Yes, Open Source has won for platform software and possibly even more. Time to look how it all happened, and what the trends going forward are going to be.

My 2 eyeopeners…

Somewhere in the early 2000, Oracle dropped its multi-year, 1000+ FTE effort of an application server to use Apache going forward. That was my first eyeopener, and I was a product developer. The next one came in 2013, in my analyst role, when IBM’s Danny Sabbah shared that IBM was basing its next generation PaaS – BlueMix, on CloudFoundry. When enterprise software giants cannot afford to out-innovate opensource platforms, it was clear that open source was winning. As of today, there is no 1000+ people engineering effort for platform software that has started (and made public), built inhouse and proprietary, by any vendor. The largest inhouse projects that are happening now in enterprises, the NFV projects at the Telcos, are all based on Open Source.

And there certainly is commercial success. IBM bought RedHat for US% 32B. Early innovators -- (one can argue Open Source started with Hadoop) Cloudera and Hortonworks have just joined forces, and other players are seeing record market valuations (e.g. MongoDB at US$ 4B+) or exits (e.g. MuleSoft by Salesforce for US$ 6B). And the next cohort of successful Open Source vendors are in the making – look at Confluent, Hashicorp, Kong to just name a few.

Why has Open Source won?

The most prominent reasons for this win of Open Source (and with that a community-based approach) over enterprise-based ones are the following:

Software Development in the 21st century

Marc Andreesen’s prediction that “software eats the world” is more relevant than ever before. But for software to turn into this omnivore, a lot of software has to be built. And it can’t be built in the traditional way, when enterprises license technology platforms, get trained, and certified, for a few quarters and then try to build their strategic software on them. An enterprise following this 20th century best practice would be hopelessly lost against the competition of the 21st century, being way too slow to build new, strategic, differentiating and disrupting software. But software has to work, and uncertainty in regards of capabilities and quality of underlying platform software slows the next generation application projects down. Enters Open Source, where code is transparent, the better solutions become ‘standards’ faster, and developers can repeat experiences across projects (and employers).

The Internet is the enabler

We often forget what fundamental change the rise of the internet has on best practices, and software development is no exception. Without the internet, Open Source would not be around today. The easy, cheap access to code repositories, the ability to download large code libraries fast, safely, and on demand are the key enablers of Open Source success. On the concern side, a fast, cheap, and tamper free internet is key for Open Source success. Today we can see that Open Source success is limited where internet access is rate / slow (e.g. large parts of Africa) and internet access is monitored / limited content wise (e.g. authoritarian regimes). When your Open Source contribution could be regarded as cooperation with international communities and as such treason, developers will stay away from it. On the flipside, these regimes may be tempted to instill malicious code into Open Source… something the Open Source community needs to be vigilant about.

More hands have never hurt software

At the end of the day, more developers make better software. The remarkable part of Open Source is that it was able to expand beyond the typical boundaries in regards of developers of traditional software projects, which run into issues beyond a few hundred developers typically. Open Source had to solve the distributed development challenge, which it did successfully. Building on the engineering ethos (and in some cases also some ego), Open Source has taped successfully in the desire of many developers and engineers to be part of something bigger, to improve something, and to work on something that is near to their minds and dear to their hearts. Most importantly, Open Source has figured out how to scale to 1000s of developers / contributors – all working remotely. This has always been a key challenge for traditional vendor-based development forces.

More eyes have never hurt software

Similar to the mantra that more hands have never hurt software, more eyes have not hurt software either. Intrinsically, software is prone to defects at any level. Finding and fixing these is a tedious process. But more people seeing code, being able to fix code will help make software better. Especially when these people work ‘for free’. The limit of QA, even in the most quality oriented development forces, has always been commercial acumen -- at some point it does not make commercial sense to hire one more QA professional / code reviewer and / or run another test cycle. But when people volunteer for this, and the cost is ‘zero’, that equation can be moved way beyond commercially viable realms. That does not mean that developers testing Open Source are not commercially astute, but the community dynamics work in their favor: Finding a major defect – even late – gives a developer stature and chops in the developer / Open Source community. Providing the fix, potentially, to millions of users, is a major motivator to spend one’s free time (in most cases) on software quality.

Layered software needs transparency
With more software needed, more software needs to leverage the layer on top of more / other software. That process requires trust in underlying layers of the software. A black box will have a hard time gaining the trust of both – developers and CxOs. Open Source, with visible source code, is in a better position here. If someone wants / needs to inspect Open Source code, they are taken a dependency – on – feel free to look as long as you like. That openness and access is key for the success of Open Source, but seldom mentioned.

“Free” is always a draw

Platform software has always been expensive – and tricky to price. It needed to be expensive enough to allow the vendor who created it to make a living (not e.g. fail like Borland, ultimately) but at the same time could not charge a premium, as the software built on it needed to be built as well. That traditional equation gets blown out of the window when it comes to Open Source… where ‘free’ is a major distortion to this equation. CxOs and architects are willing (or forced) to make compromises for a ‘free’ platform in terms of capabilities and scalability, and few other aspects. On the flipside, the ‘free’ model of Open Source has hurt some of the innovators who try to make a living on it, and pretty much only service models have shown traction / success. So ‘free’ does not translate in free for the enterprise, but CxOs are ok to pay for the services that are needed, and they have been doing that all along.

Why Open Source has won

Why will Open Source keep winning?

Now that we know Open Source has won, the question is… what is next? Will the next big thing come and replace Open Source? Or is Open Source here to stay? I tend to go with the latter. Here are the main drivers, why I see Open Source winning in the near and medium future (at least):

Software needs to be built faster

We already mentioned the need for more software to be built, and be built faster than ever before. There are three dimensions to build better software faster: People, process and tools. Given the talent challenge, little can be done on the people side. Software development processes have been chewed over and analyzed / designed all over. No matter if agile or water fall – there is little room for code acceleration once a methodology is established and tuned. Which leads us to the remaining variable, that is tools. As Open Source has largely taken out the tool market, it comes back to Open Source to innovate on the tooling. The beauty here is again the inherent nature of Open Source: If a developer sees an upside to improve tooling, they can start an Open Source Project… and other developers will join if the idea and progress seem to be in the right direction. The result is better tooling, that helps build faster, and more, on Open Source.

Cloud platforms need software fast

We are living in the era of the cloud computing landgrab… a handful or so IaaS players are fighting for market share and to power the compute loads of the enterprise. If there are vendors who ever were under pressure to build platform software fast, it is these IaaS players today. And there is no faster way than building software than using Open Source, especially when you operate on tight margins. So, it is no surprise that pretty much all IaaS players have standardized on one version of Open Source or another. Only close to their respective infrastructure, they have gone proprietary (still, often based on Open Source). As one of the ironies of the last years, we even see IaaS vendors launching their inhouse frameworks as Open Source projects and successfully establishing them in the market. Google is a master at this game, as we see the success of Kubernetes and TensorFlow.

Cloud platforms vendors need ‘standards’

The other key part of a successful IaaS business is to down play the aspect of lock-in. Enterprises don’t want to get locked-in any infrastructure, so they prefer standards that they expect can insulate them from lock-in. The definition of standard is, of course, flexible. But adopting a successful Open Source API as a standard is a commonly accepted practice. The consequence of this market reality is: IaaS players realize that Open Source, that is successful, is the door to standards. Therefore, we can see substantial competition on the timing of new Open Source initiatives and a reluctance to endorse a competitor’s initiative early, albeit promising. Historically, that behavior has hurt enterprises, see e.g. the fragmentation of ‘standard’ Unix, and even more recently Linux. But the speed and need for adoption does not allow for this fragmentation, something that can be seen with across-the-board adoption of Kubernetes. For enterprises, standards are good, and that Open Source allows to create these standard faster and across the platforms, is even better news.

Enterprise SaaS is built on it

In the past, enterprise software focusing on the application tier, had the luxury to create own application technology stacks. Pressure to deliver software faster, and the adoption of public cloud for enterprise SaaS, have led to the adoption of IaaS platforms in SaaS products. And with IaaS platforms embracing Open Source, we can see more enterprise application software running on Open Source than ever. Enterprise software is the largest load out there, the one the IaaS vendors are after in the move to the cloud, and the load that the SaaS vendors need to move, to remain competitive. The result of massive load means that a technology stack will become more adopted, and with that, more relevant going forward as every SaaS vendor moving to IaaS is brining load to Open Source. And with load comes more commercial interest, more interest by developers and so on. Load is the fuel of the Open Source (and cloud) flywheel.

Enterprises want standards

CxOs want to build software and operate it on as much standard as possible. As standards given them the chance / opportunity to transport load across computing platforms – albeit often in theory and on paper only. But the desire for standard is well understood by the IaaS vendors, who are more than happy to show the usage of Open Source, and with it, its substantial adoption numbers, and adoption makes standards. The good news is that standards are winning faster than ever, so the ‘standard wars’ of the 90s of the last century are not happening (at least now). In contrast, standards are winning faster than ever. It took S3 about 5 years to become the default ‘standard’ storage interface. It took Kubernetes less than 3 years… and it took Tensorflow (some may debate if it has won yet) about 2 years to become the leading / de-factor standard everybody needs to support.

The community aspect is the genie that can’t be put back in the bottle

Group dynamic processes have a life and dynamics of their own. Open Source succeeds with the community dynamics, that make it an innovative and unique process to create software. The power of the community in regards of elasticity of resources, worldwide capacity, seamless contribution, additional quality processes has made Open Source pretty much unbeatable. If there will be a better way to create and propagate software, it will very likely have to include the same community dynamics that have helped Open Source put the traditional, enterprise-based development team approach to rest.

Why Open Source Will keep Winning

MyPOV

Software is eating the world. But it would not happen without Open Source. It’s practically impossible today to operate any technology product without using Open Source software. Should we be concerned? Possibly, but as long as the repositories of Open Source software source code are open, can be accessed and are shared… the (software) world is in a good place.

If you liked this post... here are more Musings posts:

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Musings - The Dilemma with Cloud Infrastructure updates - read here
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Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

We had the opportunity to attend ADP’s ReThink conference, held from January 29th till 31st 2019 in Berlin. Attendance was over 250 attendees, it is a pretty exclusive event. ADP always does an interesting statistic., it aggregates the payrolls spend through its systems for these customer and the mark was at over 7B+. Impressive.

Prefer to watch – here is my event video … (if the video doesn’t’ show up – check here)

Here is the 1 slide condensation (if the slide doesn’t show up, check here):

Event Report - ADP ReThink 2019 - Global Success, TMBC and great speakers from Holger Mueller

Want to read on? Here you go:

A great event – ReThink is one of the top, if not the top event I have the privilege to attend. Everything about this event is very, very well done. Starting with an easy registration, well organized travel, great locations, very senior attendees, high caliber speakers (this edition as CNN’s Fareed Zakaria, fresh from Davos, David Miliband (now CEO of the International Rescue Committee) and Peter Gabriel (not just as musician, but mostly as human rights activist). In between ADP customers share their stories, remarkably in a consistent format. ADP messaging was at a minimal with Don Weinstein sharing product vision and Marcus Buckingham the latest ADP Research Institute findings. An event I always look forward to.

Customer Success – ADP customers are successful on the ADP products for global payroll, mostly GlobalView. In the formal presentation as well as informal side conversation, it is clear that ADP customers are doing well with this complex automation challenge. New capabilities like Celergo are something they look forward to explore and use. The ‘star’ of the presentations was certainly Microsoft which is almost done consolidating its payrolls on ADP. ADP made clear that its global payroll offerings work for small enterprises (smallest was about 3k employees) to the largest ones (in the 6-digit figures).

Last year WorkMarket, this year back to TMBC – In the past two years ADP acquired the two aforementioned vendors right before ReThink and the vendors were an integral part of the presentations and demos. The last acquisition was Celergo, and it deems itself less to present than the other two, but Celergo founder Michele Honemichl was on stage and is the new head of payroll strategy at ADP. So, it was back to one of the best presenters in the industry, Marcus Buckingham, to share the newest findings of the ADP Research Institute… Not surprisingly, embedded into this message is to use TMBC and the overall benefits were re-enforced by a presentation by Cisco, a long time TMBC customer.

Experience exchanges matter to customers – Talking to attendees the single most consistent feedback was that they learnt a lot from each other. As it should be, but it also points to an area where ADP can improve, helping its global customers to connect better. They also could take the initiative and form a user group.

MyPOV

An excellent event to attend to get the pulse on where enterprises are with their global HR / payroll projects, one of the most challenging enterprise automation topics. Not just because being global, but also because of the massive responsibility in regards of employee financial wellbeing, the constant changes in legislation and lastly the challenging exercise to make software work for some very small employee populations around the globe. ADP now must show how Celergo will help customers, it became clear that what originally was positioned as a talent “acquihire” has also some software assets under the hood. All the better for ADP customers, but they want to see the new value – as soon as possible.

ADP deliberately tunes the product message down, and while there are demo stations to see the products, it certainly will be good to see what further innovation is coming from ADP soon, what tangible capabilities customers can count on later in 2019 / the not too distant future. ADP did this in past editions of ReThink, it will be good to revive this in 2020.

The real downside is only… it’s 51 or so weeks to ADP ReThink 2020.

More on ADP:

Progress Report - ADP Analyst Day 2018 - Things are looking up - read here
Event Report - ADP Meeting of the Minds 2018 - Stay the course - read here
Event Report - ADP ReThink - Great event and a lot in the making - read here
Market Move - ADP Acquires WorkMarket to Further Extend Human Capital Management to Contingent Workers [...] - The Gig Economy looms on the Future of Work- read here
Progress Report - ADP pushes on - 2018 will be BIG - read here
Event Report - ADP MOTM - Time get customers on board!? Read here
Event Report – ADP ReThink – Great event and great value coming for customers - read here
News Analysis - ADP Acquires The Marcus Buckingham Company to Expand Talent Portfolio - read here
Progress Report - ADP Analyst Day 2016 - ADP has turned around Vantage HCM - read here
Event Report - Event Report - ADP MOTM - ADP delivers: New UI, Benchmarks, Market Place & More - read here
News Analysis - Workday and ADP partner to Deliver a Seamless Customer Experience for Global Payroll - read here
Progress Report - ADP Analyst Day - ADP executes, kills (most) ghosts from the past - read here
Event Report - ADP Meeting of the Minds - It’s all coming together for ADP in 2015 - product wise - read here
First Take - ADP Meeting of the Minds - Day #1 Keynote - read here
Progress Report - ADP shows great vision, delivers product innovation - now it needs adoption - read here
Site Visit - ADP's new innovation lab in Chelsea - read here
News Analysis - ADP announces Spin-Off plans for Dealer Services, sharpens ADP's focus on HCM - read here.
Event Report - ADP's Meeting of the Minds - ADP has made up its mind (almost) - customers not yet - read here.
First take - 3 Key Takeaways from ADP's Meeting of the Minds Conference Day 1 Keynote - read here.
ADP innovates with with verve and good timing – read here.

Want to learn more? Checkout the Twitter Moment below (if it doesn’t show up – check here).

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

ADP ReThink 2019

Since about a year IBM is pushing the pedal again on cloud, hybrid cloud more specifically. Adding the RedHat acquisition, IBM now has several products and services to position. Having consolidated all its event with Think 2019, happening in San Francisco February 12th to 14th 2019 – it was a good opportunity to check-in what IBM is announced with a news analysis.

The press release can be found here– and I am dissecting it in my customary news analysis style:

SAN FRANCISCO, Feb. 12, 2019 /PRNewswire/ -- IBM Think -- IBM (NYSE: IBM) today announced new hybrid cloud offerings to help businesses migrate, integrate and manage applications and workloads seamlessly and with security across any public or private cloud and on-premises IT environment.

MyPOV – Good summary, always good to have at the start of a press analysis. In the recent PR past of IBM, this would have been three to four separate press releases.

How IBM Hybrid Clouds Drive Innovation While Managing Complexity

The IBM Institute for Business Value estimates that by 2021, 98 percent of organizations surveyed plan to adopt hybrid architectures, but just 38 percent will have the procedures and tools they need to operate that environment1. The process today is challenging because it is largely manual with major security implications and a lack of consistent management and integration tools.

MyPOV – One of the differentiators IBM can use and is using here is its substantial business research capacity. Good to see it here and look forward to seeing it more often.

As part of today's news, IBM is launching new hybrid cloud tools and services designed to help enterprises navigate the complexities of this new landscape:

New IBM Cloud Integration Platform designed to reduce time and complexity to launch new services and applications across cloud environments in a consistent and secure manner.

New IBM Services designed to advise on holistic cloud strategies.

New IBM Services designed to simplify the management of resources across cloud environments.

New services designed to provide industry-leading security for data and applications in the public cloud.

MyPOV – Another great summary, but time to get into the specifics.

"At Aetna, a CVS Health business, we see hybrid cloud as an integral part of our transformation journey," said Claus Torp Jensen, Chief Technology Officer, Aetna. "We want to use the best services from various cloud providers to create a seamless consumer experience and digitalize underlying business processes. For that, we are taking an API-centric approach to integration and making sure that all of our APIs are easily accessible across our hybrid cloud ecosystem."

MyPOV – Great to have a customer quote right at the beginning… would have been more valuable if the CTO of Aetna would refer to the specific services here. And for the PR aficionados: IBM definitively has a new chief press release editor – customer quotes would always come towards the end in the past – with IBM executive and industry analyst quotes. Good to see the change, all that matters are… customers.

New Cloud Integration Platform Designed to Dramatically Reduce Coding Time, Complexity

The IBM Cloud Integration Platform is designed to securely connect applications, software and services from any vendor regardless of whether those systems are on-premises, in a public cloud or a private cloud. The platform brings together a comprehensive set of integration tools in a single development environment. It can help improve productivity because integration specialists can write, test and secure code once, store it in the platform and reuse it – an arduous task that once monopolized their time. This can help companies cut the time and cost of integration by 1/3, while staying within their unique requirements for security and compliance.

MyPOV – This is a ‘boil the ocean’ platform – connect anything with everything from anywhere and everywhere. But fair enough that is what enterprises want and need. Reducing integration times by 1/3 is very impressive. Love to see a proof point. And key for enterprise acceleration – as integration typically slows enterprises down.

Integration is critical as enterprises optimize business processes and create more personalized customer experiences. However, integration is becoming increasingly complex because many enterprises surveyed are already using between two to 15 different clouds and want to deploy new cloud services such as AI, analytics and blockchain to stay ahead of the competition3.

MyPOV – Correct – could / should have been the intro to the section.

With the IBM Cloud Integration Platform, companies can quickly bring to market new capabilities while freeing up integration specialists to focus on the more complex, system-level integrations.

MyPOV – Indeed – that’s the benefit. Content hops back to product (or could have been with the first paragraph here).

"Most large organizations have data and workloads spread across multiple public and private clouds, SaaS and on-premises environments – sometimes as a result of their business process infrastructure, but also for compliance, regulatory and data privacy reasons," said Denis Kennelly, general manager, cloud integration, IBM. "The challenge in this environment is to overcome data and technology siloes to quickly deploy new business services and applications with security. Today, we are launching new capabilities designed to help unleash the full power of the hybrid cloud."

MyPOV – Good quote by Kennelly, stating the problem and what is being announced.

[…]

New End-To-End IBM Hybrid Cloud Services

IBM is launching new IBM Services for Cloud Strategy and Design, a comprehensive set of services designed to advise clients on how to architect the right holistic cloud strategy from design, migration, integration, road mapping and architectural services to navigating their journey to cloud. IBM Services is establishing dedicated teams of consultants who are certified experts in the latest services and technologies across multiple cloud platforms. Teams will use open and secure multi-cloud strategies, drawing upon IBM's experience in IT transformation and collaboration with an ecosystem of cloud partners. The new services leverage IBM's industry-leading Cloud Innovate method, automated decision accelerators and IBM Cloud Garage approach to support clients with co-creation and scaled innovation in application development, migration, modernization and management.

MyPOV – And we are off to the 2nd announcement, its services offered by IBM’s consultants.

Building off a recent partnership expansion announcement with ServiceNow, IBM is also introducing new IBM Services for Multicloud Management to provide a single system to help enterprises simplify the management of their IT resources across multiple cloud providers, on-premises environments and private clouds.

MyPOV – Good to see the partnership with ServiceNow mentioned, which seems to be crucial for the delivery of these services…

The delivery of IBM Services for Multicloud Management includes three layers designed to provide a single management and operations system:

Business management – applications that provide digital service ordering, modern service management, and cost governance to help manage spend;

Orchestration – an automation layer that helps enable services of different types, from different vendors to be integrated easily and made available to consumers;

Operations - a layer that helps enable infrastructure and operations administrators to monitor and maintain systems, including legacy infrastructure, private cloud, public cloud and container environments.

MyPOV – When I read ‘layers’ I think software layers, but here we are talking services layers – which at least confuses me… but as long as enterprises catch this – key to know.

In addition, it includes a unified, self-service experience to users to facilitate faster and easier access to cloud services via an environment integrated with the ServiceNow Portal to configure and buy cloud services and solutions from multiple cloud providers. It also provides performance management services and offers the means to monitor and manage the health of the cloud.

MyPOV – Now this is a positive difference for a services announcement. All too often services projects transform in many years of support and maintenance revenue for the service provider. So, it’s good to see that IBM offers the self-services for customers… we now have to see how popular that is... and what do customers who do not have ServiceNow do?

"As we grow our digital business, moving our applications to the cloud is critical to help modernize our processes and deliver even better experiences for our customers. Adopting the right strategy and migration approach to cloud needs to be seamless and requires an understanding of our IT landscape," said Sarp Uzkan, vice president, IT, Tribune Publishing. "IBM cloud advisory services and tools provided a detailed assessment that determined not only which applications would be best to move to the cloud but a strong business case that would meet our needs and enabling us to explore the best approach for moving to the cloud."

MyPOV – Good quote by a customer… we now have covered healthcare and media.

[…]

Industry-Leading Security for Data and Applications in the Public Cloud

Security remains a top concern across all industries and markets when deploying apps and data in hybrid cloud environments. In order to minimize threats, enterprises need to the ability to protect data at every stage of its journey, easily manage access and identity and gain visibility into the security posture for all their applications.

MyPOV – And we are off to the third announcement, another services announcement. I like the structure better… first the problem for enterprises, then the solution.

IBM is launching the IBM Cloud Hyper Protect Crypto Service, which is designed to provide industry-leading security on the public cloud and is made possible by bringing IBM LinuxONE into IBM's global cloud data centers. This service will provide encryption key management with a dedicated cloud hardware security module (HSM) built on the only FIPS 140-2 level 4-based technology offered by a public cloud provider.

MyPOV – Always good to see security made more reliable by hardware-based security. But its only LinuxONE, so this is really an announcement that is a little bit if an oversell… but ok. Seems like there had to be three.

This is part of the IBM Cloud Hyper Protect family of services, which is already providing enterprises like DACS and Solitaire Interglobal with industry-leading security and resiliency for their applications. To provide high levels of security across both public and private clouds, IBM is also announcing significant enhancements to IBM Cloud Private on Z.

