Digital Transformation Digest: Box Eyes Bigger Enterprise Consulting Role, How Chaos Can Prevent Cloud Outages, IBM's Enterprise Chatbot Exchange

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Box believes content management is a crucial component of digital transformation projects, and to that end it has launched a new consulting service called Transform. The service provides customers who buy in with a dedicated and long-term consultant who will work with them on issues much broader than implementing Box software. Here's how Box describes Transform:

Integrating digital initiatives to accelerate organization-wide transformation: Box Transform provides enterprises with a strategic IT advisor to help them go beyond traditional file sharing practices, including implementing paperless strategies, digitizing time consuming processes like HR onboarding, building out custom applications with Box Platform, and retiring costly legacy infrastructure like network file shares.

Deploying agile methodologies: Projects through Box Transform are comprised of iterative sprints that include phases of planning, execution and retrospection, with the goal to increase efficiency and speed to results, resulting in processes being reimagined in months, not years.

Developing long term content strategies: With Box’s team of product and domain experts help you develop strategic and actionable content strategy roadmaps to centralize content layers and support ROI goals.

POV: Pricing wasn't disclosed for Transform services, which build upon the consulting practice Box formed in 2013. That was a telling development in Box's push toward enterprise business, and Transform represents the next natural step on that journey. The question is whether Box can make a compelling enough case to customers that Transform can truly deliver value outside the company's core domain expertise. Issues around identity management and compliance with respect to content are two areas where Box consultants could do so, notes Constellation VP and principal analyst Alan Lepofsky.

Box, founded in 2005, does have the benefit of having helped thousands of customers move technology and processes to the cloud and has been steadily notching up more large enterprise deals, including with AstraZeneca and General Electric. Still, it's a crowded market for digital transformation consulting services and Box has its work cut out for it.

Gremlin targets cloud outages with chaos engineering: Outages are a fact of life in the cloud, and they're not only inconvenient but incredibly costly to both providers and customers who rely on their services. Now a startup just out of stealth called Gremlin wants to make outages a thing of the past—or at least dramatically infrequent—through a technique called chaos engineering.

It's led by Kolton Andrus, a former engineer at Amazon and Netflix, the latter of which is known for its use of chaos engineering. Netflix built a tool called Chaos Monkey that randomly takes parts of its production system offline to see how the rest of it responds, giving engineers insight into how to build more resiliency. Chaos Monkey is now part of a larger family of Netflix tools known as Simian Army.

Gremlin's tool acts in a similar manner; the company refers to it as an "engineering flu shot," wherein companies can "safely inject failure into systems in order to proactively identify and fix unknown faults."

The distributed systems found in cloud services are inherently problematic, Gremlin contends in its announcement:

Previously, software ran in a controlled, bare metal environment that introduced few variables, making it possible for engineering teams to identify potential risk and failures before they occurred. Within the last decade, systems have shifted to the cloud and become distributed with microservices and serverless methodologies, which introduced new dependencies on services outside of one’s control - creating complexity for any team of engineers to fully understand. This makes failure and outages inevitable.

Gremlin’s tool allows engineers to see how the system will behave in the face of failure, validates that defenses will work to prevent outages, minimizes the blast radius to allow for safe experimentation in production, and saves time and resources for engineering teams.

POV: Gremlin has raised a total of $8.75 million in seed and Series A funding, so it's certainly early days for the company in that respect. But it has already managed to sign up some high-profile early customers, including Expedia and Twilio. Gremlin has certainly taken inspiration from companies who understand massively scalable systems and its tool may quickly find a place in many enterprises' operations.

IBM launches Bot Asset Exchange: Big Blue is hoping to draw more chatbot developers to its Watson Conversation service through a new portal called the Bot Asset Exchange. Here are the key details from IBM's announcement:

The Bot Asset Exchange leverages open source development to help conversational interface developers, including bot, voicebot, IoT, and virtual reality developers easily discover, quickly configure, and simply deploy bots. Users can find domain-specific conversation logic ready for them to use, leverage the creativity of a community of bot builders to discover innovative ways others have built bots, or create and contribute their own bot conversation logic.

Using the platform tools and participating in the community is incentivized by a point system that offers rewards, recognition and prizes such as IBM-branded merchandise, tickets to IBM events like Index – San Francisco, one-on-one meetings with the Digital Business Group’s product team, and social media mentions.

POV: The portal is already stocked with a healthy number of industry-specific bots, with use cases including IT support, travel booking, online banking, equity trading, personal finance and property management. The bots are dependent on Watson Conversation for the back-end conversation processing but there are no restrictions on how they can be designed or where they can be published. The site is in its early stages but is well-designed; the challenge will be raising awareness, getting a critical mass of developers engaged, and ensuring good governance over the bot content.

