – see image) brought out a nice predictive maintenance use case. Another one with PTC (and more measurement tech from National Instruments on a bicycle ) presented a product engineering use case. Another using a BMW i3 showed off a connected car scenario. I walked around and saw other sections on wind farm management, smart cities and other Internet of Things applications.
My questions here – does HPE have the application/business process depth to support such a wide range of industries? And with so many partners in each solution, will pricing be competitive?
In fairness, this is a new HPE and I liked what I saw in my limited time, even with my questions about economics and application focus. As CEO Meg Whitman said on stage, I definitely felt “a renewed sense of energy”.
I look forward to more live customer examples in future Discovers.
Five years ago, I heard Jeff Immelt, CEO of GE use the term Industrial Internet of locomotives, wind turbines, aircraft engine and MRI scanners to differentiate from the Consumer Web that Apple. Google, Microsoft, Amazon and others have made part of our daily lives. GE has since inspired many of its customers and even those of its competitors to think about “Digital” from that complex, yes even boring, enterprise lens.
Around the same time, Cognizant CEO Francisco D’Souza could see significant changes coming in his client base, and outlined plans for his “three horizons” in his 2011 Shareholder Letter.
This week, at Cognizant Community in Austin, D’Souza sounded like Immelt (he sits on GE’s board) when he told an audience of customer executives “Don’t fall into the FANG (Facebook. Amazon, Netflix, Google) trap” “Be inspired by them, but don’t copy them”. “They were born digital – you will always be hybrid”.
His EVP of Strategy, Malcolm Frank said its time to move from “Digital that’s fun” to “Digital that matters”. “Facebook is not going to run an airline, Google is not going to run an emergency room” “Systems of engagement were a head fake. We need to move to systems of intelligence”. In an excellent keynote (I will post a video shortly), he covered wide ground on the big things enterprises need to focus on.
The theme of Community this year was “Mastering Digital” (later in week I went to HPE’s Discover event and Digital Transformation was a frequently heard term there also) and I, for one, like this evolution. Way too many initial digital projects have focused on social and mobile. Important, but superficial in terms of impact. Way more important is a move to smart products, rethought business models and channels, reconfigured supply chains and manufacturing. Keynotes by Michael Porter on smart products and Peter Evans on platforms expanded on that thinking.
Interestingly, in talking to Cognizant executives, it is industries that feel most threatened by the consumer giants and startups – retail by Amazon, autos by Google and Uber, banking by several fintech startups that are showing the most urgency to undertake significant digital transformation. Others like insurance still appear to be waiting for their wake up call.
I would also be remiss if I left the impression that the consumer digital stuff is easy to deliver. In my books I have written extensively about Amazon’s highly efficient Kiva driven warehouses, postal injections and other supply chain innovations, Apple’s mind boggling quality across billions of devices via its contract manufacturing network and retail excellence, Facebook’s highly efficient data centers, Google’s sustainability initiatives and Alphabet’s wide array of R&D.
Still, as D’Souza says they were born digital and did not have to worry much about legacy. The rest of the Fortune 1000 and beyond does not have that luxury. For them, digital will be much more complex, especially when too much time and money is going into that legacy.
I just checked the New Florence index and we are at 4,960 posts. We should cross 5,000 by middle of July at the current pace.
The first post on that blog was on March 7, 2005. Back then, I was discouraged by lack of innovation in enterprise software, telecommunications and outsourcing, areas I help clients with and also write about on this blog. New Florence was a distraction I thought would run out of ideas in a couple of years.
It’s still going strong. Eleven years ago, the iPhone, FitBit, AWS, the Tesla Model S had not been launched, the term Big Data had not been coined, IV drips in hospitals were still manual.
It’s been a remarkable eleven years, and if you look wide enough across infotech, nanotech, healthtech, cleantech, biotech, foodtech and around the world, the pace of innovation is only accelerating. New Florence has given me ideas for several of my books. It has made me much more curious about every city I visit, every executive I interview.
Importantly, it has exposed me to the “art of the possible” and encouraged my clients to expect more of their enterprise vendors. Fortunately, we have seen at least some progress in the world. But if I continue to sound demanding on this blog, blame it on New Florence, because I see that the pace of innovation is not slowing
Thanks to everyone who has inspired me for the past decade, to readers and to the sponsors. Here’s to another 5,000!