MyPOV – Ok fair enough, it’s a suite of products… maybe this should have become as the 2nd paragraph.

Learn more about IBM's new capabilities in cloud security by visiting: https://ibm.com/blogs/bluemix/2019/02/cloud-security-right/

MyPOV – Good to see all announcements having additional URLs included (I took them out above) – but this one I wanted to keep, because… it was nice the see BlueMix in the mix – at least URL wise (for those who don’t know -this was IBM’s PaaS platform).

Overall MyPOV

Given Think is bringing together what used to be 5-7 separate IBM events till 2016 / 17 – this is not much. But then – sometimes less is more. But given hybrid cloud is the major investment for IBM, Ginny Rometty mentions Kubernetes 3x on CNBC live – it’s overall a little thin. THINK is not over – and more may come. And IBM / RedHat may need time to firm this up more.

What is clear is that IBM sees a big, big services opportunity in the multi-cloud business. And IBM is right, enterprises need more help here. But IBM has and will have to compete with all the Sis in that space and it’s mixed positioning of hardware / software and services will be great for existing and future customers of the overall IBM multi-cloud offerings, but for a more service provider hybrid world, it’s more of a challenge for IBM to win the business. To truly compete with the hardware agnostic Sis, IBM will have to extend partnerships to the relevant hardware vendors that are popular in enterprises’ data centers. But those vendors are discovering services as well.

For CxOs who use IBM, or want to use IBM, this is all good news. They need to make sure pricing and quality is competitive though. For CxOs who are partially in the IBM camp, they need to make sure they do not create hardware induced services stovepipes. That will likely only end up with a big bill and integration is still owned by the enterprise. For CxOs not on IBM and not interested in IBM – this is no news… unless they want to use it to entice their vendors to … offer the same. And that very last argument shows that IBM is off to something compelling and good for enterprise to operate their next generation applications and help their enterprise accelerate in the cloud era.

More on IBM:

Market Move - IBM buys RedHat - A bold move for hybrid cloud and PaaS - read here
Event Report - IBM Think 2018 - IBM is back... - read here
Market Move - IBM buys RedHat - A bold move for hybrid cloud and PaaS Event Report - IBM World of Watson - IBM's bets its future on Watson - read here
Progress Report - IBM Alliances Insights - Deep Plans, now it is execution time - read here - read here
News Analysis - Workday, IBM Form Strategic Partnership on the IBM Cloud - The IaaS vendor race for SaaS load is on - read here
News Analysis - IBM Boosts Support to OpenStack's RefStack... first serious attempt to make OpenStack interoperability real - read here
Event Report - IBM Interconnect - IBM innovates and partners into the hybrid cloud era - read here
News Analysis - IBM and VMware announce partnership to accelerate enterprise hybrid cloud adoption >> Looking promising - read here
Event Preview - IBM Interconnect 2016 - read here
Site Visit - IBM Design Studio Austin - read here
MarketMoves - IBM strikes 3x in Fall - Cleversafe, The Weather Company and Gravitant - read here
News Analysis - IBM launches Industry's First Consulting Practice Dedicated to Cognitive Business - a good move it's early times - read more
News Analysis - IBM plans to acquire Cleversafe to propel Object Storage into the Hybrid Cloud >> a good move. Read here
Market Move - IBM acquires StrongLoop - nodejs comes to BlueMix - read here
News Analysis - IBM and ARM Collaborate to Accelerate Delivery of Internet of Things - The IBM NextGenApps Stack emerges - read here
Progress Report - IBM Cloud makes good progress - but needs to attract more load - read here
Market Move - IBM gets into private cloud (services) with Blue Box acqusition - read here
Event Report - IBM InterConnect - IBM makes bets for the hybrid cloud - read here
First Take - IBM InterConnect Day #1 Keynote - BlueMix, SoftLayer and Watson - read here
News Analysis - IBM had a very good year in the cloud - 2015 will be key - read here
Event Report - IBM Insight 2014 - Is it all coming together for IBM in 2015? Or not?
First Take - Top 3 Takeaways from IBM Insight Day 1 Keynote - read here
IBM and SAP partner for cloud - good move - read here
Event Report - IBM Enterprise - A lot of value for existing customers, but can IBM attract net new customers? Read here
Progress Report - The Mainframe is alive and kicking - but there is more in IBM STG - read here
News Analysis - IBM and Intel partner to make the cloud more secure - read here
Progress Report - IBM BigData an Analytics have a lot of potential - time to show it - read here
Event Report - What a difference a year makes - and off to a good start - read here
First Take - 3 Key Takeaways from IBM's Impact Conference - Day 1 Keynote - read here
Another week and another Billion - this week it's a BlueMix Paas - read here
First take - IBM makes Connection - introduces the TalentSuite at IBM Connect - read here
IBM kicks of cloud data center race in 2014 - read here
First Take - IBM Software Group's Analyst Insights - read here
Are we witnessing one of the largest cloud moves - so far? Read here
Why IBM acquired Softlayer - read here

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

This is an overdue post, which I should really have written back when it was announced that Bernd Leukert was changing roles starting in 2019… now reality has caught up, and Leukert is leaving not only the executive board – but also the company.

In the course of five years SAP has moved from having a single leader for product with then CTO Sikka, who handed over things to Leukert. Single product leaders – who can get it done – work well for enterprise software vendors – as Oracle has shown with Kurian (but also departed, for Google, that’s another overdue post).

Some SAP product logos (source www)

Meet the Product Leaders at Board Level

Well on the board it’s three members… and what are their responsibilities?

Christian Klein (source: www.sap.com)

Christian Klein, COO - Intelligent Enterprise (which is S/4HANA and SAP Digital Supply Chain. Klein joined SAP in 1999 and is not even 40 yet. Germany’s system of dual study for cooperative education makes it possible. SAP never had such a young leader for all its core products. Remarkably Klein’s background at SAP is not in product development, but finance and support.

Juergen Mueller (source: www.sap.com)

Juergen Mueller, CTO – SAP Cloud Platform, SAN HANA, SAP Analytics and SAP Leonardo. He joined SAP little more than 5 years ago, in 2013. Previously he was SAP’s Chief Innovation Office driving research agenda and increasingly SAP Leonardo. He isn’t 40 either, even younger than Klein.

Robert Enslin (source: www.sap.com)

Rob Enslin, President (Cloud Business Group)– SAP Ariba, SAP Concur, SAP Fieldglass, SAP hybris, SAP SuccessFactors and now also Qualtrics. The group I call 5 sisters that are now… six sisters. It’s a marvel by itself, with six presidents and at least 6 heads of product reporting to them. Six different (and more) product architectures underneath them. Enslin has to balance revenue and product needs for all six sisters. Enslin joined SAP in 1992, when Klein and Mueller were barely in high school. He even worked 11 years somewhere else before joining SAP. We won’t reveal his age, but he could well be a father to Klein and Mueller.

When SAP announced the Qualtrics acquisition I joked with McDermott on a briefings call, how he felt as head of product. He hesitated a moment, then laughed it off…. But the new reality at SAP is now that falls into three large product development areas – something that has not happened in over 20 years.

For the SAP history buffs: Back in the 1990ies, SAP was a true matrix organization, with each of the then board members (Hopp / Kagermann, Plattner, Zencke, Heinrich, Tschira) having product development and go to market responsibilities (except for Tschira, if memory does not fool me). That ended up badly when SAP missed earnings and SAP moved to a functional organization. Kagermann regretted to have to give up product development and move on to… worldwide sales.

In 2019 SAP is back to a matrix – across three products and two sales leaders. This is a complex structure and needs a lot of goodwill and potential hands on management by the CEO.

To understand the task – lets look at the key challenges for each of the product leaders:

Klein – He has to make the Intelligent Enterprise real, SAP’s big news from Sapphire 2018. No easy task, since I largely contribute the departure of Leukert to the lack of resources dedicated to S/4HANA. SAP realized in spring of last year that it cannot deliver on the SAP S/4 value proposition – which was R/3: The integrated end to end ERP+ suite. It was taking Leukert and team too long, Salesforce was gaining, C/4HANA was created. All this is history – but it does not make Klein’s job easier. S/4HANA will likely be the SAP Finance system, everything more is on the test stand.

Mueller – He has to make sure that Klein and Enslin’s teams can build modern software. With the SAP Cloud Platform he needs to make the SAP PaaS competitive, beyond the SAP internal use case. He also has to keep AWS, Google and Microsoft (and likely more IaaS vendors) happy with SAP’s multi-cloud strategy. Kubernetes offerings are well portable – but much more needs to happen to make HANA run on the popular IaaS platforms. And then he has to get the intelligence into the intelligence suite… via Machine Learning / AI.

Enslin – He is leading (as predicted here) the ‘death marsh’ of the five sisters to the common SAP platform – with SAP HANA / Cloud Platform and Analytics. Basically, he is putting the 5 sisters on SAP technology. I call it a ‘death marsh’ because platform work always slows down functionality – and the degree of innovation that is coming out on the functional side of Ariba, Concur, Fieldglass, Hybris and SuccessFactors – has taken a break. SAP will deny this, but every technology knows this: When the platform changes, functionality enhancements takes a breather as all hands are on deck to get the product on the new platform live.

SAP Product Leaders, responsibilities and challenges

So what does it mean for SAP Customers?

As usual, when you can live with standard functionality – you are in good shape. But if you need anything new / strategic / co-development wise from SAP – you have to navigate the complexity.

Say for example you want something strategic from SAP Ariba. So you want to get the buy-in from Darren Koch (Chief Product Officer at Ariba). Better get his bosses’ buy in as well, that’s Barry Padgett, who works for Rob Enslin. Assume the new functionality is innovative and needs something from machine learning, and it runs on e.g. Azure. In comes Juergen Mueller with his team. And say it needs to feed back into your SAP Finance system – in come Christian Klein (and Thomas Saueressig, who is in charge of S/4HANA and more). You quickly run out of seats in the minibus or conference call lines. Customers who want to cut the chase and look for Bill McDermott’s commitment, may well try to (and likely get it). But let’s not forget that for McDermott to get this done, he needs to coordinate at least three, if not 7 executives (his three board members, the Ariba executives, and for making it easy – just one additional one from Klein and Mueller. For instance, SAP SuccessFactors has two product leaders – Amy Wilson and James Harvey. That makes it 8 executives. Add to that the usual strategic deals that Adair Fox-Martin and Jennifer Morgan will throw in, especially in Q4. I can see 50% of board meetings being about product ad product development coordination. How often do you have all these executives in the room (or the video conference) to make real time trade-offs between road maps, headcount and customer demands.

On the flipside, customers used to commitments made and delivered for instance by the presidents of the 5 sisters (or also Qualtrics) – need to double check that the rest of the SAP development organization is on board.

The recommendation for customers can only be to take the road maps for granted, hold SAP to it and to take any executive commitments… with a grain of salt. The only way SAP can make this happen is with … vetoing any special projects and commitments. Road map is the new religion. That has never happened, now might be the time to get this installed and live by it.

MyPOV

SAP will have to find a very efficient way to manage this, otherwise there is a high chance it may not be able to deliver. Not planning succession for Leukert (as SAP has almost a tradition – see succession og Agassi, Sikka) is a repeated mistake. To be fair – that is never easy. The board (and owner / operator Plattner) may think that they have the right mix in place between experience and “Sturm und Drang” but it now has all to work. Trips to Potsdam (where Plattner usually is, when in Germany) will be common. SAP has also a tradition to put “x in the box” as we saw with McDermott / Hagemann Snabe – or just last year with Enslin / Leukert. Will we see “three in the box” with Enslin, Klein and Mueller? I am pretty sure, watch the Sapphire keynote?

If it all works, the good news is that Enslin is the succession plan / insurance for McDermott, and we will see how things will get split up between Klein and Mueller. Klein was CFO at SuccessFactors, so he maybe the succession for Mucic, his role as a caretaker of S/4HANA may give him also the exposure to become the next CEO of SAP. Mueller is the executive with the most product DNA, so he may well get the job that Agassi, Sikka, Leukert had before him. But that will be not before 2-3 years from now.

But for now – it’s going to be interesting to see if SAP can deliver all the product it promised to deliver, faster. The competition certainly has simpler product organization operating models. But then… never discount SAP, there is a lot of talent and major investment at play... and a lot of German corporate DNA and rigor to deliver to a committed roadmap. On the other side it’s the biggest challenge SAP’s product organization is in since… building R/3 in the first half of the 1990ies. Exciting times ahead.

[For additional reference checkout my analysis of SAP's last major board reorg, in April 2017, which created the cloud business group - here.]

Some recent SAP blogs:

News Analysis - SAP intends to buy Qualtrics - Pairing operational and experience data – And it’s 6 sisters - read here
News Analysis - Adobe, Microsoft and SAP announce the Open Data Initiative to empower a new generation of customer experiences - Good idea, good start... - read here
Event Report - SAP Ariba Live 2018 - Las Vegas - Sustainability and UX - read here
Event Takeaways - SAP at MWC 2018 - read here
Market Move - SAP acquires Callidus - More Sales Effectiveness in the Back Office of the Front Office - read here
News Analysis - SAP HCM On-Premise Option for SAP S/4HANA - or is this S/4HCM? - read here
News Analysis - Microsoft and SAP join forces to give customers a trusted path to digital transformation in the cloud - read here
Event Report - SAP Hybris Live 2017 Barcelona - YaaS morphs and more agility ahead - read here
News Analyses Roundup - SAP's September Tech Announcements - SAP doubles down on technology - read here
Event Report - SAP SuccessFactors SuccessConnect - New Leadership - Old Challenges - read here

And some Constellation Research reports on SAP:

Constellation ShortList™ PaaS Suites for Next Gen Apps, By Holger Mueller, February 27th 2019 - see here
Constellation ShortList™ Global HCM Suites, By Holger Mueller, February 20th 2019 - see here
Experience Management Drives SAP’s Acquisition of Qualtrics, By Nicole France, Holger Mueller, R "Ray" Wang, November 28th 2018 - see here
SAP Hybris advances its Platform, By Holger Mueller, November 20th 2017, see here
SAP Cloud Platform: A New Standard for a SaaS Vendor’s PaaS, by Holger Mueller, June 13th 2017, see here
SAP HANA 2 Ushers in the Next Era of Pure In-Memory Applications, by Holger Mueller, December 27th 2016 - see here
SAP UXaaS Democratizes Usability, Starts Next Wave of User Experience, By Holger Mueller and R 'Ray" Wang, April 7th 2016 - see here

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

Apple had its long anticipated services event in Cupertino on the 25th of March. Not surprisingly, Apple announced a news, TV service. The gaming service was expected somewhat. The real surprise was the card.

I collected my notes and thoughts in a Twitter Moment (if it doesn't render - you can find it here):

Apple Services Event [FtF]

MyPOV

Tech companies do not get media, so I am sceptical that Apple can pull of anything of real substance around News and TV. Most people get these services already and often for free (as bundled with other services). Granted - Apple can throw billions at this - and showed the star power at the event. But the stars will take the money, but not guarantee success. It all reminded me of Yahoo! signing Katie Couric to go into news. Why will it work today for Apple? The challenge is also to convert a free offering (Apple News) to a paid one - never easy.

The gaming offering is interesting, as it offers a syndicated view on the Apps Store for gamers. Apple may be able to charge for placement etc. but then - it makes money already and game vendors don't like it (see Fortnite bypassing the paywall). And gamers are fiercely independent - yes they may have an iPhone - but they will side load it / jailbreak it with not a moment of hesitation for the newest game.

The most interesting offering is certainly the card. Technology with NFC payments and the smartphone capabilities can certainly disrupt payments and credit cards. It's an antiquated industry, charging premiums and waiting for disruption. Apple may be able to pull this one off - though margins will be lower than selling shiny glitzy objects. If Apple (and investors) can stomach this - great opportunity.

But overall I remain sceptical. The Apple install base has stopped growing. No smartphone / phone maker has been able to revert it. When the moment is passed, the moment is passed. Services on a shrinking platform cannot right the overall enterprise. Assuming iPhone replacements will happen every 3 years, Apple needs to extract about 500$ in services soon to smoothen the bump and then over the life of a headset. A tall order. Only subscribe (and forget) can get Apple there. And there are enough Apple fans out there to do so... going platform independent is the only way. And that's easy for the card. Future will tell if and how much services can save Apple from fading.

P.S. We often talk about product companies needing to become service companies. This is a very hard transition. If one of the richest, in talent on board and acquirable as well as financial resources, company struggles so much here... what is an ordinary / regular company going to do? Certainly place frugal bets more carefully.

More on Apple

Happy 10th anniversary iPhone - afraid the next 10 years will be harder - read here
News Analysis - Apple & SAP Partner to Revolutionize Work on iPhone & iPad - read here
First Take - Apple wants to change the Future of Work. Works with cloud apps vendors and Workato - read here
5 Questions for Apple - Or how good product development practices matters - read here
Musings - Implications for CxOs from the DoJ vs Apple tussle - read here
An evening with Gil Amelio - read here

We had the opportunity to attend the yearly SAP Cloud analyst meeting, held from March 6th till 7th in Salt Lake City. It was co-located with Qualtrics X4 Summit user conference, a good move to get the analysts up to speed on the newest ‘sister’ (as I call the SAP cloud businesses). Much of the summit was under NDA and we had to go through a reverse factual review – sharing with SAP before we published… then more work happened, and I am belated with this post… but better late … than never.

Here is the 1 slide condensation (if the slide doesn’t show up, check here):

Progress Report - SAP Cloud Analyst Summit 2019 - Intelligent Suite and Moving to SAP Tech Stack from Holger Mueller

Want to read on? Here you go:

The big SAP cloud business re-platform is under way. With this I refer to the effort of moving the ‘sisters’ to the SAP technology stack, meaning SAP HANA, SAP Cloud Platform, SAP Analytics and Leonardo. That effort is under way and seems to be going well. Fieldglass – the smallest sister – is already on HANA. Work at SuccessFactors and hybris is under way. Not sure where the Ariba efforts stand. As I learnt a week later at Concur’s Fusion – the Concur efforts are excused from the effort, going “all in” with Amazon’s AWS Cloud. Customers want to know where the effort stands – so SAP is well advised at giving some updates and timelines at some point in the near future.

Concur and Qualtrics - clarity and questions. The Concur decision makes a lot of sense, as likely HANA is punitively high for products like Tripit. And to be fair – HANA was never designed to be a travel expense / travel management database with millions of users. The big question is now what SAP will do with Qualtrics. Let the new experience management acquisition “daughter” run by itself for a while, move it to the SAP stack or maybe also to AWS (where it largely is already)? It was too early to get firm answers of this. But the question is pertinent to make the SAP desire of a new software category with “Experience Management” going – as customers and prospects will want to know what this new software will run on. Personally, I am sceptic HANA can be the database for capturing and continuously querying digital exhaust to predict and create superior experiences. That’s more of a Hadoop job. Future will tell.

Reduced functional progress is the price. As with any re-platform – this must be an all hands effort at all the daughters. They almost all picked Oracle and have heavily optimized on that platform. When you do that on Oracle, you write a lot of stored procedures, and those cannot be migrated to another database – also if its HANA. This means that a decade + of code that has been built e.g. at SuccessFactors and Ariba will have to be re-written and tested. If SAP shares the effort publicly it will likely make customers a little nervous and open the install base up for FUD from the competitors. So likely SAP will have to undertake the effort behind closed doors. The consequence is less functional progress for the ‘daughter’ as developer across the product are busy re-coding and testing functionality. I am not covering Ariba in depth, but SuccessFactors and we can see that slow down on the SuccessFactors side. Pretty much since Spring of 2018 the major piece of innovation coming from SuccessFactors is … a mobile version. Building mobile versions while re-platforming the core offering is a proven strategy for vendors in that phase – mobile is separate technology (especially when you move to HANA) and there are well defined interfaces to the rest of the product. So, it was not a surprise the demo of SuccessFactor’s Amy Wilson in Salt Lake City was about – mobile, with SAP Cockpit and the future what Qualtrics can be doing in combination with SuccessFactors for the employee experience. We will see what SAP will share soon.

A new role for SAP technology. SAP has long invested into HANA, SAP Cloud Platform and more. Executives have adamantly insisted that both are strong products, that stand alone and compete with e.g. the Oracle database. That seems to be history now, though SAP has not officially stated it is changing the role of its technology products to focus less on independent, best of breed competition, but making its technology support its application products and ambitions. Certainly, a valid approach, but a lot of investment that will not capitalize. The litmus test question: What is SAP had banked on Oracle only its database – how much SaaS product could have been built? Certainly, more than SAP has been able to build so far. It would have been the reverse takeover of the sisters’ decision to standardize on that database. In the past SAP always mentioned the license payments that had to go to Oracle – but SAP does not have a principal issue with it – as we see with its multi-cloud strategy: Here SAP uses the IaaS partners the same way as it uses / used to use its database partners.

But What Ifs are nice scenario plays – it is what it is – and SAP seems to have made that decision. Data points into that direction. It would be good for SAP to make it public.

MyPOV

Let’s focus on the good news first: The SAP Intelligent Suite messaging, unveiled at the very first meeting of this group one year ago – is still the true north for S/4HANA, C/4HANA and the sisters. It takes time to build product and keeping the vision and strategy the same is vital for delivering successful enterprise products. I may have missed the plans on the integration side. SAP is creating a distributed system landscape and this time owns the integration between these automation islands. At Sapphire 2018 executives were aware of owning this and committed to it. By now its time to see more specifics on how SAP wants to enable that integration for its customers.

On the concern side, every re-platform is risky business. It must work, must happen likely behind the scenes (as it happens in the cloud world - to not make customers nervous) and means a functional pause for the products undertaking the effort… But the train has left the station, certainly for SuccessFactors, maybe for Ariba, maybe for hybris. The big question now is what the plan for Qualtrics will be. Given SAP’s complex development organization (see here) – customers need to plead for transparency by SAP in the form of roadmaps.

But overall kudos for SAP to give insights on its overall state of the cloud products. It was good to see three board members (Enslin, Klein and Mueller) as well as their key lieutenants (e.g. Faerber, Saueressig, Wilson) coming to Salt Lake City to speak with the analysts present there. Now all eyes are on Sapphire.
More on SAP

Some recent SAP blogs:

Musings - SAP democratizes Product Development - what does it mean for Customers? Read here.
News Analysis - SAP intends to buy Qualtrics - Pairing operational and experience data – And it’s 6 sisters - read here
News Analysis - Adobe, Microsoft and SAP announce the Open Data Initiative to empower a new generation of customer experiences - Good idea, good start... - read here
Event Report - SAP Ariba Live 2018 - Las Vegas - Sustainability and UX - read here
Event Takeaways - SAP at MWC 2018 - read here
Market Move - SAP acquires Callidus - More Sales Effectiveness in the Back Office of the Front Office - read here
News Analysis - SAP HCM On-Premise Option for SAP S/4HANA - or is this S/4HCM? - read here
News Analysis - Microsoft and SAP join forces to give customers a trusted path to digital transformation in the cloud - read here
Event Report - SAP Hybris Live 2017 Barcelona - YaaS morphs and more agility ahead - read here
News Analyses Roundup - SAP's September Tech Announcements - SAP doubles down on technology - read here
Event Report - SAP SuccessFactors SuccessConnect - New Leadership - Old Challenges - read here

And some Constellation Research reports on SAP:

Constellation ShortList™ PaaS Suites for Next Gen Apps, By Holger Mueller, February 27th 2019 - see here
Constellation ShortList™ Global HCM Suites, By Holger Mueller, February 20th 2019 - see here
Experience Management Drives SAP’s Acquisition of Qualtrics, By Nicole France, Holger Mueller, R "Ray" Wang, November 28th 2018 - see here
SAP Hybris advances its Platform, By Holger Mueller, November 20th 2017, see here
SAP Cloud Platform: A New Standard for a SaaS Vendor’s PaaS, by Holger Mueller, June 13th 2017, see here
SAP HANA 2 Ushers in the Next Era of Pure In-Memory Applications, by Holger Mueller, December 27th 2016 - see here
SAP UXaaS Democratizes Usability, Starts Next Wave of User Experience, By Holger Mueller and R 'Ray" Wang, April 7th 2016 - see here

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

Late on a Friday night in Germany SAP issued a press release that Robert Enslin is leaving the company. The organizational consequence was that of Jennifer Morgan taking over the Cloud Business Group, Enslin’s previous responsibility. Morgan's existing responsibility on the go to market side are now completely with Adaire Fox-Martin – who now solely owns go to market for SAP.

The late Friday night release always implies that SAP tried to ‘hide’ the new around the departure and re-organization ad the board level, especially since it is the second one this year (read about Leukert’s departure here). So let’s start with dissecting the press release in our customary fashion, it can be found here.

WALLDORF — SAP SE (NYSE: SAP) today announced that Executive Board Member and President of the Cloud Business Group Robert Enslin has elected to resign from the company to pursue an external opportunity.

MyPOV - Short and sweet – Enslin looking for an external opportunity. The remarkable part is that he does that after a 27-year career with SAP. Usually that long tenured board members and SAP employees get the chance to retire (contrast and compare with for instance Kleinemeier). The Cloud Business group is in the midst of a transformation to move to the SAP technology stack (and in most cases off an Oracle database), but that effort seems well under way. Enslin got more responsibility during the tenure with the addition of Callidus Cloud in 2018 and recently Qualtrics. So, it needs to be something that has happened more recently to prompt him to look for external opportunities.

SAP Executive Board Member Jennifer Morgan will succeed Enslin as president of the Cloud Business Group (CBG). SAP Executive Board Member Adaire Fox-Martin will take sole responsibility of Global Customer Operations (GCO) as president. These leadership changes are effective immediately.

MyPOV - So Morgan is the ‘new’ Enslin – leaving sole revenue responsibility to Fox-Martin. Well not completely as all six ‘sisters’ of the Cloud Business Unit have a salesforce and revenue targets. This is taking it to the next level challenge wise for both executives. Fox-Martin must deliver the bulk of SAP’s revenue, ironically a job that Enslin had for a long time. And Morgan needs to show she can deliver products to market, as she has not held product development responsibility in her career. Both executives have their work cut out in the next years.

Enslin, who first joined SAP in 1992, departs following a long and successful career at the company. He was named to the Executive Board in 2014, initially as president of Global Customer Operations. A respected technology leader with a unique global perspective on business and economic trends, he earned a highly favorable reputation with customers and industry analysts. His two-year stint as president of the company’s Cloud Business Group resulted in an aggressive build-out of SAP’s cloud portfolio, including the recently closed acquisition of Experience Management leader Qualtrics.

MyPOV - Sad to see such an SAP veteran go – but I guess it was time for the next level. Enslin has delivered sales results during challenging times for SAP, and more recently made sure that 4 of the 6 sisters (Ariba, Fieldglass, hybris and SuccessFactors) are moving to SAP’s technology stack – most prominently SAP HANA, SAP Cloud platform and SAP analytics. Interesting that his 27-year retrospective of his SAP career speaks little about the sales success. Enslin emerged as the best sales person for SAP in North America, delivering regular performance and results, culminating in the world-wide sales responsibility. Most recently Enslin’s impact is going to be to have moved Fieldglass and most likely SuccessFactors over to SAP’s tech stack. Insight on Ariba is still out. Plans for Qualtrics are tbd, given the recent acquisition. Concur is free to leverage 100% AWS (HANA is out of the picture there).

Comments from Professor Hasso Plattner, Chairman of the Supervisory Board of SAP

“We are very grateful for the many significant contributions Robert Enslin has made to SAP. The Supervisory Board has immense confidence in Jennifer Morgan and Adaire Fox-Martin as they assume broader responsibilities on our Executive Board.”

MyPOV - Good quote by Plattner, but what alternatives did SAP have? The alternatives would have been presidents inside of the cloud business unit. But they are all busy at delivering results while their product teams are re-platforming. At the same time, with Enslin leaving, the designate backup for McDermott is out of SAP as well. Time to groom a potential successor. And leading SAP you always need to have some product development responsibility (McDermott is the rare exception, so was Apoteker). So, its timely for Morgan to get development responsibility. I wrote the same for new board member Klein earlier this year. Klein and Mueller would have been the other two alternatives, but they just got on the board, and need to show they can deliver first. And maybe mistakenly, SAP always had a business leaders on top of the SAP cloud business unit and each off the six sisters. That the technology transformation to SAP’s technology, despite being postulated by Plattner on a yearly level – is not a surprise by now. But hindsight is always easy.

Comments from Bill McDermott, CEO of SAP

“Let me first congratulate Rob Enslin for everything he’s done in his distinguished SAP career. He’ll be a great champion for SAP in his new opportunity and a lifelong friend to me personally. With Jennifer Morgan and Adaire Fox-Martin moving up, we have two dynamic leaders who will help us take SAP to the next level. Our market-leading core ERP and high-growth cloud application portfolio make SAP a rarity in the enterprise software industry. This transition gives us a clear path to continue simplifying the company. SAP’s leadership team will drive greater operational efficiency, faster time to market, higher product quality and superior market fit, all while significantly improving margins. ‘The Best Run SAP’ is our motto, our maxim and our strategy to run the company with greater discipline and focus. I could not be more optimistic about SAP’s road map to create value for our customers, employees and shareholders – a true Best-Run SAP.”

MyPOV – A long quote by McDermott. Nice to see him thank Enslin and sparking the curiosity where Enslin maybe going. SAP has a lot of partners – so the field is wide open. And agreed that with Fox-Martin solely in charge of almost all sales (the cloud business units sales leaders have a dotted line into her) – SAP certainly simplifies the sales organization and responsibility. Not so much though from a product development side, as the Morgan for Enslin replacement doesn’t solve the challenges of a product development troika now between Klein, Morgan and Mueller. It changes the dynamics in the troika as Morgan is less senior than Enslin (who I joked, could have been a father age gap wise to Klein / Mueller). And certainly, the board has gotten much younger, it maybe (math pending) on record low average age – even before Kleinemeier retires.

Comments from Robert Enslin

“I am truly grateful to Hasso Plattner, Bill McDermott and all my SAP colleagues for the opportunity to be part of such a special company. As I leave SAP for a new journey, I do so with unrivaled respect for the company and its amazing customers around the world.”

MyPOV – Nice quote. Always good to leave on a high note.

Comments from Jennifer Morgan

“I am very honored by this opportunity to work with the outstanding team in SAP’s Cloud Business Group. I have never been stronger in my belief that SAP’s best days are yet to come.”

MyPOV – Good quote. Would have loved to see some of the Cloud Business group goals in here.

Comments from Adaire Fox-Martin

“For the entirety of my career at SAP I have focused on our customers and their success. I could not be more energized to continue this exciting journey as president of Global Customer Operations.”

MyPOV – Good quote – focus on the customer. Strange though Fox-Martin trails Morgan in sequence. Alphabet can’t be used as explanation. At least form an outside perspective and revenue responsibility (not functional diversity) her job eclipses Morgan’s.

Overall MyPOV

SAP’s board organization doesn’t come to peace, and with that the stability that matters for execution is not materializing. Except for Finance, HR and Services – every board area has been changed and / or re-organized in the course of the last 6 months. I can’t think of such a broad level change in the board happening at SAP … ever. And the next change is already announced, as Kleinemeier stayed an extra year to keep doing the work that Leukert was supposed to take over. Organizations need stability on the top, and changes on the top have repercussions many levels down the organization, all the way to middle management changes. In a traditionally stable culture like SAP these changes are especially challenging, as networks have operated over decades, that are now dismantling and have to be rebuilt. But change can be for the better, so we will have to see what happens.

The other aspect is of course SAP’s questionable job of succession management. This is not an easy task at board level, and one only needs to think the issues e.g. Apple has had. But SAP needs to benchmark itself with the competition, and there the parallels of loosing Leukert are similar to Oracle losing Kurian, but Oracle absorbed that change much better (for now, blog post coming). If SAP did not have the double leadership in sales, a luxury and complexity, Morgan would not even have been available as a board member to suceed Enslin. The other potential successor(s) for Enslin had to come from the presidents of the cloud subsidiaries. But none of them made it, and not sure if any was ready for running all 6 sisters at this moment. As a side note: A mini consolidation occurred with moving Fieldglass under Barry Padgett who now runs Ariba and Fieldglass. And apparently no external candidates have been considered. But then SAP has a questionable record of bringing in outside board members, it has tried and failed twice for its people leader before Ries was installed. Board members from acqusitions never lasted long (Schwartz, Chen, Dalgaard) .

So, except for Mucic, Kleinemeier and Ries, everybody has a new job on the SAP board – or is new to the board. The good news is, this board has worked together before. And SAP has reduced sales complexity with handing the sales keys for (almost) all of SAP sales to Fox-Martin. One can argue McDermott’s job hasn’t changed, but I’d argue that he is the product developer in chief (see here), a new role for him.

For customers these changes simplify things on the sales side, where Fox-Martin has the last word – before reaching out to McDermott. Things remain as complex on the product side as before, with new relationships with Morgan having to be developed. Her background in sales is likely going to make the first phase of customer interaction easier, the potential challenge will be not to over extend product development commitments.

But at the end of the day, it is what it is: SAP’s executive board is younger than ever before (for a very long time), and needs to get going asap as the challenges are massive and not getting smaller because SAP is reorganizing: Making the value proposition of the digital core real, getting S/4HANA right, adding new technologies across the products, operating on the new reality of SAP owned integration between its products and moving the six sisters to the SAP technology stack. All while delivering results to shareholder expectations. Time to roll up the sleeves for the SAP board.

[For additional reference checkout my analysis of SAP's last major board reorg, in April 2017, which created the cloud business group - here.]

Some recent SAP blogs:

Musings - SAP democratizes Product Development - what does it mean for Customers? read here
News Analysis - SAP intends to buy Qualtrics - Pairing operational and experience data – And it’s 6 sisters - read here
News Analysis - Adobe, Microsoft and SAP announce the Open Data Initiative to empower a new generation of customer experiences - Good idea, good start... - read here
Event Report - SAP Ariba Live 2018 - Las Vegas - Sustainability and UX - read here
Event Takeaways - SAP at MWC 2018 - read here
Market Move - SAP acquires Callidus - More Sales Effectiveness in the Back Office of the Front Office - read here
News Analysis - SAP HCM On-Premise Option for SAP S/4HANA - or is this S/4HCM? - read here
News Analysis - Microsoft and SAP join forces to give customers a trusted path to digital transformation in the cloud - read here
Event Report - SAP Hybris Live 2017 Barcelona - YaaS morphs and more agility ahead - read here
News Analyses Roundup - SAP's September Tech Announcements - SAP doubles down on technology - read here
Event Report - SAP SuccessFactors SuccessConnect - New Leadership - Old Challenges - read here

And some Constellation Research reports on SAP:

Constellation ShortList™ PaaS Suites for Next Gen Apps, By Holger Mueller, February 27th 2019 - see here
Constellation ShortList™ Global HCM Suites, By Holger Mueller, February 20th 2019 - see here
Experience Management Drives SAP’s Acquisition of Qualtrics, By Nicole France, Holger Mueller, R "Ray" Wang, November 28th 2018 - see here
SAP Hybris advances its Platform, By Holger Mueller, November 20th 2017, see here
SAP Cloud Platform: A New Standard for a SaaS Vendor’s PaaS, by Holger Mueller, June 13th 2017, see here
SAP HANA 2 Ushers in the Next Era of Pure In-Memory Applications, by Holger Mueller, December 27th 2016 - see here
SAP UXaaS Democratizes Usability, Starts Next Wave of User Experience, By Holger Mueller and R 'Ray" Wang, April 7th 2016 - see here

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

We had the opportunity to attend Oracle Modern Business Experience (MBX) event, held in Las Vegas from March 18th till 21st at the Mandalay Bay Convention Center. A new event for Oracle, that is combining a number of separate events (e.g. HCM World) into a single event and focusses on ERP, HCM and SCM applications. Accompanied by Oracle Modern Customer Experience (MCX), the event almost felt like an AppsWorld (the event that Oracle rolled into its mega event, Oracle Open World about 10 years ago). For a first event it was well organized and attended, also showing some novel ideas, like a CEO keynote in the afternoon / early evening. But enough about the event, let’s look at the HCM / Future of Work key takeaways.

Here is the 1 slide condensation (if the slide doesn’t show up, check here):

Event Report - Oracle Modern Business Experience 2019 - The Future of Work Perspective from Holger Mueller

Want to read on? Here you go:

UX push in a mobile finale – Oracle has been criticized for a long time for a laggard user experience, but the vendor has addressed this well in the last 1.5 years. What remained was a disjointed mobile experience and Oracle tackled it this MBX. Interestingly for the technologists, not with native apps, but a responsive app, that has the same look and feel across the popular Android and iOS platforms. Oracle chose an innovative and confident stance with the new mobile app, creating a mobile challenge for conference attendees as well as analysts. There is an implicit wow effect in being able to launch an application with pointing your phone to a QR code – almost instantly, that still has the rich user experience of a proprietary mobile app. Giving the analysts the app to play with is a sign of confidence by Oracle and maturity in the app. It works well, is responsive even with spotty conference Wifi and provides all key capabilities of the ESS / MSS functional realm as well as the employee and manager exposed part of Talent Management.

Oracle HCM UX

HCM Experience Studio empowers HR – Rollout times are always a concern for software vendors, and configuration required while an enterprise system is live is often overseen. Functional departments, here HR departments, often struggle with getting systems setup and (re-) configured as needed (and possible). Often key business information gets lost in the process of bringing the technical resources up to speed (or whoever does the configuration work. Oracle attempts to stop that with the HCM Experience Studio – enabling HR professionals to configure and extend their Oracle HCM system. If the product proves itself at scale in practice, it can have a material benefit of going live with Oracle HCM as well as enabling a fast, efficient and low-cost way to keep an Oracle HCM system configured and setup as required and desired by the HR and the business. That will be a substantial contribution to enterprise acceleration, something all CxOs clamor for.

Oracle's Top 10 investment areas in HCM

Oracle works to become more human – We have said and written before that the biggest detriment for Oracle HCM success is not its product maturity, functionality and usability anymore – but the way how Oracle has reacted in the market with customers and prospects, and the related image of that behavior. In many cases CxOs just don’t ‘want’ to do business with Oracle. It’s good to see Oracle has realized and acknowledged that (to some point even publicly) and is now trying to address this with a new, more human centric marketing campaign. The campaign and messaging are well done, but it needs to overcome years of less human and customer centric behavior by Oracle in the market. Not easy, but possible and likely necessary for Oracle to get an adequate or even better than expected return on the massive R&D the vendor has invested into HCM.

Oracle's HCM Experience Design Studio

MyPOV

As always good progress by Oracle, which is adding capabilities en masse to the HCM Cloud, making HCM Cloud one of the most complete and functional rich HCM suites in the market. Having now overcome the usability challenges of the past, Oracle also performs well with vendors. It now has to address ‘likeability’ a specific wrinkle in the HCM market, where decisions makers value the ‘human’ side of vendors, their ‘people centricity’, their Top x of something rank much more than in any enterprise automation area.

The good news is that Oracle is trying to address this, and when Oracle addresses this challenge successfully it will do really, really well in the market. But decades of ‘bad buy’ image are hard to overcome, but it needs to get started, and Oracle is starting the process. We will be watching.

Want to learn more? Checkout the Twitter Moment below (if it doesn’t show up – check here).

And more on Oracle

More on Oracle:

Event Report - Oracle Open World 2017 - Top 3 Positives / Top 3 Concerns - Overall good - read here

News Analysis - Oracle Unveils New Programs that Transform how Customers Buy and Consume Cloud – Gloves Off - read here

Summer 2017 News Analysis - Oracle invests in IaaS (or at least CAPEX) - read here

News Analysis - Oracle empties the barrel - Revolver style (6) Cloud News Analyses - read here

Musings - Does Oracle and Accenture make sense - or never ever! - read here

Progress Report - Oracle HCM Analyst Summit 2017 - Oracle HCM stronger and stronger - read here

Event Report - Oracle OpenWorld - the HCM perspective - Almost no news, but wait... - read here.

First Take - Early Oracle OpenWorld 2016 Keynotes - read here

Event Preview - Oracle OpenWorld 2016 - What to expect, what to watch for ... will IaaS start Clicking? - read here

Market Move - Oracle acquires NetSuite - Oddly consolidation means more options for customers - read here

News Analysis - Oracle Unveils Suite of Breakthrough Services.. or short: Oracle Cloud Machine - read here

Progress Report - Oracle Cloud - More ready than ever, now needs adoption - read here

Event Report - Oracle Openworld 2015 - Top 3 Takeaways, Top 3 Positives & Concerns - read here

News Analysis - Quick Take on all 22 press releases of Oracle OpenWorld Day #1 - #3 - read here

First Take - Oracle OpenWorld - Day 1 Keynote - Top 3 Takeaways - read here

Event Preview - Oracle Openworld - watch here

Future of Work / HCM / SaaS research:

Event Report - Oracle HCM World 2018 - Dallas - Steady Progress - read here

Event Report - Oracle HCM World - Innovation around the Core - read here

Event Report - Oracle HCM World - Full Steam ahead, a Learning surprise and potential growth challenges - read here

First Take - Oracle HCM World Day #1 Keynote - off to a good start - read here

Progress Report - Oracle HCM gathers momentum - now it needs to build on that - read here

Oracle pushes modern HR - there is more than technology - read here. (Takeaways from the recent HCMWorld conference).

Why Applications Unlimited is good a good strategy for Oracle customers and Oracle - read here.

Also worth a look for the full picture

Event Report - Oracle PaaS Event - 6 PaaS Services become available, many more announced - read here

Progress Report - Oracle Cloud makes progress - but key work remains in the cellar - read here

News Analysis - Oracle discovers the power of the two socket server - or: A pivot that wasn't one - TCO still rules - read here

Market Move - Oracle buys Datalogix - moves more into DaaS - read here

Event Report - Oracle Openworld - Oracle's vision and remaining work become clear - they are both big - read here

Constellation Research Video Takeaways of Oracle Openworld 2014 - watch here

Is it all coming together for Oracle in 2014? Read here.

From the fences - Oracle AR Meeting takeaways - read here (this was the last analyst meeting in spring 2013)

Takeaways from Oracle CloudWorld LA - read here (this was one of the first cloud world events overall, in January 2013)

And if you want to read more of my findings on Oracle technology - I suggest:

Progress Report - Good cloud progress at Oracle and a two step program - read here.

Oracle integrates products to create its Foundation for Cloud Applications - read here.

Java grows up to the enterprise - read here.

1st take - Oracle in memory option for its database - very organic - read here.

Oracle 12c makes the database elastic - read here.

How the cloud can make the unlikeliest bedfellows - read here.

Act I - Oracle and Microsoft partner for the cloud - read here.

Act II - The cloud changes everything - Oracle and Salesforce.com - read here.

Act III - The cloud changes everything - Oracle and Netsuite with a touch of Deloitte - read here.

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here. Oracle Modern Business EXperience - HCM - 2019

We had the opportunity to attend Google Next 2019, held from April 9th till 11th 2019 at the Moscone Center and adjacent hotels in San Francisco. Attendance with over 30k registrants (my estimate about 20k present, comparing to Dreamforce and Oracle OpenWorld), and a large mix of exhibitors across Moscone South makes Google Next a major player in the cloud conference circuit. What a difference to the initial event held on a San Francisco pier with maybe 1000 attendees at best – in 2016 only three years back.

Prefer to watch – here is my event video … (if the video doesn’t’ show up – check here) \

Here is the 1 slide condensation (if the slide doesn’t show up, check here):

Event Report - Google Cloud Next 2019 - Google puts more arrows in the cloud quiver from Holger Mueller

Want to read on? Here you go:

Digital Transformation and Verticals are added to the leitmotiv – Not surprisingly with Kurian there was the entry of the three-bullet slide – what matters are the new messages and since Google Next, they are Digital Transformation and Verticals. Both not brand new, from an influence perspective Digital Transformation is already a bit ‘tired’ but to be fair most enterprises have not been digitally transformed. Messaging needs to appeal to the bulk of existing and prospective customers, and this will likely work. Verticals are a new message, but something that the ‘As’ (how Google refers to Amazon and Azure) have woken up to as well. But Kurian brings a SaaS perspective: When I asked him if Google can win in Verticals without SaaS offerings – he smartly replied with the Media industry as an example where Google can play (and traditional ERP vendors have fallen short, as Kurian knows first hand from Oracle).

Google Next 2019 - Holger Mueller - Constellation Research

Kurian with his 3 Google Cloud Differentiators

Google goes multi-cloud with Anthos – Enterprises have not been more worried about cloud lock-in than today. An almost irrational fear in the current day, given that the best cross cloud aka multi-cloud capabilities exist with Kubernetes. But Google is raising the ante on this, by releasing Anthos – a Google supported Kubernetes version across Google, but also Amazon and Azure. Kubernetes having won and gained the support of all major IaaS and the combination of Google being the ‘parent’ of Kubernetes help here. But we witness the first cloud offering supported by one of the big three vendors on the other’s infrastructure. The keynote demos moving a Kubernetes load to / from AWS got its attention. Combined with the GKE on premises capabilities Google now offers the biggest vendor supported range of Kubernetes capabilities. The portability is something enterprises want, but with vendor support ‘guaranteeing’ the interoperability, we expect the offering to blossom (pun intended, Anthos, Greek, means flower).