I believe every vendor should be proud of successful customers. Both Apple and Microsoft use SAP in different parts of the enterprise. With recent partnering announcements with Apple, and Microsoft CEO Satya Nadella making an appearance at SapphireNow, I have seen SAP execs and fans talk up both the relationships. There’s pride and then there is hype.
First of all, leveraging brands is common across industries. Delta serves Starbucks coffee, Audi offers Bang and Olufsen sound systems, Keebler offers cookies with M&M candy. Consumers like the reassurance of big brands collaborating. But imagine if you had to pay a hefty premium for that collaboration or you had to jump through hoops to get that combination. You would think twice.
My question is why is SAP only now leveraging Apple’s mobile capabilities or Microsoft’s Azure data center and machine learning expertise? It has had wild swings in its own mobile strategies and has lived with primitive data centers compared to what Microsoft, Amazon, Google have. So, if the transition to whatever SAP delivers with Apple and Microsoft is smooth and affordable, good but bear in mind SAP may change its mind again soon.
Also, learn from SAP’s previous such initiatives with big tech brands
Exactly a decade ago, SAP announced its Duet initiative with Microsoft. Back then I called it “wine after its time” and asked “why Microsoft Office and SAP R/3, both a decade old at that point and dominant applications in most corporations had not (already) been tightly integrated." Duet was only marginally successful because options like SaaS solutions like Google Docs had started to blossom, and Duet was overpriced and also because Microsoft was starting to emphasize its own ERP products.
Or go back, two decades to the joint venture with Intel called Pandesic to develop “e-commerce” capabilities. Again marginally successful.
Regarding Apple as a customer. SAP will periodically, as it did at Sapphire last week, bask in the phenomenonal success Apple has had. CEO Bill McDermott said “the whole’s most valuable company loves our software”. Ask anyone who follows Apple closely. They would highlight Foxconn's incredible delivery record, Tim Cook's and Fedex's supply chain sophistication, Jony Ive's design teams, their retail leadership under Ron Johnson and now Angela Ahrendts, their app ecosystem of millions of small developers, as far bigger contributors to Apple’s success.
SAP is taking way more credit for Apple than it deserves. It often forgets it is just a transaction backbone, a back office system. And BTW I did not even mention Steve Jobs in who should take credit at Apple.
I was in California last week relishing NetSuite’s SuiteWorld – and its two decades of cloud maturity and growing industry functionality as I summarized here. I happened to see a 8 page color SAP insert in the Wall Street Journal and I shook my head at drivel like “When you Run Live, you Run Simple. And when you Run Simple, you win.” Add that to all the meaningless HANA commercials and obnoxious spokesperson, “Phil” you have to roll your eyes at the marketing money SAP is wasting.
However, something remarkable was happening at SapphireNow in Orlando. As Bob Ferrari notes CEO Bill McDermott in his keynote, “openly admitted that he ditched his original keynote content 15 days before Sapphire. The reason cited was some pointed feedback received from customer CIO’s as well as from SAP Board members. Instead, the message was one of acknowledgement that SAP was not listening and responding to customer feedback. McDermott therefore declared that empathy would be the number one message delivered.”
Ferrari generously gives my book SAP Nation credit for opening SAP’s eyes. That’s very nice of him, but does beg the question what the heck have SAP executives being doing for the last several years?
McDermott gave out his email and invited customers to write directly to him. Nice gesture, but customers have been signaling to him in many more forceful ways. Thousands of customers have ring fenced and two-tiered around SAP.
John Appleby, a SAP partner tweeted from the event : Great quote: "Every relevant software company in the world in the last 10 years was created in a gap which SAP left behind". To which I responded “translate that from customer pov. In last decade SAP has delivered little for over $150 bn in maintenance fees.” Over 200 customers have moved to third party maintenance, and from my recent Rimini Street briefing series I can tell you they are getting better returns than they were promised and are doing reference calls with tons of other SAP customers. Countless SAP customers have been moving infrastructure to the cloud, re-bidding their application management outsourcing contracts.
If the SAP field has not been reporting all this back to McDermott and the board something is dramatically wrong at SAP. As Vijay Vijaysankar of IBM observes: The “surprise” for me honestly was that SAP leaders themselves seemed to be surprised by what they heard from the CIOs they spoke to. This frustration has been there for a while amongst customer ecosystem.”
The irony is SAP executives were expressing empathy while the partner booths at Sapphire continue to be as giant as ever. It’s a visible sign of the $ 300 billion annual burden on SAP customers.
I am afraid attendees to this year’s Sapphire will have the same reactions I had noted in SAP Nation.