Google Anthos is GA - 1st Vendor Supported Cross Cloud and on Prem Compute Plane

A new approach to opensource that the enterprise will like - -Google announced a new stance as an IaaS vendor towards popular open source products – by offering them directly, in combination with the vendors and with a unified billing and support. Unified billing is tricky – but can be done. A single number for support is even more challenging and we will have to see how Google and its partners will pull that off. Certainly possible, but definitively what enterprises want. CxOs don’t’ want to manage the complexity of their next generation applications down to every dependency on the commercial side – and enterprises users want one number to call for support issues. The new stance towards the open source vendors also gives Google a good relationship position vs. e.g. AWS, where vendors are a little more concerned about AWS taking their core offering, improving it (with mixed reviews, depending on who you ask) and then offering it themselves directly. A better relationship to the vendors that enterprises need to power their next generation applications is a smart strategy.

New Memory Instance Types (targeting SAP customers 1st and foremost)

Key push across the board – instances, AI, tools, vertical apps – Over 300 enhancements and announcements are impossible to digest, but Google showed its broadest push across the product portfolio. No surprise, Google pushes its AI offerings into more end user friendly tools, raising GSuite sheets to be a BigData Explorer and giving AI tools in the hands of end users. If Google can win here, it can create substantial load for Google Cloud. Plug-ins for developer to build Kubernetes and Serverless (KNative) apps are a smart move to meet developers in their ‘living room’, the IDE. New memory tuned instances (6 and 12 TB) are tuned to accommodate the largest in memory loads (aka SAP customers). Google is working hard to capture more than a relative share of the SAP load and it is well on the way with that effort. Lastly vertical apps are coming, like e.g. a retail API. It will be interesting how Google will go ahead with these vertical AI apps, without getting into the SaaS field (it has already in HCM with Google Hire).

Pichai walks by the liquid cooling TPU Pods

MyPOV

Very few vendors manage to build up a second technology business. One can argue, that Google’s core business, advertisement is not a technology business – but it’s technology that powers it. To some degree Google has take the opposite rout of enterprises – that pick cloud technology to become a software company. Google was a software company and had to build cloud technology to power its software. It gives it a unique stance from an offering DNA, compared to Microsoft – who was / is an enterprise software company needing a cloud platform, and to Amazon / AWS – who was / is a e-retailer who needed a cloud as well. The difference is that Google had to build for global and fast coverage, therefore the Google network rules superior across the field of AWS players. And it had to optimize for general scale – of advertisement, of email, of mobile management and for billions of users. In the first phase of Google Cloud, the vendor failed to realize that its value proposition was too different (though attractive) to get the enterprise on board. In the next phase Google tried to address this with bringing in Diane Greene, but to me Google felt like a two dimensional ‘mouse trap’ – with ‘just’ great IaaS / PaaS and AI / ML. We are getting in the 3rd phase with Thomas Kurian, were certainly enterprise is going to be addressed. I expect also the Google offerings to show more consistency. Lesser noted at Google Next – but in the press, Kurian addressed that Google was ‘outsold’ on personnel level side – with only having about 10% of the salesforce headcount than the two ‘As’. Kurian knows the sales machine at Oracle well, so I expect him to deliver an improved copy of that sales structure.

On the concern side, it is high time for Google to show some success, if it does not want to remain the ‘third cloud’ for a long long time. Multi-cloud capabilities, offered by an IaaS player, coupled with on premises run time, a better way to manage and support open source a great first steps, but they must deliver in customer wins and market share. Too early to tell if Google can pull this off.

But overall an impressive event, Google is making steps into the right directions, now it needs to execute. And Kurian is all about execution. Check my 8 point checklist here.

Don't miss my Twitter Moments - below is the Day #1 Keynote and here is the one of the Analyst Day (if they don’t show up – check here).

More on Google:

Summer 2017 - News Analysis - Google introduces Google Hire - read here
Event Report - Google Next 2017 - Google makes progress - but is it fast enough? Read here
New Analysis – Google enables citizen developers and developers with Google App Maker - read here
First Take - Google enters enterprise software space with Google Jobs API - read here
Event Report - Google I/O 2016 - Android N soon, Google assistant sooner and VR / AR later - read here
First Take - Google Google I/O 2016 - Day #1 Keynote - Enterprise Takeaways - read here
Event Preview - Google's Google I/O 2016 - read here
Event Report – Google Google Cloud Platform Next – Key Offerings for (some of) the enterprise - read here
First Take - Google Cloud Platform - Takeaways Day #1 Keynote - read here
News Analysis - Google launches Cloud Dataproc - read here
Musings - Google re-organizes - will it be about Alpha or Alphabet Soup? Read here
Event Report - Google I/O - Google wants developers to first & foremost build more Android apps - read here
First Take - Google I/O Day #1 Keynote - it is all about Android - read here
News Analysis - Google does it again (lower prices for Google Cloud Platform), enterprises take notice - read here
News Analyse - Google I/O Takeaways Value Propositions for the enterprise - read here
Google gets serious about the cloud and it is different - read here
A tale of two clouds - Google and HP - read here
Why Google acquired Talaria - efficiency matters - read here

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

Google Cloud Next 2019 - Day #1

We had the opportunity to attend ADP yearly user conference “Meeting of the Minds” (MOTM), held from March 31st till April 3rd, 2019. Attendance with over 1100 attendees, the usual attendance of MOTM, held at the Cosmopolitan in Las Vegas. An ideal location for conferences of this size, given the short distances between venue, rooms and entertainment.

Prefer to watch – here is my event video … (if the video doesn’t’ show up – check here)

Here is the 1 slide condensation (if the slide doesn’t show up, check here):

Event Report - ADP Meeting of the Minds 2019 - Wisely, Data Cloud and AI from Holger Mueller

Want to read on? Here you go:

Wisely front and center – The keynote only had one single major product pitch (apart from the perennial success story of the ADP mobile app), the new daily pay capabilities that ADP has acquired with Wisely. Business needs and benefits were well explained, and it was clear that ADP wanted all MOTM attendees go back home with a good understanding on what Wisely can do for them, now that it’s part of ADP. Let’s hope this will help underfinanced and underbanked employees, where there seem to be more than expected these days.

ADP Meeting of the Minds #ADPMOTM Holger Mueller Constellation Research

Politi introduces Wisely

ADP Momentum in Workforce Management –In a separate briefing I learnt more about the ADP traction in Workforce Management that is more significant than frankly I expected. While Time and Attendance capabilities are prominent, and larger customer benefit from the partnership of ADP with Kronos, ADP has carved out a very substantial install base for Workforce Management with 70k+ customers who use not only time management, but also clocks and scheduling. With that install base and ADP’s R&D commitment, ADP has certainly be counted for as a Workforce Management vendor.

Thomas with event stats

New Customer Success Program – Customer Success is vital, especially in the cloud age that is catalyzed by the speed of bad news travelling on social media… and ADP has experienced a small but notable attrition over its past. Evidently management does not want to see that anymore, so a new customer success program is in place, with more dedicated customer success personnel in place. Being in the rollout, it’s to early to judge success in the market and in regards of customer attrition, but kudos for ADP to address one of the weaknesses in its business that have been around for decades.

Cambern with ADP Mobile Priogress

New HR Core and Payroll MIA– Surprisingly, after mentioning both new products – ADP’s new HR Core product Liffion and ADP’s new Payroll (code names ‘Pi’) as the 2018 edition off MOTM – no mention this year. Usually you see a growth curve in customer communication on new products a user conferences, ADP opted for a different course. We know the products are well on the way in beta and production in different geographies, so the decision is hard to understand. The good news for ADP is, in random conversations with MOTM attendees – they do not seem to miss that. But then – do they know that ADP has a great performance management / team management capability with the TMBC assets? A pretty good gig economy solution with WorkMarket? Not mentioning these capabilities and potentially seeing customer look elsewhere is not productive for ADP.

The ADP AI Philosophy

MyPOV

A good user conference for ADP, with happy attendees. Good mixture of product and services vs. entertainment, with a little too much entertainment for my personal taste. Good to see the Wisely acquisition front and center in the keynote and attendees took note. Good to see ADP addressing its ‘efficiency’ problem in customer retention with the new customer success program. Even 5% (a random number I picked) customer churn can be expensive in the cloud era, so it’s good to see ADP addressing this. And ADP keeps the good news under wraps, e.g. it’s momentum in Workforce Management. After the briefing I checked with some colleagues, it’s totally possible I missed something here, but they were equally surprised. As much as I admire comeback and solid product development, some level of marketing, roadmap, product updates need to happen … before 70k+ customers are live on a key business capability.

On the concern side, ADP is to shy to give ADP MOTM attendees the product updates that they deserve. A roller coaster event-based communication strategy like on Liffion and PI does not make sense. The irony is that it usually predicts product issues and delays, and that is not the case for ADP at the moment. When the cat is out of the bag, you need to keep talking about how it is doing, developing etc. One of the big mysteries of my analyst career.

But overall a good event for ADP, customers are happy and look forward to use and adopt new capabilities in the ADP Data Cloud (AI was another push at MOTM) and realize what they can do with Wisely. I guess it’s a step at a time and ADP wants to pick the steps customers can and should take.

MyPOV

A good event for Ultimate, that is also pushing out its AI assistant Xander to more capabilities, e.g. (Continuous) Performance Management, and candidate matching in Recruiting. Xander has been good for Ultimate customers, helping them running HR more successfully. Attendees were positive on the new capabilities and enjoyed the new venue. Ultimate has probably the most engaged conference attendees when it comes to participation in both educational and recreational activities of a vendor conference. Good to see the engagement.

On the concern side, Ultimate needs to find the development speed to move all its offerings to a consistent UX. The ‘gamble’ of a mobile only approach may work out, but the next year will have to show if Ultimate can extend the mobile capabilities beyond employee, manager and (some) HR admin capabilities, of will have to go back to fundamental renovation / innovation of the browser UX. A leaner architecture is key, and we will see if Ultimate has the discipline to deliver towards that. That will make it easier to run in hybrid mode, though we would like a vendor not to spend on inhouse data center re-freshs in 2019.

But overall a positive event, good to see Ultimate is still Ultimate, good to see the continued expansion of Xander, which continues to deliver value for Ultimate customers. Good to see the portfolio extension with HR Services, now it will come back to see how much market penetration Ultimate can achieve with the capability in its core North American market. Stay tuned.

What are the key trends?

For a product to make it to 10 years, it must have gone with the trends of time, in this case staying with the computing trends that power enterprise workloads. There are a number of trends that are changing the enterprise computing landscape – let's look at the most pertinent ones:

Heterogeneous Computing Demands. CxOs are confronted with rapidly changing computing demands. Barely having satisfied the business need for big data, the computing requirements that CIOs must answer stretch from support for machine learning to speech recognition for internal and external digital assistant / chatbot solutions, all the way to the edge of the enterprise. New computing platforms have entered the data center—for instance, with the advent of large GPU racks to run machine learning. A never-before-seen platform diversity manifests itself at the edge of the enterprise to support the Internet of Things (IoT). And the pace of change is not slowing down, as shown by new demands for additional workforce support (e.g., augmented/mixed/virtual reality) and new user experience support (e.g., holographic displays).
The Need for a Single Control Pane. The era of CxOs simply accepting that new products bring a new control pane is history. CxOs operating next-generation applications[i] must run them as efficiently as possible, via a single control pane. This not only allows for more efficiency to manage infrastructure but also is the best way to manage a heterogeneous landscape effectively. Ramping down and ramping up resources as demand requires cannot be done from a "zoo" of instrumentation. At the same time, the automation of resource scaling is essential, so humans can focus on oversight instead of spending time and energy on operational tasks.
Degrees of Cloud Skepticism. Although many next-generation application use cases are best (and sometimes only) operated in the cloud, there is still a degree of skepticism over computing in the public cloud. It ranges from rational challenges (such as whether IaaS vendor data instances are available inside of a necessary jurisdiction) to reasonable challenges (hardware write-downs and connections to existing on-premises computing resources, such as mainframes) to less rational concerns (for instance, regarding data safety). Nonetheless, it means that CIOs need to implement and operate workloads in local data centers for at least the next decade.

Figure 1 – The six Next Generation Computing Platform Trends

Source – Holger Mueller, Constellation Research

Other relevant trends are the pressure to achieve high data center utilization, the rising complexity of the IT organizations, and compliance pressure.

What is it?

Oracle Exadata X8 is an engineered appliance / server system that has been engineered to run Oracle workloads best. First and foremost, the Oracle database, but also Oracle's portfolio of SaaS applications.

Oracle has continued to upgrade Oracle Exadata over the decade of its existence. Key recent innovations on the hardware side are flash memory to support in-memory columnar storage, hot swappable flash storage and 25 GigE client networking. On the software side Oracle has ensured that Exadata works best with the software innovations of the Oracle Autonomous Database, the support of automatic indexing and on the services side the support for Exadata cloud service.

Figure 2 – The capability growth of Oracle Exadata

Source: Oracle

What sets Oracle X8 apart from other next generation compute planes is the 100% Identicality between running Exadata on premises and running Exadata in the Oracle Cloud. No other vendor has the same physical hardware on both sides of the computing equation between on premises and the public cloud.

High Identicality gives CxOs the confidence that they can move compute loads across the compute architectures, across on premises and the cloud without having to make any changes. Identicality on the hardware side ensures that there is no residual risk of hardware related incompatibility that is possible in purely software abstraction solutions. This matters to enable key next generation computing best practices like bursting workloads and achieving cross platform high availability.

Why does it matter?

There as number of reasons why CxOs care about viable Next Generation Computing platforms:

Old-Guard Vendors Are No Longer Viable

Humans are driven by habits, and CxOs are no exception. If they could still procure all of their computing needs from the vendors they dealt with in the 1990s, the majority of CxOs would likely do so. The problem with these "old-guard" vendors is that they have failed to innovate, are no longer viable from a cost perspective and often have switched to business models that are perceived as extortion. Therefore, innovation and commercial necessities require CxOs to deal with a new set of computing vendors.

Cost Pressure

For decades now, CxOs have been asked to do more with less, especially on the IT side. For a long time, the benefits of Moore's Law have bailed out CIOs because they were able to offer better computing power at the same costs or equal computing at lower costs. But Moore's Law is running out of runway, and at the same time new next-generation application use cases require innovative new platforms that charge a premium.

The Innovation Imperative

While software is eating the world, enterprises are turning into software companies, and, as such, they need to innovate faster than ever. This makes CxOs look for winning platforms and ideally allows them to move workloads as seamlessly across them as possible. As enterprises flock to platform-as-a-service (PaaS)^{^[ii]} products to help them build these next-generation applications,^{^[iii]} workload portability is a key acquisition criterion and overall success factor for the selection of a PaaS^{^[iv]} platform.

Additionally, CxOs face challenges due to lack of skilled workers and contractual challenges that limit them to outdated and older platforms.

Figure 3 – The Five Buyer Challenges

Source: Holger Mueller, Constellation Research

Advice for CxOs

The following recommendations can be made for CxOs looking at their computing architecture:

Enable enterprise acceleration. Enterprises need to move faster than ever before, and IT/computing infrastructures cannot remain the shackles on agility that they have been in the past. This is why CxOs look for next-generation computing platforms that allow them to transfer workloads from on-premises to the cloud and vice versa without having to make changes. This is a key strategy to help the technical side of an enterprise contribute to the overall objective and necessity of enterprise acceleration.

Select companies that have the greatest capability of identicality. Identicality is the key to workload portability. The higher the identicality between an on-premises architecture and a cloud architecture, the better the chances to move workloads seamlessly. This argument is intuitively clear to CxOs leading the transformation, and platforms with high identicality are therefore clearly preferred. Even better when vendors state that they designed for identicality and want to keep identicality high — as high as technically feasible. As stated in this report, Oracle excels at Identicality between Exadata on-premises, Oracle Exadata Cloud Service, Oracle Autonomous Database and the Oracle Exadata Cloud at Customer platforms.

Evaluate Oracle Exadata as existing Oracle customers. As most customers run the Oracle Database in one way or another, it is important that they familiarize themselves with the most prominent member of the Oracle Cloud at Customer product family, Oracle Exadata Cloud at Customer. Being able to lower TCO, reduce support and maintenance, fit sizing to the average load of the machine, burst to the cloud for peaks and transfer loads between Oracle Cloud and on-premises are substantial benefit drivers that CxOs cannot ignore. Experienced Oracle customers know that the best deals are usually available in Q4.

Consider Oracle's option as a prospect. Database and tech stack migrations are challenging, so non-Oracle customers will look at Oracle Cloud at Customer with some distance. The benefits of Oracle Exadata are substantial, though, and CxOs need to talk with their respective cloud and technology stack vendors about what they can do in this regard. Should the projected gap of future roadmap become too large, and the potential cost savings with Oracle Exadata substantial enough, it is time to pay attention, but consider a potential migration.

Take a stance on commercial prudence. No matter which vendor, enterprises need to make sure they pay for value. For Oracle Exadata, CxOs need to pay attention that licenses and services (for instance, costs to burst to the cloud) are still providing their enterprise with an attractive TCO. As with all services-related offerings, prices will fluctuate, need to be contractually agreed as long as desired and need to be constantly monitored to avoid negative commercial surprises.

Oracle has invested for a long time, and practically gave up on short-term, incremental growth areas in the marketplace to get its systems engineered from the silicon all the way to the SaaS application suite products together in one technology stack. Oracle has always kept the ability to deploy the same infrastructure on-premises, likely to anticipate customer demands as well as knowing that Oracle's IaaS offering was the last of the Oracle "as-a-service" products to reach maturity. This has put Oracle Exadata in a favorable position compared with the competition for next-generation computing architectures because it gives CxOs the highest flexibility to fluidly deploy workloads across the cloud and on-premises.[v]

MyPOV

It is good to see enterprise IT vendors pursuing diverse strategies, and we can see the major players following distinct strategies. Diverse strategies mean different value propositions for enterprises, and that means more choice, which consequently gives CxO more options to differentiate and accelerate their enterprise with information technology.

The current three approaches are:

The software only approaches that Google Cloud (with Anthos) and IBM (with IBM Cloud Private) pursue.
The partner hardware strategy that Microsoft is using with Azure Stack. (It is too early to know where AWS will end up with Outposts).
And there is Oracle who is building the vertically integrated product stack from silicon, across all ISO / OSI layers to the user click in a SaaS application.

Oracle Exadata X8 is the manifestation of the merits of that strategy, as Oracle has designed Exadata X8 highest Identicality, so that it can run the Oracle Autonomous Database in the best and most efficient way from on-premises to the Oracle Cloud. It is unlikely the competition will even make the attempt that they can run the Oracle Database better than Oracle. Effectively this means that Oracle Database customers will have compelling reasons to remain … Oracle customers.

So for now it is congratulations to Oracle with Oracle Exadata X8 – we will see soon how well the market will receive this new offering.

[i] Holger Mueller, "The Era of Infinite Computing Triggers Next-Generation Applications," Constellation Research, June 1, 2018. https://www.constellationr.com/research/era-infinite-computing-triggers-next-generation-applications

[ii] For more best-practice considerations for PaaS, offerings, see: Holger Mueller, "As PaaS Turns Strategic, So Do Implementation Considerations," May 9, 2018. https://www.constellationr.com/research/paas-turns-strategic-so-do-implementation-considerations

[iii] For more on next-gen applications and PaaS offerings, see: by Holger Mueller, "Why Next-Gen Apps Start with a Next-Gen Platform as a Service," April 5, 2018. https://www.constellationr.com/research/why-next-gen-apps-start-next-gen-platform-service

[iv] For a Constellation ShortList™ on PaaS vendors, see: Holger Mueller, "Constellation ShortList™ PaaS Tool Suites for Next-Gen Apps," August 22, 2018. https://www.constellationr.com/research/constellation-shortlist-paas-tool-suites-next-gen-apps

[v] For more details see: Holger Mueller, "Constellation ShortList™ Next-Generation Computing Platforms" February 12^th 2019, https://www.constellationr.com/research/constellation-shortlist-next-generation-computing-platforms

We had the opportunity to attend ADP’s yearly analyst day, held from September 12th till 13th at the vendor’s innovation labs in New York City. As usual well attended by the analyst and influencer community.

Prefer to watch – here is my event video … (if the video doesn’t’ show up – check here)

Here is the 1 slide condensation (if the slide doesn’t show up, check here):

Progress Report - ADP Analyst Day 2019 - Products get stronger - Now its about adoptoin from Holger Mueller

Want to read on? Here you go:

ADP has never been so strong on product. Well that is for my time as an industry analyst, or 6+ years. What was an amalgamation of numerous products running on even more payrolls, with a weak talent management suite back in 2013, has changed substantially, if not dramatically. In the last six years ADP has re-invigorated its innovation, starting with a new UX, a successful mobile Application (top 5 in the App Stores), a move to APIs, the establishment of what is the most successful marketplace in HCM, and brought its talent management up to par. Acquisitions like TMBC, Workmarket and Celergo have improved the product portfolio and reach. And then ADP shared almost two years ago that it has created a new payroll capabilities (code named PI) and is now unveiling its new HR Core (code named ‘Liffion’). That’s a busy last six years and one of the most productive product development efforts in the HCM industry.

A new approach to HR Core. ADP has (rightfully) realized that work in enterprises gets done in teams. But making teams the foundation of its new HR Core product is a radical departure from the traditional foundational DNA of HR Core systems. Few of them are being built these days, and then, usually with the more administrative and self-service enabling DNA. ADP now has the chance to redefine what HR Core really needs to be – the one place to go for people in an enterprise to get work done. Apart from easy team creation and the people directory capabilities, ADP’s NextGen HCM (as the vendor calls it) has integration to the popular chat platforms and is integrated into the ADP Marketplace. Important, but still remarkable, is that teams can span people inside and outside of the traditional enterprise demarcations.

New Payroll to reach the 100s in 2020. ADP has done significant R&D on its new payroll engine, also formerly also know as PI. It is completely rules driven, has been validated in Australia and the US and has a few dozen customers live on the product. We saw an end user (or payroll manager) friendly rules editor that will put payroll managers in charge of owning their payroll success, without having to rely on technical resources to make changes. The payroll team also showed something which has been the ‘dream’ of many payroll people – the ability to setup a payroll based on knowing its artefacts, the paychecks. Some very encouraging insights that with a limited number of paychecks (scanned) a payroll can be setup to very high confidence levels. But the most important news is that ADP is now confident enough of its new payroll to roll it out to 100s of customers next year, and equally push its country support further out by then.

No Code with Mini Apps. ADP showed Mini Apps first two years ago and has now matured the platform and process to the level of making this key capability available to customers. Being able to create little automation pieces for selected areas of HCM is a key demand by enterprises. Allowing this to be achieved by reasonably technical people, that still are not programmers, is a key enabler for enterprises to achieve what matters the most, enterprise acceleration. Moreover, the empowerment of users to build the automation hat their team / department needs – and that they would likely never get from their IT department – is very valuable. With its graphical / flow-based programming approach, ADP fulfills this demand very well. Mini Apps are easy and fast to be built and more importantly, deployed as well.

New data insights coming. ADP has an important insights business, effectively Data-as-a-Service, with its salary data and benchmarking capabilities. We learnt a lot about the inner workings of the business and about the plans on where it is heading. With the ADP Data Cloud, ADP has also one of the very few BigData offerings in the HCM market available. The next key step for the ADP Data Cloud is to add business data, as HR data by itself is of little meaning. The value is to correlate HR data with business performance and glean insights from the combination. Will be interesting what SAP will provide in this area soon.

MyPOV

ADP is in its best spot when it comes to product strength yet. It has done the investment, the products seem ready, now it’s time to get them in the hands of customers. If ADP manages to re-position HR Core right with a team-based approach, it may be able to force the whole HCM industry into a re-write of a key HCM capability. For now, it is a great and plausible idea and concept – that needs to be validated with 100s of customers and prospects.

On the concern side, it is now for ADP to show that it not only can build very good and visionary products, but also sell them into the market – to both prospects and the install base. This is always the 2nd step after building product, and with an industry mostly building product (e.g. payroll), ADP is in the lead in terms of maturity and now needs to convert that lead into customers and revenue. ADP will also have to ramp up its partner efforts and move from its largely inhouse implementation to a partner driven model. This allows ADP to keep focusing investment into products.

But for now, it a good problem to have. ADP has a great marketing and sales machine. How they ramp up and get customers successful will now be key for the next 4-6 quarters.

Want to learn more? Checkout the Wakelet below (if it doesn’t show up – check here).

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

What Are the Key Trends?

There are a number of trends that are changing the enterprise computing landscape now, so let’s look at the most pertinent ones:

Heterogeneous computing demands. CxOs are confronted with rapidly changing computing demands. Barely having satisfied the business need for big data, the computing requirements that CIOs must answer stretch from support for machine learning to speech recognition for internal and external digital assistant/chatbot solutions, all the way to the edge of the enterprise. New computing platforms have entered the data center—for instance, with the advent of large GPU racks to run machine learning. A never-before-seen platform diversity manifests itself at the edge of the enterprise to support the Internet of Things (IoT). And the pace of change is not slowing down, as shown by new demands for additional workforce support (e.g., augmented/mixed/virtual reality) and new user experience support (e.g., holographic displays).

Data Center Utilization. As workloads move from enterprise data centers to public cloud vendors, CIOs struggle to reach the level of utilization they intended when originally planning and investing in their data centers. One part of the challenge is the business practice of letting divisions choose their automation tools, which results in a lower degree of predictability for available workloads in on-premises data centers. An additional hurdle for CIOs is that physical infrastructure requests are moving slower and have a much longer-lasting financial impact. Data center utilization can quickly change from full capacity to two-thirds of utilization. Dropping a single server-refresh cycle will create that scenario, which CxOs experience as they move workloads to the public cloud.

The Need for a Single Control Plane. The era of CxOs simply accepting that new products bring a new control plane is history. CxOs operating next-generation applications[i] must run them as efficiently as possible, via a single control plane. This not only allows for more efficiency to manage infrastructure but also is the best way to manage a heterogeneous landscape effectively. Ramping down and ramping up resources as demand requires cannot be done from a “zoo” of instrumentation. At the same time, the automation of resource scaling is essential, so humans can focus on oversight instead of spending time and energy on operational tasks.

Figure 1. Six Next-Generation Computing Platform Trends

Source: Constellation Research

Other relevant trends are the pressure to achieve high data center utilization, the rising complexity of the IT organizations and compliance pressure.

What Is It?

Oracle Exadata X8M is an engineered appliance/server system that has been engineered to run Oracle workloads best—first and foremost, the Oracle Database, but also Oracle’s portfolio of platform-as-a-service (PaaS) and software-as-a-service (SaaS) applications.

The Oracle Exadata team is not taking breaks. Oracle has followed up Exadata X8[ii], released in Spring of 2019, with Oracle Exadata X8M, bringing three key innovations to Exadata:

1. RDMA over Converged Ethernet (RoCE) for networking.

2. Persistent memory for the introduction of a new tier of data caching.

3. KVM as its new hypervisor.

Moreover, Oracle has improved the specs per rack of Oracle Exadata X8M

HDD Storage: 3.0 PB of raw disk

Flash: 920 TB of flash memory and

Persistent memory: 27 TB of persistent memory.

The result is the world’s fastest database machine, that enterprises can take advantage of – without any code changes to their applications.

Better SQL performance: 2.5x faster than Oracle Exadata X8. 16 million SQL readIOPS
Lower latency: 10x faster than Oracle Exadata X8. 19 μs
Lower costs: More workloads on fewer resources.
Faster Applications: Better performance of the most critical workloads in fraud, IoT, Machine Learning etc.

Figure 2. The Oracle Exadata X8M Benefits

Source: Oracle

What sets Oracle X8M apart from other next-generation compute planes is the 100% Iidenticality between running Exadata on-premises and running Exadata in the Oracle Cloud. No other vendor has the same physical hardware on both sides of the computing equation between on-premises and the public cloud.

High Identicality gives CxOs the confidence that they can move compute loads across the compute architectures, across on-premises systems and the cloud, without having to make any changes. Identicality on the hardware side ensures that there is no residual risk of hardware-related incompatibility that is possible in purely software abstraction solutions. This matters to enable key next-generation computing best practices such as bursting workloads and achieving cross-platform high availability.

Why Does It Matter?

There are a number of reasons why CxOs care about viable next-generation computing platforms:

Old-Guard Vendors Are No Longer Viable
Humans are driven by habits, and CxOs are no exception. If they could still procure all of their computing needs from the vendors they dealt with in the 1990s, the majority of CxOs would likely do so. The problem with these “old-guard” vendors is that they have failed to innovate, are no longer viable from a cost perspective and often have switched to business models that are perceived as extortion. Therefore, innovation and commercial necessities require CxOs to deal with a new set of computing vendors.

Employee Scarcity and the Skills Shortage
The first world is quickly running out of hands because of unfavorable aging dynamics. Enterprises in general and IT departments more specifically are not immune to these changes, and CxOs find it increasingly harder to find employees with the right skills.[iii] Enterprises often pay regal amounts to IT outsourcing firms to solve this challenge. And enterprises that do not outsource find it increasingly hard to train and improve the skills of their workforce—a good reminder that no enterprise function is being more disrupted by the cloud than IT.

The Innovation Imperative
While software is eating the world, enterprises are turning into software companies, and, as such, they need to innovate faster than ever. This makes CxOs look for winning platforms and ideally allows them to move workloads as seamlessly across them as possible. As enterprises flock to platform-as-a-service (PaaS)[iv] products to help them build these next-generation applications,[v] workload portability is a key acquisition criterion and overall success factor for the selection of a PaaS[vi] platform.

Additionally, CxOs face challenges due to lack of skilled workers and contractual challenges that limit them to outdated and older platforms.

Figure 3. The Five Buyer Challenges

Source: Constellation Research

Advice for CxOs

Thefollowing recommendations can be made for CxOs looking at their computing architecture:

Enable enterprise acceleration. Enterprises need to move faster than ever, and IT/computing infrastructures cannot continue to be the shackles on agility that they have been in the past. This is why CxOs look for next-generation computing platforms that allow them to transfer workloads from on-premises to the cloud and vice versa. With architectural identicality and workload mobility from on-premises to the cloud as well as higher performance, Oracle Exadata X8M addresses exactly this need.

Don’t compromise on performance, evaluate Exadata X8M. CxOs that experience performance bottle necks in their mission critical applications, need to take a look at Oracle Exadata X8M and see what the fastest Oracle Database platform can solve for them. Not having to do any code changes brings a key advantage for a quick adoption and rollout of the new platform.

Select vendors that have the greatest identicality capability. Identicality is the key to workload portability. The higher the identicality between an on-premises architecture and a cloud architecture, the better the chances to seamlessly move workloads. This argument is intuitively clear to CxOs leading the digital transformation, and platforms with high identicality are therefore clearly preferred. It’s even better when vendors state that they design for identicality and want to keep identicality high—as high as technically feasible. As stated in this report, Oracle excels at identicality between Exadata on-premises, Oracle Exadata Cloud Service, Oracle Autonomous Database and the Oracle Exadata Cloud at Customer platforms.

Evaluate Oracle Exadata X8M as existing Oracle Database customers. As most enterprises run the Oracle Database to support critical applications it is important that they familiarize themselves with the most prominent member of the Oracle Exadata product family, Oracle Exadata X8M. Better performance has not caused negative feedback to CxOs, but CxOs need to determine if they need the additional performance. CxOs also need to look at database consolidation as a driver to adopt Oracle Exadata X8M. Of course, experienced Oracle customers know that the best deals are usually available in the fourth quarter.

Consider Oracle’s Exadata offerings as a prospect. Database and tech stack migrations are challenging, so non-Oracle customers will look at Oracle Exadata Cloud at Customer from some distance. The benefits of Oracle Exadata are substantial, however, and CxOs need to talk with their respective cloud and technology stack vendors about what they can do in this regard. Should the projected gap of the future road map become too large, and the potential cost savings with Oracle Exadata substantial enough, it is time to pay attention—but consider a potential migration. Oracle Exadata X8M pushes that equation further out, increasing the performance for the Oracle Database, while lowering its TCO.

Take a stance on commercial prudence. No matter the vendor, enterprises need to make sure that they obtain the value they seek. For Oracle Exadata, CxOs must pay attention that licenses and services (for instance, costs to burst to the cloud) are still providing their enterprise with an attractive TCO. As with all services-related offerings, prices will fluctuate, need to be contractually agreed as long as desired and must be constantly monitored to avoid negative commercial surprises.

Oracle has invested for a long time, and practically gave up on short-term, incremental growth areas in the marketplace to get its systems engineered from the silicon all the way to the SaaS application suite products together in one technology stack. Oracle has always kept the ability to deploy the same infrastructure on-premises, likely to anticipate customer demands as well as knowing that Oracle’s IaaS offering was the last of the Oracle “as-a-service” products to reach maturity. This has put Oracle Exadata in a favorable position compared with the competition for next-generation computing architectures because it gives CxOs the highest flexibility to fluidly deploy workloads across the cloud and on-premises.[vii]

MyPOV

Oracle keeps pushing its 10 year old Exadata product line forward, at an accelerated pace, with two Exadata platforms coming out in summer 2019 – Oracle Exadata Cloud at Customer Gen2 as well as Oracle Exadata X8M. With that Oracle keeps investing in its strategy of enabling identical machines and platforms that run both in the Oracle Cloud Infrastructure (OCI) and are equally available for customers to run on premises in their corporate data centers.

It is good to see enterprise IT vendors pursuing diverse strategies, and we can see the major players following distinct strategies. Diverse strategies mean different value propositions for enterprises, and that means more choices, which consequently gives CxOs more options to differentiate and accelerate their enterprise with information technology.

The current three approaches are:

The software only approaches that Google Cloud (with Anthos) and IBM (with IBM Cloud Private and post Red Hat acquisition, more Red Hat assets) pursue.

The partner hardware strategy that Microsoft is using with Azure Stack. (It is too early to know where AWS will end up with Outposts).

And there is Oracle, which is building the vertically integrated product stack from silicon, across all ISO/OSI layers to the user click in a SaaS application.

The Oracle Exadata group of products is the manifestation of the merits of that strategy, as Oracle has designed Exadata X8M in such a way that it is de facto the best performing platform to run the Oracle Database. The introduction of innovations like persistent memory (PMEM) and RDMA over Converged Ethernet (RoCE) are key enablers for the next generation of performance of the Oracle Database. PMEM effectively introduces another level of data handling, expanding the traditional RAM, Flash and HDD troika to a quartet, insering PMEM between RAM and Flash. And RoCE gives enterprises in memory, cross server performance gains, while using familiar Ethernet protocols[HM9] .

It is unlikely competitors will even attempt to run the Oracle database better than Oracle. Effectively, this means that Oracle database customers will have compelling reasons to remain … Oracle customers.

So, for now, congratulations to Oracle on Oracle Exadata X8M—we will see soon how well the market will receive this new offering.

[i] Holger Mueller, “The Era of Infinite Computing Triggers Next-Generation Applications,” Constellation Research, June 1, 2018. https://www.constellationr.com/research/era-infinite-computing-triggers-next-generation-applications
[ii] For more on Oracle Exadata X8, see: Holger Mueller, “Oracle Exadata Powers Next-Gen Computing”, June 12th 2019, https://www.constellationr.com/research/oracle-exadata-powers-next-gen-computing
[iii] For the people-leader perspective on the skills shortage and the need for enterprise acceleration, see: Holger Mueller, “Why People Leaders Must Embrace Enterprise Acceleration,” July 3, 2018. https://www.constellationr.com/research/why-people-leaders-must-embrace-enterprise-acceleration
[iv] For more best-practice considerations for PaaS, offerings, see: Holger Mueller, “As PaaS Turns Strategic, So Do Implementation Considerations,” May 9, 2018. https://www.constellationr.com/research/paas-turns-strategic-so-do-implementation-considerations
[v] For more on next-gen applications and PaaS offerings, see: Holger Mueller, “Why Next-Gen Apps Start with a Next-Gen Platform as a Service,” April 5, 2018. https://www.constellationr.com/research/why-next-gen-apps-start-next-gen-platform-service
[vi] For a Constellation ShortList™ on PaaS vendors, see: Holger Mueller, “Constellation ShortList™ PaaS Tool Suites for Next-Gen Apps,” August 14, 2019. https://www.constellationr.com/research/constellation-shortlist-paas-tool-suites-next-gen-apps-2
[vii] For more details, see: Holger Mueller, “Constellation ShortList™ Next-Generation Computing Platforms,” August 28th, 2019. https://www.constellationr.com/research/constellation-shortlist-next-generation-computing-platforms-0

Earlier this year Constellation published its Market Overview for HCM Suites. Currently I am in the midst of writing the Offering Overviews of the eight vendors that were part of the Market Overview. Which leads to some reflection on what enterprises want (and need) from their HCM Suites.

But let’s look at the market trends first, and then we look at what matters to buyers and to finish, what are the selection criteria that Constellation sees being used for HCM Suites.

Market Trends

Constellation identified seven distinct market trends that shape the HCM market at the moment. Enterprises see these trends in the market place and need their HCM vendors to respond. Here are three of the most prominent ones (of a total of seven):

“Always-on” Payroll Is the New Normal
The best practices of running payroll when ready and needed are by now archaic. Real-time payroll information has quickly become standard for both employees and managers who want and need to make smart payroll-related decisions. The “always-on” payroll allows better transparency into pay-related information and processes. Benefits for all constituents in the process are tangible, so it’s good to see technology progress—largely powered by cheaper computing in the cloud—enabling these next-level best practices.[i]

Voice Is the New User Experience (UX)
The only workers in an enterprise who spend substantial time in an HR application are HR professionals. Many workers do not have access to a computer keyboard to run the functions they need from their HCM system. And overall, voice is a much more powerful means of communication than keyboards. Consequently, voice is becoming the new UX for workers, starting with employee self-service, time and attendance automation and other high-frequency transactions.

Employee Experience Matters Again
For the longest time, enterprises knew that the employee experience is important but found it convenient to neglect the topic. In the last couple of years, the conversation has thankfully been restarted, bolstered by the argument that a better employee experience leads to happier employees, and happier employees lead to higher customer satisfaction. Nobody can argue with the last goal, but the result is that HCM vendors need to meet workers where they work, and that’s not in the HCM application. Bringing at least employee self-service capabilities into productivity applications such as email and chat will be a start for 2019.

Figure 1 – Seven Market Trends Defining HCM Systems for 2019 and Beyond

Source: Constellation Research

Buyer Challenges

When enterprises look for HCM Suites, they face a number of challenges. Constellation has identified size in total, here are three of the more prominent ones:

Employee Scarcity and the Skills Shortage
The first world is quickly running out of hands because of unfavorable aging dynamics. Enterprises in general are not immune to these changes, and people leaders know that line-of-business executives find it increasingly hard to find employees with the right skills.[ii] The lack of qualified employees forces people leaders to look again or more at HR services and BPO.

The Innovation Imperative
Enterprises are turning into software companies, and they need to innovate more quickly than ever. As enterprises are looking for platforms, people leaders must show that HCM software has platform-as-a-service (PaaS)[iii] capabilities to allow their enterprise to integrate and extend HCM processes as well as to build new HCM capabilities—if necessary, for enterprise differentiation. The need for building next-generation applications[iv] in HCM increases by the year, and the selection of a PaaS[v] platform is critical for that endeavor.

Global Business
Business is becoming more global at an accelerated pace. That poses substantial challenges for people leaders in terms of visibility, automation and compliance. Hence, enterprises want vendors that can automate more of their global people systems—either natively or through partnerships. A special emphasis is on payroll and pay visibility because people cost is the largest operational cost for most enterprises, and payroll disruptions are pitfalls for employee morale and engagement.[vi]

Figure 2. Five Areas of Buyer Challenges for HCM Suites

Source: Constellation Research

Selection Criteria

When enterprise successful have overcome the challenges associated with a selection process, the select based on the following six criteria. We highlight three important ones:

Suite Synergies
People leaders dread little more than being made responsible for a failure of integration between two systems they selected in the past. And the integration challenges in the overall HCM automation portfolio remain daunting. Therefore, people leaders strongly prefer to select suite-level products because they provide vendor-provided integration between the different HCM modules of a suite. When integration fails, it’s still not good, but the vendor is to blame—and, more importantly, responsible to fix the issue ASAP.

Usability
People who use HCM systems do so sporadically at best. Many users don’t need to access and use their HCM system for several months at a time. The more important factor is a high level of usability, especially at the employee level, because it allows workers to complete their few tasks swiftly during their rare and infrequent usage of the HCM system. The more a vendor can show support for these very casual users, the better they will fare in selections.

Ease with Vendor
Vendor selection success hinges substantially on the overall level of ease an enterprise has with that vendor. HCM selections are no different, and decision-makers as well as their overseers (usually the CFO, CEO and the board) must feel at ease with the selected vendor.

Figure 3. Six Criteria for HCM Suites

Source: Constellation Research

Recommendations

There is no guaranteed way for enterprises to select the right HCM Suite for their needs, but here are some selection process proven, over and over validated recommendations:

But here are some general recommendations:

Stay with your vendor. The biggest synergies and the lowest risk for an HCM offering can only be achieved when staying with your vendor because only the vendor could provide the out-of-the-box offerings fully integrated. Becoming the system integrator for different HCM products can work but is a riskier strategy.

Payroll remains a must-have. The ability to run payroll remains table stakes for enterprises running HCM applications. When payroll does not work, the enterprise comes to a screeching halt, with long-term reputation and motivational damage. Although payroll is often considered a given, people leaders must ensure that the selected vendor has both the right scope and track record for their respective enterprise.

Determine your enterprise’s HCM automation needs beyond standards. In this era of business uncertainty, enterprises need to experiment and built their own automation, not excluding HCM automation. Therefore customization and better PaaS capabilities of a vendor are key for a long-term successful relationship with the vendor as well as an enterprise’s ability to create its own best practices.

Create a five-year plan for the remaining on-premises HCM assets. The shift from capex to opex is in full swing. Don’t underestimate the draw of the cloud, and don’t end up with outdated on-premises software that’s at the end of support. Few things are costlier for an enterprise in the era of digital disruption[vii] than badly allocated, inflexible capex, as in maintenance payments for on-premises licenses with inadequate return.

Realistically assess personnel demand and complexity. History is full of CxOs who overestimated the learning speed of their employees. Cloud-based HCM products are typically more intuitive and easier to learn than the traditional on-premises products. Even the largest enterprise can fall under that challenge, so CxOs need to keep an active eye on managed-service offerings, ideally ones offered directly by their HCM vendor (because service providers struggle with improving skills as well).

Assess personal and enterprise-wide comfort levels. There is both a personal and an enterprise comfort level to be weighed with any of the eight vendors. Both need to be in sync to a close-enough degree because a disconnect between the two will not work when things get rough. Decision-makers and the overall enterprise must be comfortable with a vendor selection. Plan for rough patches, so comfort levels at selection time are key to make it through those challenges.

Get going. New technologies like AI, big data and the cloud change enterprise software forever. Enterprises cannot be left behind with old, outdated and subpar HCM applications. People leaders must actively evaluate the innovation trajectory of their current vendors as well as keep up to date what state of the art is and know what it could mean for their enterprises.

The Constellation Market Overview that is the research side underlying this document can be found here on the Constellation Research website.

What selection criteria have you seen being important and what recommendations would you make? Would love to hear from you.

Some more Musings blog posts, with a focus on the Future of Work:

Musings - Enterprise Acceleration - and what every HR Leader should know about it - read here
Musings - Time to bring back the software user conference - read here
Musings - Happy 10th Brthday iPhone - afraid the next 10 years will be harder - read here
Musings - The Privacy Shield is real - what are the CxO repercussions? Read here
Musings - The Bots are coming to your conversation - what are the implications? - read here
Musings - We are entering the age of the Über Super Computer - read here
Musings - Retail is the breeding ground for NextGen Apps - read here
Musings - Time to re-invent email – for real! Read here
Musings - What are true Analytics - a Manifesto. Read here

Find more coverage on the Constellation Research website here, find tweet collections of events here and checkout my magazine on Flipboard and my YouTube channel here.

[i] For an overview of North American payroll vendors, see the Constellation Shortlist: Holger Mueller, “Constellation ShortList™ Payroll for North American SMBs,” Constellation Research, August 29, 2018. https://www.constellationr.com/research/constellation-shortlist-payroll-north-american-smbs-0

[ii] For the people-leader perspective on the skills shortage and the need for enterprise acceleration, see: Holger Mueller, “Why People Leaders Must Embrace Enterprise Acceleration,” Constellation Research, July 3, 2018. https://www.constellationr.com/research/why-people-leaders-must-embrace-enterprise-acceleration

[iii] For more best-practice considerations for PaaS offerings, see: Holger Mueller, “As PaaS Turns Strategic, So Do Implementation Considerations,” Constellation Research, May 9, 2018. https://www.constellationr.com/research/paas-turns-strategic-so-do-implementation-considerations

[iv] For more on next-gen applications and PaaS offerings, see: Holger Mueller, “Why Next-Gen Apps Start with a Next-Gen Platform as a Service,” Constellation Research, April 5, 2018. https://www.constellationr.com/research/why-next-gen-apps-start-next-gen-platform-service

[v] For a Constellation ShortList™ on PaaS vendors, see: Holger Mueller, “Constellation ShortList™ PaaS Tool Suites for Next-Gen Apps,” Constellation Research, August 22, 2018. https://www.constellationr.com/research/constellation-shortlist-paas-tool-suites-next-gen-apps

[vi] For a Constellation ShortList™ on global HCM suites, see: Holger Mueller, Constellation ShortList™ Global HCM Suites,” Constellation Research, August 15, 2018. https://www.constellationr.com/research/constellation-shortlist-global-hcm-suites-2

[vii] For an example of digital transformation, see: Holger Mueller, “Lufthansa Digitally Transforms the Workplace for Flight Managers,” Constellation Research, February 27, 2018. https://www.constellationr.com/research/lufthansa-digitally-transforms-workplace-flight-managers

This morning, news broke, originally over the Wall Street Journal, that Kronos and Ultimate Software are merging. Long rumored, asked for and denied, this merger is now happening. Time for a merged Market Move and News Analysis blog post.