But like so much else in Orlando, Sapphire Now is kitsch, a pleasant escape from reality. When they return home, attendees realize their SAP environment is not “simple” or “minimalist,” words SAP executives frequently use. They look back and wish technology works as well as it did at the event, which supports nearly 100,000 iPads, smartphones, laptops, and the walkie-talkies and pagers of the event attendees, security staff and “roadies.” They wonder why SAP cannot extend its influence on its partners beyond the event. At the event, SAP has guidelines for exhibitors concerning every little detail: signage, dress codes, professional behavior, employment solicitation and “sensitive and/or non-complementary” materials.
As they share all the freebies they picked up at the event with their kids, it strikes the event attendees that nothing in the SAP economy is really free. They chuckle about the all-too- real joke they heard in Orlando: “SAP stands for ‘send another payment.”
Many customers have gone beyond chuckling.
And depressingly I have not been to Sapphire in years. Little appears to have changed.
I wrote in January I expect this to be the year of the vertical for cloud applications. There are too many horizontal cloud apps in accounting, HR and CRM, not enough in industry specific functionality. Every event I have gone to since, I have viewed from that lens. SuiteWorld 16 last week was no different.
CEO Zach Nelson pointed out they now have customers across every one of 1540 SIC codes including exotic ones he joked about like "coin-operated amusement devices”. Almost to validate Nelson, an Alphabet (Google’s parent) exec remarked on stage they were recommending NetSuite to a wide array of divisions including Nest which makes home devices and Calico which is focused on anti-aging research.
The reality, however, is there are plenty of utilities who would love to replace SAP billing, ditto with retailers with Oracle merchandising, and health care providers with Epic electronic health records. They are not calling NetSuite. Not yet anyways as these currently fall outside of NetSuite’s areas of focus.
NetSuite’s specific industry strengths were sharply in focus on day two of the event where they had 5 parallel sessions for Software/Internet, Retail/Commerce, Wholesale Distribution and Manufacturing, Services and Nonprofit sectors. I attended the Software track and it was very well done. Product functionality and customer executives showed NetSuite’s appeal across the lifecycle from start-ups to “growth at scale” to public companies. NetSuite own executives like Founder, CTO and Chairman, Evan Goldberg and CFO Ron Gill talked with credibility about different needs and challenges in each phase and how their solution met them.
I spent time with two senior NetSuite execs in the Wholesale/Distribution sector (which is NetSuite’s most mature) and two manufacturing customer CEOs – one at EPEC, a tech design and engineering company and Urban626 which makes the URB-E light scooter.
In each of the focus sectors (other than non-profit which Jessica Twentyman of Diginomica covers here) NetSuite can showcase 000s of customers and years of product growth – definite signs of maturity.
In a Q&A, Nelson pointed out they can see adding a couple of new industries a year going forward. Jason Maynard, EVP Strategy and Corporate Development highlighted the role of partners (NetSuite says 70% of their deals involve at least one SuiteCloud Developer Network (SDN) partner with a SuiteApp built using their platform). In a side conversation, Goldberg told me they follow the lead of customers when deciding on verticals. He said they have not seen much interest from law firms so the service sector offering will likely not evolve into e-discovery or other nuances attorneys need.
Another area of NetSuite growth is in multinational functionality with enhancements for global entity management and inter-company accounting. NetSuite has historically been competitive in 2 Tier ERP scenarios and this should further strengthen its position there as well as in single tier ERP at the enterprise level.
The recurring theme from many sessions = NetSuite has a formidable offering in the “Order to Revenue” cycle for many industries. On day one of the event, NetSuite introduced SuiteBilling, an order-to-billing-to-revenue solution and I heard several of their execs use a variant of the slogan “If you can sell it, we can bill it, and recognize the revenue”. Revenue recognition will be a strong suit for NetSuite as enterprises prepare for compliance with standards like ASC 606.
In the past I have written about NetSuite’s retail industry strength and support for omni-channel commerce. At this event, I saw that extended to omni-business-model - any product, any service and any subscription as-a-service. Add to that NetSuite’s multi-national strengths, SuiteCloud Platform PaaS capabilities, and partner diversity and you can see how its solutions are attractive to a wide number of industries.
While I would love for NetSuite to start developing more industry specific operational modules I am pleased to see the revenue side capabilities that many a SIC code customer can adopt. At this stage, I believe NetSuite has one of the most evolved industry strategies in the cloud application world.