So let's dissect the press release in our customary style, it can be found here:

Creating Company Valued at $22 Billion
Merger brings together world-renowned best places to work, with plans to add 3,000 employees over three years
LOWELL, Mass. and WESTON, Fla. , Feb 20, 2020
Kronos Incorporated and Ultimate Software today announced that they have entered into a definitive merger agreement to form one of the world’s largest cloud companies. By bringing together two industry leaders, the transaction will create the world’s most innovative human capital management (HCM) and workforce management company to help organizations across all industries manage their people more effectively with an unparalleled combination of cloud solutions. The combined company will have enhanced scale and an even stronger position in the fast-growing HCM marketplace.

MyPOV – Good headlines on what is happening and nice work to get in the hiring ambition, right away deflating the fire that a merger between two PE firm owned entities is all about cost cutting.

News Facts
Kronos and Ultimate each have a proven track record of delivering the industry’s most innovative solutions to help organizations around the world drive better business outcomes, achieve a competitive advantage and create engaged workforces. The new company will bring together the best of each company’s award-winning solutions – Ultimate’s UltiPro HCM and Employee Experience products with Workforce Dimensions from Kronos, Kronos Workforce Ready, and other solutions from Kronos – with an unwavering commitment to delighting customers and exceeding their expectations.

MyPOV – Good to bring in the products- that’s what it’s all about.

Combining two exceptional, highly compatible cultures will create a company that is People Inspired. Kronos and Ultimate have been consistently recognized around the world as great places to work – including both being multi-year winners of the prestigious Glassdoor Employees’ Choice Best Places to Work and Fortune 100 Best Companies to Work For® honors. This reflects both companies’ belief that people are at the core of an organization’s success, and that prioritizing the employee experience is the most effective way to help customers succeed.

MyPOV – Culture merger will be hard – even though both vendors agree on people centricity. Ain and team will have to get this tricky one right to keep key talent. Good news for the competition – one spot less that is given out in the coveted workplace rewards game…

Upon closing, the combined company will have revenues of approximately $3 billion, more than 12,000 employees worldwide, and an enterprise value of $22 billion, with further plans for growth including the addition of 3,000 employees over the next three years.

MyPOV – That may make Kronos / Ultimate one of the top 3 – if not the largest HCM player (LinkedIn is #1 in my guestimates). Amazingly there is very little overlap in the customer base, the CMOs expressed their disbelief when the number was first shared (still NDA at the moment).

Aron Ain, longtime Kronos chief executive officer, will be the chief executive officer and Chairman of the combined company – guiding an experienced executive team comprised of leaders from both Ultimate and Kronos.

MyPOV – Congrats to Aron Ain, one of the longest serving and most accessible HCM CEOs out there. Most of all he tells things how they are and is honest. He now has the challenge of his management career ahead. Solve the integration and merger issues, keep the teams motivated, make a difference for customers and shape the HCM industry. The combined entity is tangling product revenue wise close to ADP, Oracle, SAP (all don’t disclose HCM revenue) and Workday.

The new company will be jointly headquartered in Lowell, Mass. and Weston, Fla., with dozens of offices around the world.

MyPOV – Wise choice for continuity and culture. Merger watcher will count days spend by Ain where… Weston is a weather draw over Boston… but then dual HQ structures usually don’t last. And we don’t know which Ultimate executives are reporting to Ain.

Hellman & Friedman LLC (H&F), the controlling shareholder of both Kronos and Ultimate, will be the controlling shareholder of the newly formed company. Following H&F, private equity funds managed by Blackstone will be the largest minority investor, followed by GIC, Canada Pension Plan Investment Board (CPP Investments), and JMI Equity.

MyPOV – H&F in the lead, but a good selection of PE owners who will want to see value in 3-4 years. The question is if this reset the ‘fabled’ clock for Kronos / Ultimate – or not.

Supporting Quotes
Aron Ain, chief executive officer, Kronos
“I have never been more excited in my 40 years at Kronos! Combining our passionate and extremely talented Kronos and Ultimate teams will create a company that is truly People Inspired. Together, we will expand the value we deliver to customers and create the industry’s most comprehensive human capital management and workforce management solution for organizations around the world. With a combined 70 years in business, we are poised for tremendous success. For our employees, customers, and partners there is an even better future ahead. Our top priority as we complete this merger is to ensure a smooth transition for our people and continue to exceed our customers’ expectations.”

MyPOV – Good quote by Ain. Ultimate has what Kronos for the long time did not search – very good HR Core and Payroll offerings. That only changed recently. And the maturity of the Ultimate product is a key asset for the combined entity.

Adam Rogers, chief executive officer, Ultimate
“The combination of Ultimate and Kronos paves the way to deliver the next generation of employee-facing solutions that will set the standard for the workforce of the future. This merger will enable our more than 12,000 inspired people around the world to deliver innovation in human capital management faster than ever before. Both companies remain fully committed to their core strengths as well as to the combined benefits that the new company will bring to employees and customers.”

MyPOV – Good quote by Rogers, looking at the future… but he has announced he will leave the company once the deal is completed.

David Tunnell, partner, Hellman & Friedman, lead director, Kronos, and chairman, Ultimate
“The merger of Kronos and Ultimate brings together two exceptional, industry-leading companies that are dedicated to delivering great technology services and – just as importantly – creating outstanding employee cultures of their own. After many years of a growth-oriented partnership with Kronos, and a more recent, successful relationship with Ultimate, we have strong conviction in the deep compatibility of these two companies and the unlimited growth potential of this sector. We know that by creating an inspiring place to work and putting people first, this combined company will thrive for years to come.”

MyPOV – It’s the H&F serenade of love to the HCM investments. Payroll continuity and workforce management stickiness make HCM vendors steady and predictable investments.

Martin Brand, senior managing director, Blackstone
“We believe the combination of Kronos and Ultimate will create a cloud industry leader in human capital management and workforce management software, and one of the best companies to work for in technology globally.”

MyPOV – Short and sweet – and the mission as well.

1 Slide Summary

As usual for key events - here is the 1 Slide summary:

Market Move - Kronos and Ultimate merge - Lots of potential and migration ahead from Holger Mueller

Implications, Implications…

[These are our recommendations based on how we see things developing, which is of course a speculation - so read with a grain of salt.]

Implications for Kronos customer

Nothing changes in the short term here. As usual, customers should seek reassurance on roadmap commitments critical to them. Expect a new roadmap at KronosWorks in fall. If you get a new executive contact or sales rep, build the relationship asap. Relationships matter.
Implications for Ultimate customers
Nothing changes short term as well. Secure the executive relationship with Kronos. If your Ultimate executive sponsor is no longer there, see replacement immediately. Reach out to them today. If you have more than 5k employees, reach out to Ain. Relationships always matter…. But even more in mergers. If implementing and depending on Infor’s Workbrain product then actively look for implementing / using Kronos Dimensions – which will be the long-term solution. Proactively plan the switch, it will be painful but worth it

Implications for Ultimate customers

Nothing changes short term as well. Secure the executive relationship with Kronos though. If your Ultimate executive sponsor is no longer there, seek a replacement immediately. Reach out to both vendors today. If you have more than 5k employees, reach out to Ain. Relationships always matter…. But even more in mergers.

If implementing and depending on Infor’s Workbrain product (UltiPro Time Management, Ultipro Time and Attendance, UltiPro Workforce Management), nothing will change immediately. The merged company will sell, service and support these solutions. Realize though, that Kronos Dimensions (and if a smaller enterprise, Kronos WorkforceReady) are the long term solutions going forward for workforce management. As always plan for the replacement proactively, it will be painful but worth it, don't get surprised a few years down the road.

Implications for partners

While it may look like less vendors to partner, in the short run this is a massive opportunity. Migrations all over the place in the future. There will be a new product. There is the immediate need for putting in Kronos Dimensions in Ultimate customers using Infor Workbrain, especially in starting implementations, and customers who may want to switch 'in flight' during an implementation. If you are an Ultimate partner with no Kronos skills, time to get them and become a partner – or you will wither down in the combined ecosystems.

Implications for competitors

One less competitor… yes – but in the longer run a combination that will be stronger than Kronos and Ultimate could have been standalone in North America. At the moment a combined product strategy will be announced (earliest KronosWorks 2020), Ceridian will feel validated with its single suite. Practically, Ceridian has where Kronos and Ultimate combined want to be – one single architecture based HCM suite that spans from Benefits to Payroll. It will also give more space to the SMB ambitions of Oracle, SAP and Workday – and also will get ADP more often to the table, by sheer elimination of one slot. Enterprises shortlist 2-3 vendors and even though executives of Kronos and Ultimate maintain they did compete much amongst each other … they will and would have more and more over time.

MyPOV

The writing was on the wall… Someone at H&F calculated growth vs R&D and other costs and reached the conclusion that the combined entity will be more successful. Size matters in enterprise software and Kronos / Ultimate have it now – effectively we estimate they are a top 3 vendor. A lot of work ahead for Ain and his team, clearing product direction is very high. So far, a good job on that and Ultimate Software Connections conference is coming up in … 10 days. The joint CMOs on today’s call were quick to point out that execs from both vendors will be there. This will help also the internationalization ambitions of both vendors, who individually have moved relatively slowly, with a preference of English-speaking countries… the PeopleDoc by Ultimate Software being the notable exception. One sales office and one sales team are more efficient, and I expect Kronos / Ultimate to speed up its internationalization efforts.

On the concern side, even though both vendors are very people focused, there is a culture merger to be solved. Ultimate had stellar benefits (100% employer paid) and who would not like that at Kronos. just to start the challenges. A roadmap must be there soon, though I would not exclude a secrecy project on products as Kronos pulled with Falcon aka Workforce Dimensions. Both vendors have limited experience in high talent / low cost locations (but Kronos has offices in Eastern Europe and Noida, India) and need to estabish that for their long term competitiveness. And Kronos / Ultimate will have to convince customers to move from a very mature UltiPro product to a nascent, integrated Kronos / Ultimate (likely Dimensions based) HR core suite at some point in the future (expect 2-3 years) . For smaller customers there is the options to move from UltiPro to Workforce Ready as complete suite, which has been successfully in his market for many years, so a less daunting perspective, assuming that the combined Kronos / Ultimate will mantaine the two Workforce suites. For the payroll fans – Ultimate’s payroll with its atomic collection of payments / services that made it the market leader in pro sport franchises – will be a cliff for any new payroll. But maybe its time to build a new payroll for the combined entity? There maybe already work done on that...

But overall congrats and exciting times ahead – the HCM market is getting more competitive. Players become more viable. All good news for enterprises who in the era of enterprise acceleration need to move faster than ever before and need better people software than what they have today.

More on Kronos:

Event Report - Kronos KronosWorks 2018 - Kronos is firing on all cylinders... - read here
Event Report - Kronos KronosWorks - Kronos unleashes the Falcon - launches Workforce Dimensions - read here
Progress Report - Kronos grows and grows - read here
Event Report - Kronos KronosWorks - Solid progress and big things loom - read here
Event Report - Kronos KronosWorks - New Versions, new UX, more mobile - faster implementations - read here
First Take - KronosWorks - Day 1 Keynote - R&D Investment, Customer Success and Analyticss - read here
Kronos executes - 2014 will be key - read here
Tweeting and feeling good about it - read here

IBM under Rometty

Rometty’s rein over the company was around 8 years, taking over from Sam Palmisano, who clearly dealt ‘Ginny’ a bad card: Financial engineering setup IBM for steady growth as it was common in the early 2000s (see GE), while the company was not innovating fast and well enough and had missed the move to cloud. IBM was not alone in that miss, and remarkably, from the IT mega vendors of the 20th century its only Microsoft and Oracle who have a game in the cloud business. It is not that Rometty did not try – my first news analysis blog post as an industry analyst was about IBM acquiring SoftLayer (see here) on June 5th 2013. Cloud quickly became a mantra, but under the hood there was a bitter fight between the established cloud business (that ‘failed’ as SoftLayer had to be acquired) and the new guys. No surprise – and as often – the establishment won and SoftLayer founder Lance Crosby was soon gone.

Under Rometty IBM did more than 50 acquisitions, with the pace only slowing recently… but the direction was never clear beyond a doubt. Rometty transformed 50% of the IBM revenue says ibm.com – still no luck. IBM’s cloud efforts quickly got shifted into big ‘lift and shift’ endeavors, signing large outsourcing deals. Nonetheless IBM was ahead of its time with many key cloud offerings – e.g. being the first to bring HANA and SAP to the cloud (see here), it partnered early with Workday (see here), was the first to sign a partnership with VMware (see here) etc. It all did not help, the IBM disease (more later) kicked in. It was partnerships driven by customer needs, usually a good sign, but never developed broadly, always seen in the services lens…

The other big bet under Rometty was Watson. Watson had a great start and had great brand recognition with the jeopardy fame, but did not see the investment that was needed to keep Watson a modern AI platform. A classic example of a product that was taken to market and then overtaken by the technology progress: Better cloud based solutions, the rise of neural networks and an inability of IBM to truly innovate with Watson (or a successor), make Watson a sad story. It is also a lesson learnt that no matter how much marketing you put into this (IBM coined it cognitive, had a World of Watson conference series). The saddest part for me was the fine line between truth and fiction that IBM executives tangled with closely with – when it came to Watson. But at the core the problem for Watson was again the IBM disease…. (more later).

For some time, IBM was playing well in the PaaS space with BlueMix (see e.g. here), it had its height from 2014-2016 – but then went away as well, as IBM did not manage to make the transition of its Rational install base to the BlueMix platform and it realized that a truly successful PaaS platform would compete with many of it software partners… here is a hint on the IBM disease… again.

More recently IBM has bet more on block-chain, that for some time was the third product strategy of IBM (for some reason there is the common infatuation with three initiatives). But deployments are slow, uptake is not as expected, and things have gotten more quiet around block chain in the last 12 month at IBM.

And then IBM had a large software portfolio of some promising and less promising software assets (yes, IBM sold HCM software with Kenexa, better know as Brassring). How that software portfolio held together, what the synergies were and the master plan – all that went away when legendary IBM software executing Steve Mills retired. Since then the software portfolio has been in disarray, lacks leadership and overall encompassing strategy that at least gives an idea what the ‘endgame’ will be.

To remain relevant, Rometty had to do something big, and the ‘big’ thing was the Red Hat acquisition. Enters also the new CEO, Krishna, who was the key architect of the acquisition. The least discussion about the big impact of the acquisition was the price – 34B (read my take here). Red Hat itself was struggling with its new investments to make up for the shrinking RHEL base. The most promising was AppDev – which has gone missing again (likely for the same reasons BlueMix never took off). The next one was the PaaS platform OpenShift, where in October 2017 Red Hat laid the foundation to its multi-cloud support with partnerships with AWS and Google (see here). Curious on the next bet? OpenStack and we know that one went sore for a lot of players. So a lot of expectation is now on creating a hybrid cloud business around the Red Hat OpenShift platform.

The RedHat view of its Portfolio in 2017. OpenShift on the left.

IBM’s ‘disease’

I have attended north of 50 IBM events and conferences in the last 7 years. The company has extraordinary customers, talented people, deep pockets… but it never built truly great software products in the last decade (I am sure there will be a few exception). IBM feel like an unfinished opera: Act I was hardware, Act II was services and Act III would have been … software. But the products – as solid as they were, as much they were shouldering true enterprise load – they never were truly really great. Close software assets like db2 and WebSphere were more or less thrown out for the next big thing, much to the surprise of customers and other partners. My eye opener was attending the IBM Alliances Insights event August 15th 2016. I always knew that IBM had a ton of consultants… but learning that over 100000 IBM employees made their living with only three partners (SAP, Oracle and Microsoft) made me realize that IBM more than ever, was stuck in the services player category. Simply put – product that were ‘good’ at IBM would never have seen the light at e.g. Microsoft, Oracle, Salesforce or SAP. They were to service intensive. But for IBM that was ok. Truly great products, that did not need a consultant (e.g. think of BlueMix) were more of a problem. The return of R&D did not translate into a revenue from consulting engagements. And IBM did not understand how to maintain and expand truly great software products (like db2 and WebSphere).

[Updated] Let me be clear - there is nothing wrong with the services business, and IBM is a great partner to many large enterprises around the world. The question for Krishna is: Will IBM be a services player with an enabling software product / platform business - or will IBM have software products that stand in their own right and are also sold without IBM services (hey even challenge that - resold by other services players). At the end software margins (if done right) always beat services margins.

The good news is that the hybrid cloud consulting business is immune against the IBM ‘disease’. It takes little armies of consultants to get started and remain operating in hybrid cloud… but if enterprises want to keep the armies around when operating their hybrid clouds - remains a huge and big question.

Arvind Krishna in an interview with CNBC on April 6th 2020

Krishna has his work cut out

Almost in a position of where the board might have said, "you sold us the deal – now make it real"– Krishna has to deliver. But to get 34B back from hybrid cloud licenses (small) and professional services (small) is a huge challenge. IBM sees a 1.2T US$ revenue opportunity in hybrid cloud, but it has its set of competitors. AWS, Microsoft and Google have their hybrid offerings – and largely without the need of legions of consultants. IBM may position itself as the hybrid cloud vendor that takes care of the challenging, more service needy clients. In the meantime, the product centric vendors will reduce the need for professional services with every new product release. While having Accenture, Atos, Cap Gemini, Deloitte, KMPG, etc. help them implementing. Mapping progress of the OpenShift platform vs the leading cloud offerings for hybrid cloud will allow to assess IBM’s long term success.

Oh and then there is AI. In its initial interview on CNBC, Krishna pointed out that work is being done with Watson (he is still there) Assistant and he was positive on the growth of digital assistants. But no matter how promising digital assistants are – they cannot fuel an IBM as we know it today. So IBM will have to provide a major investment (or acquisition?) in the AI space to be a player. With its fumble on its own cloud infrastructure – it will be a hard market get (back) into. And the challenge was laid in Whitehurst’s portfolio with having Bob Lord / Cognitive Applications report directly to him.

Speaking of cloud – IBM’s future is literally spilled all over the org chart. Whitehurst and team need to bring OpenShift to the IBM product teams. It makes sense that strategy reports to him. Rob Thomas is also reporting to him with responsibility “security, hybrid cloud, AI and Red Hat synergy” (if you go, Huh? This is word for word from press release). in charge of doing that for the data and cloud products, reporting to Whitehurst. But the platform will be developed under new Red Hat CEO Paul Cormier. Oh yes and then Howard Boville joins from Bank of America (where he was CTO) as SVP for Cloud, overseeing IBM Cloud. Pressure will be also on Bridget van Kralingen who has to deliver the revenue numbers. All of them will need Krishna to call the shots to succeed pretty much on a daily basis. If one of the many strategic IBM customers want and need something, it quickly gets complicated and Krishna will have to play interference.

MyPOV

If Krishna wants to outlive the short tenure of other short tenured IBM CEOs (T. Vincent Leason had 2 years from 1971 to 1973) and John Opel (1981-1985) (see the list of IBM CEOs here) he needs to find a strong second and third revenue stream for IBM. If this still can be AI / Watson is under question. Financially IBM can’t make any too big acquisitions, and merging is out of the question (at least for now).[Updated: IBM reminds me that the vendor is more than healthy, true that. Capital is cheap as well, maybe IBM / Krishna surprise us].

Revitalizing the software portfolio, and what is left of it, is an option, especially as Krishna comes from that group. The board gave him a bad setup as giving right away the president position to Whitehurst. Usually IBM CEOs keep that title and it is rarely bestowed (who was the last IBM President that was non CEO – if you know – I will gladly here, it broke Google).On the flip side, if Whitehurst fails, Krishna may be around longer. If Whitehurst succeeds, then Krishna may end up with a tenure with a time between Leason and Opel. Krishna is a smart, humble and likable personality, this will all play in his favor in his new role. Expect to see the by now typical synergies with other key Indian CEOs (Nadella at Microsoft, Pichai at Google and Narayen at Adobe) – which will certainly help.

[Updated] I am also bullish on IBM's efforts around System Z and quantum computing. The Former is a key automation building block that is not going away and IBM has shown that it is a good steward of the product line, bringing new software platforms and use cases to the mainframe. The latter is where IBM shows its commitment to R&D and that it can do the original 'trick' - build revolutionary hardware. No question IBM is at the forefront of the quantum computing race. But even mega success in both System Z and Quantum computing can fuel IBM as we know it today.

On the concern side, all is setup for a repeat of the SoftLayer story: Only the ‘in house’ team has a new head with Boville. But expect the battle between the traditional IBM cloud and Red Hat offerings. Krishna needs to clarify that fast, as customers and partners need to know where IBM is heading. A 10-15 time higher price tag (rumor was that SoftLayer was 2B+ back then) does not guarantee success. Part of it is the customer – why move your cloud offering, if the new offering does not offer enough tangible benefits. A key innovation dilemma that Krishna needs to address, given the more conservative nature of IBM customers and their mission critical workloads.

The opportunity for IBM is multi-cloud. Enterprises do not want lock-in. The question is – how much services do they need for operating in a multi-cloud model and… if the IBM ‘disease’ will strike again, the sooner Krishna can transform IBM into a “software first” mentality and deliver on it – the better for IBM, its customer, its shareholder and its employees.

Some more Musings blog posts, with a focus on the Future of Work:

Musings - Why Open Source has won and will keep... winning - read here
Musings - Enterprise Acceleration - and what every HR Leader should know about it - read here
Musings - SAP democratizes Product Development - what does it mean for Customers? Read here
Musings - Why splitting Windows is Nadella's first major mistake - read here
Musings - Time to bring back the software user conference - read here
Musings - Does Oracle and Accenture make sense - or never ever! - read here
Musings - Happy 10th Brthday iPhone - afraid the next 10 years will be harder - read here
Musings - The Privacy Shield is real - what are the CxO repercussions? Read here
Musings - The Bots are coming to your conversation - what are the implications? - read here
Musings - We are entering the age of the Über Super Computer - read here
Musings - Retail is the breeding ground for NextGen Apps - read here
Musings - Time to re-invent email – for real! Read here
Musings - The Dilemma with Cloud Infrastructure updates - read here
Musings - Are we witnessing the Rise of the Enterprise Cloud? Read here
Musings - What are true Analytics - a Manifesto. Read here
Musings - Microsoft does not need one CEO - but six - read here

In the night before its earnings call for Q1 2020, SAP surprised (probably) all of us with another change in its executive team, ending the dual CEO structure with Christian Klein and Jennifer Morgan.

Before we jump into analysis – let’s dissect the call in our customary style (the press release can be found here):

WALLDORF — SAP SE (NYSE: SAP) today announced that Christian Klein (39), Co-Chief Executive Officer and member of the Executive Board, will continue as sole Chief Executive Officer. Jennifer Morgan (48), Co-Chief Executive Officer and member of the Executive Board mutually agreed with the Supervisory Board of SAP SE that she will depart the company, effective April 30, 2020.

MyPOV – Short and sweet. All said in one paragraph. That was (unfortunately) a very short tenure of the first woman leading a DAX company, little more than half a year. Last time SAP got rid of the co-CEO structure, it was Bill McDermott taking over… but it was 9 months heads up and Jim Hagemann Snabe went to the SAP board then (see the great piece of former colleague Chris Kanaracus here).

More than ever, the current environment requires companies to take swift, determined action which is best supported by a very clear leadership structure. Therefore, the decision to transfer from Co-CEO to sole CEO model was taken earlier than planned to ensure strong, unambiguous steering in times of an unprecedented crisis.

MyPOV – This is little bit of an odd justification – as SAP has successfully managed though tough economic times with dual CEOs (the dot com bust with Plattner / Kagermann and the 2008 downturn with Kagermann / Apoteker – handing things over again to dual CEOs in 2010 with McDermott / Hagemann Snabe). The co-CEO model certainly takes time to coordinate, but typically leads to better decision management.

“I am grateful to Jennifer for her leadership of SAP, including all she has done for the company, our people, and our customers,” said Professor Hasso Plattner, chairman of the Supervisory Board of SAP SE. “This transition comes at a time of great uncertainty in the world, but I have full faith in Christian’s vision and capabilities in leading SAP forward toward continued profitable growth, innovation, and customer success.”

MyPOV – Good quote from Plattner, note he thanks Morgan first for company, then people, then customers. No mention of product or innovation. Innovation and customer success come out when he (as all board chairman do) praises the new sole CEO. Let’s follow that aspect… as it will matter in the overall MyPOV later.

“I’d like to thank Jennifer for her partnership over many years,” said Christian Klein, CEO of SAP SE and member of the Executive Board. “Throughout SAP’s transformation, Jennifer has always been laser-focused on customers, partners, shareholders and employees. It’s thanks to her that we have established a strong position in experience management solutions. I know she will always be a champion of SAP.”

MyPOV – Good quote from Klein. He adds partners and shareholders to the employee and customer mix. Both Klein and Morgan became SAP board members in close proximity, Morgan in 2017 and Klein on January 1st, 2018. While that maybe ‘many years’ for a few companies, it certainly is not for SAP, where that usually is a term you pack out for a decade plus of working together. Interesting Klein also mentioned experience management, which is the Qualtrics acquisition. But its this area where SAP has done little progress, as we are coming to the one-year anniversary of Sapphire where Qualtrics and the merge of O and X data was all the headlines.

“It has been a great privilege to drive SAP’s growth and innovation in so many areas and most recently as Co-CEO,” said Jennifer Morgan. “With unprecedented change within the world, it has become clear that now is the right time for the company to transition to a single CEO leading the business. I would like to thank Hasso Plattner for the opportunity to co-lead this great company, and I wish Christian, the Executive Board, and SAP’s talented team much success as they drive the company forward.”

MyPOV – Good quote from Morgan, fair and positive. She adds innovation to SAP growth… innovation at software companies means products, but Morgan only had direct product responsibility since taking over the Cloud Business Group (aka the six sisters of Ariba, Concur. Fieldglass, hybris, Qualtrics, SuccessFactors). And there the agenda was set – bring the products to SAP HANA and SAP BTP (where SAP Cloud Platform is now part of). To be fair, under her leadership SuccessFactors championed HXM, the merger of Qualtrics capabilities to measure employee engagement.

Morgan joined SAP in 2004 and was appointed co-chief executive officer, together with Klein, in October 2019. Previously, she served as president of the Cloud Business Group, overseeing Qualtrics, SAP SuccessFactors, SAP Ariba, SAP Fieldglass, SAP Customer Experience and SAP Concur. She was named an Executive Board member in 2017.

MyPOV – A remarkable career, that previously started at Andersen Consulting, she spent four years at Siebel, before joining SAP in 2004 in public sector (and a tidbid - Adair Fox-Martin joined in ... public sector as well). At 48 Morgan has a lot of CEO and other executive options ahead of her, she can basically choose. Better chances for a long tenure than say in 5-6 years two board contracts down the road. Might have been a factor.]

The SAP co-CEOs Christian Klein an Jennifer Morgan in Walldorf in January 2020

Overall MyPOV

At the end of the day SAP is a software company and software companies thrive with successful products. The irony is that SAP over time has thinned its product development leadership over a decade now. Agassi left in 2007, Sikka left in 2014, Leukert and Goerke left in 2019. The longest fix point on product is Plattner. Product leadership is now in the hands of Thomas Saueressig, the former CIO. Saueressig reports to Klein, when Klein was CEO and Klein brought him ‘over’ to lead products. And Saueressig is doing a good job at getting the priorities of S/4HANA right. Certainly, a better one than the heads of product over at the six sisters… who all were busy to move their products to the SAP platforms. Nothing to excel and inspire a board to hand over the reins to them.

The immediate question Klein needs to answer what is going to happen with the product development areas that had not yet reported directly or dotted line to Saueressig. That’s Qualtrics and whatever SAP calls its CRM ambitions under seasoned CRM product leader Stutz. I would not be surprised if all goes to Saueressig. SAP needs good, better great CRM to be a competitive ERP player. Too much depends on customer processes. SAP was most successful because it built on a single platform. Bringing together the O and X data on the SAP BTP is a key differentiator. It’s also a key test for the agility of the SAP BTP to support standalone third-party deployments that Qualtrics certainly needs to keep supporting.

As a father of three daughters I was excited to see (finally) a woman lead a DAX company. Europe tends to be behind when it comes to diversity at the top. Unfortunately, Morgan’s tenure was way too short. I am also a fan of the dual leadership model, as it leads to better decisions. The problem at SAP is, that the decisions are made – S/4HANA is becoming the R/3 successor – with all its ERP automation in a single product (single schema we will see) and on a single platform. Fox-Martin can and will deliver the sales numbers, services is rolling. So, there was no room to play and add for Morgan. I wish her well and I am sure she will show up in a leadership role. Though: Due to SARS-COV-2 - sales and services models need to move digital and right now that is not happening with the large traditional SAP implementations on the old continent. This maybe a formidable challenge ahead, if the pandemic ripple effects last longer.

For Klein and Saueressig it is all about getting the S/4HANA value proposition right. Augment it with the capabilities of the ‘6 sisters’. Deliver the integration plans. Have it all ready a few years before the now extended support and maintenance timelines expire. Oh – and in the meantime, keep SAP numbers up and keep the R&D team protected. It’s hard to build new product, its even harder to build new product with less product developers. Writing this on the day before, actually less than 7 hours before the earnings call (April 20th 2020), for which SAP already had to warn as traditional on-premise revenues were not coming in as planned.

Right when you though things would calm down and become a little dull at SAP, here comes another change. Never a dull moment.

Some recent SAP blogs:

News Analysis - SAP keeps - re-organizing - Fox-Martin in charge of world-wide sales, Enslin out, replaced by Morgan - read here
Musings - SAP democratizes Product Development - what does it mean for Customers? read here
News Analysis - SAP intends to buy Qualtrics - Pairing operational and experience data – And it’s 6 sisters - read here
News Analysis - Adobe, Microsoft and SAP announce the Open Data Initiative to empower a new generation of customer experiences - Good idea, good start... - read here
Event Report - SAP Ariba Live 2018 - Las Vegas - Sustainability and UX - read here
Event Takeaways - SAP at MWC 2018 - read here
Market Move - SAP acquires Callidus - More Sales Effectiveness in the Back Office of the Front Office - read here
News Analysis - SAP HCM On-Premise Option for SAP S/4HANA - or is this S/4HCM? - read here
News Analysis - Microsoft and SAP join forces to give customers a trusted path to digital transformation in the cloud - read here
Event Report - SAP Hybris Live 2017 Barcelona - YaaS morphs and more agility ahead - read here
News Analyses Roundup - SAP's September Tech Announcements - SAP doubles down on technology - read here
Event Report - SAP SuccessFactors SuccessConnect - New Leadership - Old Challenges - read here

And some Constellation Research reports on SAP:

SAP SuccessFactors Leads with HR Core, Payroll and Global Capabilities, by Holger Mueller, January 10 2020 - see here
Constellation ShortList™ PaaS Suites for Next Gen Apps, By Holger Mueller, February 27th 2019 - see here
Constellation ShortList™ Global HCM Suites, By Holger Mueller, February 20th 2019 - see here
Experience Management Drives SAP’s Acquisition of Qualtrics, by Nicole France, Holger Mueller, R "Ray" Wang, November 28th 2018 - see here
SAP Hybris advances its Platform, By Holger Mueller, November 20th 2017, see here
SAP Cloud Platform: A New Standard for a SaaS Vendor’s PaaS, by Holger Mueller, June 13th 2017, see here
SAP HANA 2 Ushers in the Next Era of Pure In-Memory Applications, by Holger Mueller, December 27th 2016 - see here
SAP UXaaS Democratizes Usability, Starts Next Wave of User Experience, by Holger Mueller and R 'Ray" Wang, April 7th 2016 - see here

Some Musings blog posts:

Musings - IBM's 10th CEO takes the reins - Krishna has his work cut out for him - read here
Musings - Why Open Source has won and will keep... winning - read here
Musings - Enterprise Acceleration - and what every HR Leader should know about it - read here
Musings - SAP democratizes Product Development - what does it mean for Customers? Read here
Musings - Why splitting Windows is Nadella's first major mistake - read here
Musings - Time to bring back the software user conference - read here
Musings - Does Oracle and Accenture make sense - or never ever! - read here
Musings - Happy 10th Brthday iPhone - afraid the next 10 years will be harder - read here
Musings - The Privacy Shield is real - what are the CxO repercussions? Read here
Musings - The Bots are coming to your conversation - what are the implications? - read here
Musings - We are entering the age of the Über Super Computer - read here
Musings - Retail is the breeding ground for NextGen Apps - read here
Musings - Time to re-invent email – for real! Read here
Musings - The Dilemma with Cloud Infrastructure updates - read here
Musings - Are we witnessing the Rise of the Enterprise Cloud? Read here
Musings - What are true Analytics - a Manifesto. Read here
Musings - Microsoft does not need one CEO - but six - read here

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

IBM had to cancel the physical Think 2020 conference and go to a digital format like many other conferences. As the first major vendor event going digital, IBM had to set a yardstick in terms of digital events – and did not disappoint. A special challenge was that Red Hat’s Red Hat Summit conference just happening the week before and it stole a lot of the ‘thunder’ especially in regards of hybrid cloud announcements. Weekly event proximity does not well for a set of rich announcements.

Here is the one slide summary in case you are too time pressed to read on:

Event Report - IBM Think 20020 - Cloud, AI and Quantum from Holger Mueller

And here are my key takeaways:

It is all about hybrid cloud. No surprise – the need for hybrid cloud and how IBM achieves it with Red Hat OpenShift was central to Think 2020. IBM did a good job with vision, sessions and customer examples for the adoption of OpenShift. The new push for edge was certainly not missing, as Red Hat released new capabilities for operating on the edge the week before. And with the race to 5G being first of all a massive backend overhaul, IBM did not miss out to show its value proposition for telcos here. A capability of OpenShift that CxOs need to note is that through its marketplace – multi-cloud deployments of 3^rd party software can be achieved. Once an ISV is on the Red Hat Marketplace – its software runs not only on premises and the IBM Cloud, but also AWS, Microsoft Azure and Google Cloud. For CxOs appreciating consistent deployment and single control – certainly, a benefit. Interestingly, separate conversation with a database vendor that recently published on the Red Hat Marketplace – show little to no performance degradation from OpenShift deployments – vs native deployments.

Quantum shows momentum. While I have some concerns on many of the IBM offerings and services, I have little to none of them on the Quantum progress that IBM is demonstrating. It shows the traditional hardware DNA still delivers (ok it does for the mainframe as well) and in combination with software is a key differentiator that few other tech giants can compete with. IBM used the digital format to even expand its quantum presence at Think 2020, adding more presentation and sessions on Quantum technology. One of the clear upsides of the digital format. Needless to say, Covid-19 was present, and IBM showed how quantum technology is superior simulating complex scenarios – like the spread of the SARS-COV-V2 virus. Since some time, IBM is looking at Quantum from a stronger use case perspective that was not missing at Think 2020. No surprise – financial institutions will benefit from quantum (and I wonder why that is not part of the vertical Financial Service cloud offering – at least in PowerPoint), but also security and most interesting to me – for chemistry. The game in quantum has moved from the pure quantum machine to the point how well can enterprises embed quantum processes into the rest of their computing architecture – forming a different type of hybrid cloud, a hybrid computing cloud were conventional processors work with quantum machines bridging the two worlds of compute to power next generation applications. IBM is very well setup to take part of this ‘other’ hybrid computing model, as it has all the relevant offerings to support it.

Watson comes to Ops and we have AIOps. Given IBM’s experience managing large software environments and hardware, its announcements into the new AI Ops space are not a surprise. Another driver is of course the complexity of a hybrid, distributed IT environment – that IBM is selling, implementing and operating for its clients. Giving customer and / or its own consultants the ability to run these complex environments more reliably, securely and resiliently is key. At the core is the industry wide admission that Kubernetes environments that are spread out over many compute platforms are inherently complex. Enterprises want self-driving solutions, that operate autonomously. The solution is of course AI and when it is IBM that is Watson. How well Watson is up to the task will have to be seen, its traditional expert system that is queried by a human and created / operated by a data scientist is not the setup needed for autonomous AIOps. Now we have to see how well IBM can automate in the AIOps space. Success is not optional, as IBM sells and implements complex hybrid environments that no longer can be reliably managed in their totality by humans.

Act – do not react. IBM. Of course, AI overall was not missing at Think 2020 and IBM has a new motto with ‘Act – don’t react’. It is a good line, as it describes well the recent best practice change in AI deployments… instead of humans analyzing data and the realizing something is wrong (‘reacting’) – it is key to close the insight to action loop. That has been the quest from the first mainframe-based report that was printed… and has not been addressed by the industry overall. CxOs need to pay attention though as often the ‘act’ is contained into the BI / AI system – which poses the same challenges as before… only makes the delivery of insights better. Certainly, a benefit – but not really what is possible. All to often, at Think 2020, it was also again about the data side of AI, but that is a problem that is largely solved and / or solvable – the quest is really for the autonomous AI system, that makes the human optional in 2020, at least for some easy to make decisions. How well IBM can fill the vision of the new motto remains to be seen – beginnings are promising, but autonomous is really the holy grail.

Digital Conference Rating: B. Moving from in person events to digital events creates formidable challenges for enterprises, but is a necessity during the Covid-19 pandemic. The yardstick of what is good is moving rapidly – what was good in April, is no longer good enough in May, as enterprises find ways to create better digital experiences. It is a profound learning shift from the executives, to the regular speakers, to the event teams. IBM did well for being the first large vendor to have their event (Google cancelled in April) – so it will be interesting to see how other large event vendors like Microsoft, Oracle, SAP and Salesforce will do. The good news is – the platform (whatever IBM used) held up to the demand, there was interesting content, executives were comfortable by presenting live etc. Ironically, a week before newly acquired RedHat did better overall, including a better agenda, better social support and more interactive panels. Remarkably former CEO Ginny Rometty did the best amongst executives, she had a genuine conversation that seemed unscripted, not screen read etc. with will.i.am on diversity and inclusion.

MyPOV

IBM did not disappoint pulling off Think 2020 in a challenging environment: CEO transition, virtual event, new org structure etc. – all challenges that would have made a traditional conference a potentially challenging to very challenging event. It would not have been the first time a vendor cancels an event, with Covid-19 as excuse / explanation. So kudos for IBM to never consider that.

Not surprisingly IBM has shown there is a new executive team in place, that can articulate the vision, first and foremost around hybrid computing with Arvind Krishna and Jim Whitehurst. The cloud story needs a new chapter and IBM is trying to establish vertical cloud (again, something it tried a few years ago). No surprise, IBM starts in an industry where it is strong, Financial Services, but the announcement needs more than horizontal capabilities (security), but differentiating software assets, in short, a roadmap. Equally on the bright side IBM is making good progress with its Quantum offerings.

On the concern side, I am not sure if this is enough to turn IBM to revenue growth and keep its close to 300k employees busy, meaning – will it fuel the IBM as we know it over the decades, as the trusted advisor and partner for enterprise IT. In my view IBM needs more offerings for that – the always visible trifecta of three major offerings under Rometty – with e.g. Cloud, Watson and even blockchain (no big announcements on the topic at Think 2020) from 5-6 years ago – feels stronger than Cloud, AI / Watson -and – wait what is the third of 2020? Lastly, I would really like for IBM to talk more about the products its customers are using – e.g. dB2 had a new release. What is happening with WebSphere? IBM not only maintains but keeps building out these products, that are all critical for IBM customers.

Overall a good start for IBM under new leadership and a new executive team. The hybrid cloud offering, with the attempt to be the ‘neutral’ cloud vendor that can provide workloads across all major public clouds and on premises, to the edge is attractive to CxOs. But it competes with the more proprietary options from the public cloud vendors who offer a closed, but likely faster path to production. IBM needs to deliver fast on the OpenShift opportunity, needs to share roadmaps and show it can deliver more attractive portfolio offerings for client and prospects. It also needs to lead its Quantum offerings from trial and lab into real world benefits on a larger scale – not easy – but the priority at hand right now. DNA, talent, money and opportunities are there – its for the team around Krishna to deliver them. IBM has a knack of not becoming a ‘boring’ IT player.

Don't miss my take on Arvind Krishna's appointment here and Wakelet collection of key tweets below.

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

More Time to Code, Less Time Lost on Admin/Ops

Introduction

Oracle introduced a new offering of its technology stack on August 13, 2020: Autonomous JSON Database. Autonomous JSON Database joins the growing autonomous product family at Oracle, which already includes the Oracle Autonomous Database, Oracle Autonomous Linux and Oracle Autonomous Data Guard.

This blog post looks at Oracle Autonomous JSON Database’s impact on developer productivity and how the new offering can boost a key developer satisfaction driver: velocity.

Why Does Developer Velocity Matter?

The overused headline “Software Eats the World” usually omits the fact that a lot of developer “blood, sweat and tears” are behind the software that powers enterprises’ next-generation applications.

And as the demands for building more software ramp up, the complexities of the associated technology stacks grow even faster. Luckily, there is more training and learning available for developers; unfortunately, though, there is typically less training time available. Today, it is important to understand that the creation of the DevOps function has not insulated developers well enough from nonproductive work. Simply put, DevOps teams are as overwhelmed as developers in trying to keep the software-powered revolution going. Meanwhile, legions of developers have come to understand that when they cannot learn new technologies on the job, they need to learn new capabilities on their own time and dime. And while some of that gives developers the much-needed freedom to explore, learn and tinker, it may constrain their long-term marketability.

At the end of the day, what matters is how fast developers can provide good code that aligns with both the specification and the performance requirements of the application in production. The concept of developer velocity is a relatively new term, but it aptly describes the demand that is now put on developers. Meanwhile, it is important to understand that developer velocity is situational and is based on experience, training, know-how and general talents. So, developers who strive to remain good, or even become better, are pressed to increase their maximum velocity with additional training and education (see Figure 1).

Figure 1. Developer Velocity Defined

Source: Constellation Research

Finally, the key determinant of developer velocity is the time available to code. The more time that developers have to write, review and test code, the more productive code they can deliver. For decades, the focus has been to improve developer productivity when they code. And that is a key factor, but even more potential can be derived by giving developers more time to code. This means the elimination of noncoding tasks. Associated noncoding time spent needs to be examined and, ideally, reduced to a minimum.

One of the key perils of the developer job is that when new technologies are involved in a project, the developers often become the first ones in an enterprise to master the operation of the overall technology. That is natural, as they deal with the technology first and—initially, at least—the most. Unfortunately, though, all too often they are drawn into long-term managing, maintaining and scaling operational tasks around the technology of their projects. Developers too often step into the “experience trap”—the capture of the most experienced resources on operational tasks keeping them from their real job: writing and reviewing code.

And while developers are obliged to do their part to not get caught in the perils of the developer job or the experience trap, their enterprise also has to empower them to use platforms that avoid both challenges, through inherent capabilities. Recent innovation in the self-driving or autonomous product category makes this possible.

What Is the Oracle Autonomous JSON Database Service?

Oracle has been steadily building out its autonomous software road map, having released Oracle Autonomous Database, Oracle Autonomous Linux and Autonomous Data Guard. Now the Autonomous JSON Database joins the family of autonomous products.

Specifically, Oracle Autonomous JSON Database is a cloud service that addresses the JSON developer community. It uses native JSON storage and is a fast and scalable service, using Oracle Cloud Infrastructure (OCI). Most importantly, it allows use of both non-SQL, document-centric code assets and SQL-centric code assets, and it provides simple document APIs for programming languages via REST or the command line interface. Contrary to widespread expectations regarding an Oracle Database product/service, SQL is not required to use the Autonomous JSON Database (see Figure 2).

Figure 2. Autonomous JSON Service

Source: Oracle

There have been long debates regarding the right way to access document-centric JSON databases. Oracle is taking a balanced approach, allowing developers to access the Autonomous JSON Database service as they prefer, either with a document-centric language via Simple Oracle Document Access (SODA) or via SQL.

SODA is an easy-to-learn language construct that plugs into popular Java, JavaScript/Node.js, Python, PL/SQL and C programs (and more via language drivers or RESTful web services). For the SQL camp, Oracle provides its proven SQL engine that comes with ISO SQL/JSON support and the command line interface with SQLcl, which allows powerful in-line editing, statement completion and command recall (see Figure 3).

Figure 3. How Oracle SODA Plugs into Important Popular Programming Languages

Source: Oracle

With Oracle having addressed two key developer approaches for creating code for JSON-based next-generation applications, it has contributed already to developer velocity, literally helping developers to be productive quickly, reusing previously acquired skills.

But this is only half the story: The main value of Oracle Autonomous JSON Database is that it runs on Oracle Autonomous Database, which means that it has all the self-driving automation, availability, scalability, elasticity and pay-per-use model of the Oracle autonomous platforms. Oracle provides the availability that enterprises need for their JSON-centric next-generation applications as well as the scalability and elasticity that JSON-native applications need. Practically, this means developers do not have to worry about taking care of database management (new instance provisioning, automated backup, replication, disaster recovery, scaling and tuning, and so on), and with that they can avoid the “talent trap.” With little to no DevOps resources and skills needed, developers will not be stuck supporting JSON databases. In these capabilities lie the real advantage for developers using Oracle Autonomous JSON Database: It allows developers to increase time available for developing code, and to spend less time on “plumbing,” thus gaining greater developer velocity.

Why It Matters for Developers

Developers want to create and maintain successful code in applications that make a difference for their enterprises. With the Autonomous JSON Database, Oracle delivers four key qualities that improve the developer’s experience in this regard (see Figure 4):

1. Fast ramp-up. Developers can use both SODA and SQL with the Oracle Autonomous JSON Database and mix and match between the two, depending on the use cases. With support for the ISO SQL/JSON standard, and with SODA being close in composition to other popular document APIs, developers can become productive quickly.

2. Self-driving NoSQL. Oracle autonomous qualities benefit the Autonomous JSON Database. Therefore, auto-scaling, backup, cloning and more are easily achieved. Relieved of such administrative requirements, developers can code with no outage or impact on their applications.

3. Single database benefits. Oracle’s universal database approach brings all relevant information together, not only the relational system of record information on the Oracle Database but also the nonstructured, document-oriented NoSQL data with Oracle Autonomous JSON Database. Developers who understand Oracle Database don’t have to learn anything new to use Autonomous JSON Database.

4. More coding, less admin and ops. To achieve higher velocity, developers need to have more time to code and less time consumed by administrative and operational tasks. Oracle Autonomous JSON Database delivers on that, with all the qualities of the Oracle autonomous technology stack.

Figure 4. Developer Benefits of Oracle Autonomous JSON Service

Source: Constellation Research

Advice for JSON Developers

Constellation has the following recommendations for developers regarding Oracle Autonomous JSON Database:

1. Accept the automation imperative. Progression in technology, most notably Infinite Computing,[i]allows the automation of more routine and advanced tasks than ever before. Developers need to realize that their work environment will change more in the next 10 years than it has changed in the last 25. Developers who take advantage of autonomous self-driving capabilities earlier will increase their developer velocity and be more successful.

2. Evaluate Oracle Autonomous JSON Database for NoSQL demands (existing Oracle customers). Suite-level benefits are strong, especially when it comes to the platform-as-a-service (PaaS) layers (in this case, the database). If a developer is already using the Oracle Database, then the synergistic effects of the Oracle platform make Oracle Autonomous JSON Database very attractive.

3. Conduct a cost-benefit analysis for a potential switch to Oracle Autonomous JSON Database (Oracle prospects). Oracle has a multiyear lead on PaaS competitors when it comes to building an autonomous platform, starting with its flagship RDMBS product, the Oracle Database. As Oracle adds autonomous offerings (for instance, Oracle Autonomous Linux and, now, Oracle Autonomous JSON Database), the labor savings and developer velocity advantages of the platform become worth the consideration by non-Oracle customers.

4. Prioritize developer velocity. As Enterprise Acceleration[ii]is travolging[iii]enterprises, developers find themselves as the key enablers of the software-driven enterprise. Developers who can show higher velocity than their peers will do better.

5. Consider Oracle Autonomous JSON Database for next-generation applications. All seven of the universal next-generation application use cases require JSON skills to be successful.[iv]Developers interested in building next-generation applications need to look for NoSQL/JSON offerings that will make their development success more likely. Oracle Autonomous JSON Database has the potential to deliver on that, and therefore merits a closer look/evaluation.

6. Understand and avoid the time sinks that developers step into. Developers need to continuously monitor where they spend their time—humankind’s most precious resource. But as all engineers, including developers, are measured on outcomes, developers need to be more acutely aware of how they actually spend their time. Conversely, good developers will be constantly on the lookout for offerings that free up more time for coding and increase their developer velocity.

MyPOV

Developers need to think more about themselves, even to the point of becoming selfish. Technology advancement has accelerated, and the expertise and learning options available a few years ago are no longer keeping developers skilled to the level where they want to be and should be.

At the same time, days have not gotten longer than 24 hours, so it really is up to developers to determine how they can get the most out of their time. Adding more admin/ops skills is not the best choice. It is true that new technologies are always interesting and often fun to learn with, tinker with and even build software with. But, all too often, developers get stuck with operating and maintaining these technologies longer than they should, and they really cannot afford to waste time on supporting technologies that could be automated or that should be supported by others. (DevOps, anyone?)

This realization makes developers effective change agents for their work environment. That is not a new role, as developers have that freedom when it comes to the tools they want to use when they code (e.g., their IDE). But the change-agent role now needs to expand to platforms that do not require developers to be taken “hostage” by platform maintenance and operation needs. The consequence is that developers need to become more active in selecting platforms, something they have not done traditionally.

The good news is that new, modern platforms inherently avoid pitfalls that burden developers with operational, administrative and maintenance demands. One such modern offering is Oracle Autonomous JSON Database, which minimizes operational and maintenance demands on anyone—whether they are developers or DevOps staff. The result of using platforms with autonomous qualities is that they improve the developer experience: Developers can spend more time coding and/or more time learning, increasing their skills, relevance and marketability.

Not understanding the secret of your success.

Löw deserves credit at analyzing the game tactics at the time, which was characterized by Germany loosing against a ball possession centric Spain three times in a row. It is all understandable, that Löw designed a ball possession centric system for Germany. He got enamored by the ‘false 9 system, originally perfected by Guardiola with Barcelona. What Löw failed to realize – Barcelona had Messi to score, and Spain scored from standard situations. Who scored for Löw were Klose and Müller. Klose broke scoring records for all time at World Cups with 15, so for Löw to realize he had a once in a lifetime player with him – was obvious. And Müller won the golden boot at the 2010 World cup and the Silver Boot at the 2014 World cup. A quick not for the non-football / soccer connoisseurs, when you score, and keep the ball, your chance for winning is up. That worked for Germany.

The enterprise lesson: CxOs need to know the real reason why they are successful. It does not matter what they are told from outsiders and insiders, but it is key to look at the key mechanics of the enterprise. Usually, the success factors are not the ones that are seen and perceived from the outside.

Bottom line: Know what works, what fails and why you succeed.

Assuming you are different than previous leaders.

Four world champions have been eliminated in the group stage in World cup history. Sure, 1966 Brazil may have been a fluke, but 2002 (France), 2010 (Italy) and 2014 (Spain) world champions got eliminated as well. So, for Löw does not taking any visible precautions in 2018, borders to gross negligence. At the same time, it is an oversight issue, but more on that below.

The enterprise lesson: Market rules may change, but the fundamental mechanics are always in place. Leaders get complacent, slow down to innovate, take lower risks, hang on to key personnel all the time.

Bottom line: At the top, there is not resting, but efforts need to be doubled…

Hanging on to the wrong tactics.

Löw is hanging on to his ‘False 9’ system till the end, with the expected lineup for Germany’s first European Championship game tomorrow listing Thomas Müller as 9 (the center forward). And Löw should know better: Whenever Germany fell behind on scoring or needed to score in the last tournaments (and Löw holds the record for a German national team falling behind on scoring by now) – he would begrudgingly bring a 9, a center forward, his favorite player being (the now retired) Gomez. Initially that worked, later it did not. Players were familiar with a 9 in their team. But when Gomez got injured, there was no backup for him (as he was the backup strategy anyway). At the 2020 European Championship (happening in 2021 due to Covid, right now), the fall back 9 is Volland. Now guess which player did not play any test matches. You know it, Volland, who is the most successful striker with a German passport in 2020 / 2021 league play with 16 in the French Ligue 1 (likely starters Müller / Gnabry scored 11 / 10 last season in the Bundesliga).

On the defensive side, traditional strong German defenses got soft. So, Löw started to play three center backs, even four in some qualifying games (ironically, they scored, underutilized, and unmarked in games as did Ginter and Ruediger). Now Löw seems to have settled with 3 center backs and 3 outside defenders, effectively playing a 5/2/3 – which looks nice as a 3/4/3 as most media will put it.

The enterprise lesson: When your fallback strategy is working and making you successful, then it is time to consider that the fallback strategy is the main strategy. It is easy to rationalize the need for the fallback strategy due to special events – and go back to the old main strategy… but if the patter repeats itself over 4-5 business cycles… it is time to change. And it is time to bring the right people and personnel in for the backup strategy.

Bottom line: Strategy needs to have the right degree of adoption and fluidity. And you must have the right talent for a dual strategy on board. If you do not have the management bench for the backup strategy, do not be surprised it will fail due to talent availability and capacity.

Bad and inconsistent personnel decisions.

Practice plays a role and Löw declared he will only consider players for the 2018 World Cup who have been playing the season before, having the necessary fitness. He did not say that he would have a special rule for goalie Neuer, who was injured all season, and still started. Though glossed over, that did not go down well… and for goalkeepers it is evident – you cannot just move players around like on the field (as Löw is doing with Kimmich right now….).

More recently Löw wanted to rejuvenate the team and sorted out world champions Boateng, Hummels and Müller. But before the Euro he reverted and Hummels and Müller are back.

The enterprise lesson: Do what you say and say what you do. If you are public about something live up to it or explain why you changed it and move on. You can't revert aging. But be 100% sure when you trigger a transition. Reverting 2 years later like

Löw is counter productive. Players now don't know if they have a longer term future and are part of it - or get replaced by veterans before a major event like Euro 2020.

Bottom line: If you change key personnel, it either has to be reverted very quickly, or stick to it.

Trying too many different strategies for the comeback.

Naturally fallen leaders want to adjust their strategies, so did Löw. Different defensive and midfield lineup were tested over and over but did not lead to the desired outcomes. And Löw never considered that he may have to change the ‘false 9’ setup. Now he goes into Euro 2020 with an attack system his players are not familiar: Even the ‘Bayern Block’ plays with a real number 9, a certain Lewandowski, yes, the player who was the best forward on earth if you believe the judges. And on the defensive side, Löw’s center backs play as couples, not triples and with 4 not 5 defenders… practically the only defensive player allowed to play his familiar club defensive setup is Atlanta’s Gossens. But wait, he has a true 9 on the field. What could possibly go wrong?

The enterprise lesson: Too many strategies can be confusing, and backfire. A supply chain strategy (e.g., defense) that does not match the demand strategy (e.g., attach), will overly strain people doing value creation (e.g., the midfield). It must also match talent and capacity of the people (e.g., players) executing it.

Bottom line: Strategy must work as one organic construct and be familiar to the talent and people executing it.

Lack of oversight and leadership.

Public enterprises have boards, private enterprises have owners and investors. So does the German soccer association, DFB. But the DFB Praesidum chooses to fight amongst themselves, gets involved in potential right-wing rhetoric and other unprofessional and inappropriate optics. Allowing a Bundestrainer to stay in place after the worst performance in association history is a sign of weak leadership. Löw evidently was clinging to his job, offering an 8-week analysis of the 2018 world cup disaster. What he should have done is offer to step down. He did not, sensing the weakness in the DFB Praesidium.

The enterprise lesson: Strong oversight matters. May it be on the mentoring and coaching side, may it be at pulling the trigger and changing leadership. It also means taking responsibility for the personnel in place and the personnel changes. Strong boards with the proverbial skin in the game are crucial for enterprise success to last.

Bottom line: Oversight matters, strong board are a guarantor of success.

Getting the succession wrong.

By now it is clear that Löw will return after Euro 2020. So why does he do this tournament? He is the proverbial lame duck, and his successor (Flick) is even available. So, oversight is giving Löw what he wants, despite time pressure. World cup 2022 is in a year, Covid allowing.

But there is a Flick issue as well. He was Löw’s assistant in the glory days. And he looked like a genius 12 months ago when Bayern (his team then) won the German Championship, German Cup, and the Champions League… but turns out that Flick did not learn from the over dependence of great goal scorers (it was Müller and Klose, scroll up) – and now it was Lewandowski. When Lewandowski got injured, Bayern missed out on two titles, going down to one. It was clear Flick had no system, no alternatives to Lewandowski, and was just riding the wave, as Löw and he did in 2014. Worse, a club coach has his team around almost all year to develop a tactic system, rotate players (yes, they have ups and downs, and yes, they get injured. And that at one of the richest and wealthiest teams in club soccer, Bayern. If Flick did not catch the root cause of the post 2014 debacle, he repeated the mistake again at Bayern. How does that qualify him to be the next Bundestrainer?

Finally – the excuse for keeping Löw in place was always – there are no good German (!) coaches available. Klopp at Liverpool, Tuchel now at Chelsea, Flick at Bayern – oh wait… In the meantime – DFB Leadership failed to realize that the national coach does not have to have the national passport as the players have to… and nation ranked #1 – Belgium – Martinez is… Spanish.

The enterprise lesson: Executive changes are tricky… in enterprises as in national soccer teams. But before you put the next person in charge, understand why you are replacing the current leader. If the new one was the understudy, left and failed for the same reasons, why would you put the understudy in charge?

Bottom line: When the natural succession moment is gone, it is gone. Do not bring the understudies back. Study the competition. Look at a wide talent pool.

MyPOV

Soccer / Football is an unpredictable game. A bigger portion of luck is typically involved as in higher scoring team sports (think basketball, handball, volleyball etc.). I have been concerned about Löw’s tactics since a long time (see here) – Euro 2020 gave me the event to get this blog out. It is well possible that Löw turns the ship around and Germany beats world champion France tomorrow. “Der Ball ist rund” as longest tenured Bundestrainer, Sepp Herberger said once upon a time. And while the fate of Die Mannschaft may be better, the lessons learnt for enterprises … remain valid.

Overall MyPOV

Ceridian continues its strategic acquisition spree of regional payroll players, that offer multiple country support already. Ceridian has shown that for the APAC region with the 2020 acquisition of Excelity and this February with Ascender. It even has a luxury and consolidation challenge there, as payroll offerings overlap. Now Ceridian is tackling Latin America and Caribbean. What’s next? Europe and Africa remain… as well as the Middle East. We won’t be surprised if Ceridian acquires there in 2022…

But it is one thing to acquire payroll providers, it is another one to get the know how into the go to platform (Dayforce) and another one to consolidate these payrolls and replace them with the Dayforce offering. Ceridian has shown in North America that it can do upgrades on a large scale at metronomic precision, as it upgraded the old Ceridian platform customers to Dayforce. And let’s not forget, Dayforce is a nice upsell for most of these customers who only HR Core and Payroll with their vendors, maybe some light Talent Management, but a full Talent Management suite, and the Ceridian ‘crown jewel’ on the Workforce Management side are massive upsell opportunities.

For not it is congrats to Ceridian, you first need to have the inhouse know how to build a payroll, and an acquisition is a good way to not only get the know-how, but also get real customer to convert to the new product to. Let’s see which countries will come out first wit the help of ADAM HCM.

Also on Ceridian

Offering Overview - Ceridian Doubles Down on the Integrated HCM Suite - see here

Event Report - Ceridian Insights 2018 - Ceridian is on a roll - read here

Event Report - Ceridian Insights 2017 - Ceridian widens and deepens the Dayforce Suite - read here

Progress Report - Progress Report - Ceridian pushes onward across the board - read here

Progress Report – Ceridian executes on product, next challenge – implementation capacity, then sales …read here

Event Report - CeridianINSIGHTS 2014 - Ceridian innovates and adds key functionality - read here

First Take - Ceridian INSIGHTS Day 1 Keynote - Top 3 Takeaways - read here

Progress Report - Ceridian makes a lot of progress - but the road(map) is long - read here

Ceridian transforming itself and with that the game – read here

And unrelated to Ceridian - but how important payroll can be for HCM innovation:

Constellation ShortList™ Payroll for North American SMBs - see here.
Could the paycheck reinvent HCM - yes it can - read here
And suddenly... payroll matters again - read here
Musings - How Technology Innovation fuels Recruiting and disrupts the Laggards - read here
Musings - What is the future of recruiting? Read here
Why all the attention to recruiting? Read here.
Musings - Is Transboarding the future of People Talent Management? Read here

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.

IBM invited its partners for three days to the IBM Innovation Lab in Paris, to share progress in quantum as well as provide partner the chance to educate each other, share progress and state of their projects as well as ample network opportunities.

Here are my four key takeaways from the event:

IBM makes good progress on the innovation of its platoform / hardware.

IBM’s VP of Quantum Jay Gambetta was in Paris and re-confirmed that IBM is on track with its goal of reaching 4000+ qubits by 2025, based on the IBM Quantum System Two. For now, the Osprey chip that is available with its 433 qubits, later this year Condor (1121 qubits) is slated to become available. At Think 2023 IBM also launched new offerings for quantum, with the IBM Quantum Safe technology getting the most attention.

Figure 1 – The IBM Quantum Development Roadmap

Source: IBM

Most importantly, partners see progress and are confident that IBM is the right partner to provide the underlying hardware platform for their quantum computing projects.

Figure 2 – Jay Gambetta in Paris, May 15^th, 2023

Source: Constellation Research

A wide variety of use cases are happening today.

IBM sees five large use cases where quantum is being implemented today, IBM’s Jamie Garcia walked us through the five use cases:

· Aerospace and automotive. Prominent use cases here are customer experience (CX), materials design, structural design and optimization of processes like in manufacturing.

· Financial Services. Thepopular use cases are evidently fraud detection, pricing of derivatives and options, portfolio optimization and risk analysis.

· Hight Tech. IBM sees seismic imaging, catalysts, supply chain planning and manufacturing scheduling as key quantum use cases.

· Energy, environment, and utilities. Portfolio optimization, grid optimization, risk analysis and options pricing as well as battery design are key use cases for quantum in these verticals.

· Healthcare and life sciences. IBM sees the prediction of disease risk, drug discovery and design as well as protein folding predictions as the most prominent uses cases in these industries.

Fig 3 – Jamie Garcia presenting in Paris, May 16^th, 2023.

Source: Constellation Research

Quantum education remains challenging but is making progress.

Education on what quantum computing is, and what its benefits are in academia, government and enterprise is a major challenge. More than one time I heard from attendees referring to the session and saying that they need to explain what quantum is over and over. The challenge is the novelty of quantum and that requires education of executives but also requires education of the workforce. As of today, most attendees held degrees in physics, something not surprising given the nature of quantum. But that needs to change, and other disciplines will have to play a role here. It was also good to see the first quantum education courses coming into place in Canada. The challenge is real and vital for the industry, as for quantum to grow it needs skilled people who can use, explain, and advance quantum technology.

Figure 4 – Rafa-Martin Cuevas presenting in Paris May 17^th, 2023.

Source: Constellation

The partner network approach is delivering.

With over 100+ attendees across the whole partner ecosystem – from clients, prospects, services partners, academic partners, and IBM, it was good to see how the network is delivering value for the attendees. On such an innovative and fast pacing technology like quantum, it is key to bring together users, implementors and makers, so they can align on what is feasible and what needs to be done. The learning across the use cases is substantial, even if they come form very different vertical use cases. This is critical at the relatively early phase quantum is still in its adoption across enterprises, governments, and academia. More than a few times attendees said they learnt from other industry use cases, partners, enterprises in other countries and regions, even from academia. It is good for IBM to bring it all together as synergistic learning is substantial. As quantum grows, this approach may not be feasible anymore but for now and the next years to come this is the right approach and IBM deserves kudos for inviting and hosting the forum. With just around 100 attendees, the event is small scale enough for a lot of networking to happen, as anyone who wants to speak to another attendee has the chance to do so. Additionally, a unique atmosphere is created at an event where almost every attendee is a moderator or panelist, as it breaks the attendee vs presenter barrier effectively – encouraging networking and information exchange on a peer-to-peer basis.

Also checkout the multimedia deliverables, the Wakelet of the event here, the 1Slide summary here and the event video below (and don't miss the Day #1 and Day #2 (with a bonus on how Arizaon State is using quantum) summaries here and here).

We are midway through the fall conference cycle, and it is time to take stock on where vendors are in the uptake of generative AI… Here are eight questions to ask the vendor to separate the hype from the true progress towards generative A.

When you hear - “We have been doing AI for a long time…” – it maybe trouble.

It is human nature to downplay something new, especially when caught by surprise… so, when a vendor says above, take caution. The previous approaches to AI were not using large language models (LLMs) and were not able / typically did not leverage unstructured data. They were – if true AI – limited use case applications, more likely using ML and account for a large part being powered by predictive analytics. That doesn’t make any of these offerings not valuable, but they are not generative AI. And vendors resorting to these may give an insight on potentially not getting their heads and arms around generative AI.

WHen you hear - “We have unparalleled data…” - don't get fooled

Many vendors often quote their data advantage, but that is likely limited to transactional data. There are almost no vendors that can say they have brought together all relevant structured and unstructured data in their automation domain… AND made it available for generative AI algorithms. And while that vendor may practically exist but has not come across my briefing and event schedule in Fall of 2023.

Does the vendor have a data lake, lakehouse etc.?

AI needs data and a lot of it. And it needs to be stored cheaply, while being able to query it in any possible way – as the digestion and preparation for AI learning is not standardized. A lakehouse is the right approach as it can store both structured and unstructured data of the enterprise. A data lake is fine as well. Or at least any Big Data / Hadoop powered data storage. If none of that exists – the vendor has a lot of catching up to do.

Is the vendor running AI in the public cloud?

If the answer to this is not a clear Yes! this spells trouble. Only the abundance of cheap compute in the cloud can make generative AI feasible. And as a customer you do not want a vendor to invest double digit millions into an on premise / private cloud supercomputer for model training. It will not get the utilization and the CAPEX is spent better in software (like for generative AI).

How does the vendor get the data?

Before the cloud, AI offerings would rely on getting sample data, train the model and then federate it back to the customer instances. Of course, there was / is a delay for this – and that can make the whole AI model irrelevant / inadequate and worse – wrong. Today the best practice is to have all customer data and continuously train models – in a fully automated approach. You want your vendor at least to plan for this.

Can the vendor explain their 2024 AI platform?

There are many approaches to AI – but a vendor needs to be able to explain – even to a business audience – what their AI platform in 2024 will be. Kudos if that is the same as in 2023 – and they can explain that one today. Understand where data, where compute is coming from. Understand what AI models and training is used. Understand how models are being trained and then implanted into enterprise applications for AI powered outcomes. If the vendor is using any of the standard LLMs – which ones are they?

Can the vendor explain their foundation model strategy?

Foundation models are key to make generative AI work. General knowledge and conversation skills come from a cloud vendors LLMs… but then it comes back to how vendor nomenclature, vertical nomenclature, and lingo and finally customer lingo is inserted into the AI models. This requires an efficient foundation model and model merge architecture. Understand the models being used, how they are merged or call each other and how an enterprise can e.g., insert / create / add their own model.

Can the vendor access transactional data?

The dirty secret of the GenAI hype is – transformer models cannot (or at least easily) access transactional data. Unfortunately -that is where all relevant enterprise data gets stored – in transactional systems. There are workarounds and approaches to bring documents and transactional data together – but they are not yet established / proven. Ask your vendor how they are going to address this issue – the biggest challenge we have with AI going into 2024.

MyPOV

There is a lot of potential for generative AI. It is the first technology innovation that was more familiar to the consumer than the enterprise… thanks to how Microsoft / OpenAI launched ChatGPT & co. It is also the first technology innovation that promised so much potential, that enterprises were ok with their vendors dropping their roadmaps and figuring out what to do instead… a first in the industry…

Nonetheless vendors need to understand the technology, adopt it in their tech stacks and then let generative AI make a difference for their customers… it will take some time. For now it is all first use cases, the big challenge will be the integration of document and transactional data. 2024 will be the big year for generative AI – in the meantime I hope the above debunk questions help you figure out what is hype and what is real in the fall of 2024.

Let me know if I missed something, totally possible. And don’t be shy to provide any other feedback. Thank you!