Digital Transformation Digest: Microsoft Quantum Appeal to Developers, Google Cloud's Ecosystem Traction, Internet Pioneers' Net Neutrality Hail Mary

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Microsoft looks to seed quantum developer base: In September, Microsoft laid out its quantum computing vision, which included the unveiling of Q#, a new programming language. Now Microsoft is hoping to get its large base of Visual Studio developers working on quantum projects with the release of a counterpart toolkit.

Classical computers are binary, storing bits as either a one or a zero. But quantum systems take advantage of the behavior of subatomic particles, which can hold multiple states in a phenomena known as that stands to give quantum systems vast amounts of processing power.

The new toolkit is "deeply integrated" with Microsoft's Visual Studio IDE, comes with a set of libraries and tutorials, and also includes a quantum simulator that runs on a laptop. For bigger quantum projects, Microsoft has a simulator that runs on Azure. Any quantum applications written with the kit will be future-proofed in a sense, as they'll work on general-purpose quantum hardware now under development at Microsoft.

POV: Microsoft has been working on quantum computing for more than 10 years. Still, it is playing catchup somewhat to rivals such as IBM, who has already pledged to have commercial quantum systems to market in just a few years. Google says it is getting close to reaching "quantum supremacy," referring to a quantum system that can complete a task faster than the world's most powerful classical supercomputers.

But giving millions of developers access to quantum tooling and educational resources now, consumable from within the familiar confines of Visual Studio, is a long and smart play from Microsoft. There are fundamental conceptual differences in programming a quantum system that the vast majority of developers will need to wrap their heads around. The toolkit and language, which will surely be continuously refined, provide an abstraction layer that gives developers a head start.

Google Cloud Platform plays catchup on MSP ecosystem: In a move that both suggests increased interest from enterprises and acknowledges their needs, Google Cloud Platform is steadily increasing the number of managed service providers in its orbit.

In March, Google announced that Rackspace would be GCP's first MSP; today, that number has grown to 12. While not a jaw-dropping total, it's nonethless progress for GCP's ecosystem and a sign that partners are becoming more willing to make their own substantial investments in building out GCP practices. Here's how Google describes the MSP program:

From hands-on support to the ongoing operation of customer workloads, these partners offer proactive services to both large and small cloud adopters. With their staff of dedicated technical experts, MSPs can tackle high-touch projects, covering engagement to migration and execution, to post-planning and ongoing optimization. Specifically, Google Cloud MSPs offer at minimum:

Consulting, assessment, implementation, monitoring and optimization services 

24x7x365 support with enterprise-grade SLAs 

L1, L2, L3 tiered support models 

Certified support engineers

One big addition to the ranks is Accenture. The rest is a mix of smaller companies: Cascadeo, Claranet, Cloudreach, DoIT International, Go Reply, Pythian, RightScale, SADA Systems, Sutherland and Taos.

POV: A robust MSP ecosystem is a proof point that a platform has matured and has market traction. As for GCP, 12 MSPs on board is certainly better than one, but to compete for more enterprise business Google will need to grow the ecosystem significantly, both from an expertise and geographic availability perspective. Google says more MSP partner announcements are coming soon.

Internet pioneers throw a Net Neutrality hail Mary: Later this week, the U.S. Federal Communications Commission's board is expected to overturn net neutrality regulations along party lines. The vote seems inevitable (although net neutrality proponents have a number of options to pursue next), but a group of 21 well-known technologists are asking members of Congress to step in at the eleventh hour.

The group, which includes Internet pioneer Vint Cerf and Apple co-founder Steve Wozniak, has written an letter to members of the House and Senate committees for technology-related matters, with the rather tart title, "Internet Pioneers and Leaders Tell the FCC: You Don’t Understand How the Internet Works." Here is an excerpt from the letter:

This proposed Order would repeal key network neutrality protections that prevent Internet access providers from blocking content, websites and applications, slowing or speeding up services or classes of service, and charging online services for access or fast lanes to Internet access providers’ customers.

It is important to understand that the FCC’s proposed Order is based on a flawed and factually inaccurate understanding of Internet technology. These flaws and inaccuracies were documented in detail in a 43-page-long joint comment signed by over 200 of the most prominent Internet pioneers and engineers and submitted to the FCC on July 17, 2017.

Despite this comment, the FCC did not correct its misunderstandings, but instead premised the proposed Order on the very technical flaws the comment explained. The technically-incorrect proposed Order dismantles 15 years of targeted oversight from both Republican and Democratic FCC chairs, who understood the threats that Internet access providers could pose to open markets on the Internet.

POV: Net neutrality bars ISPs from slowing legal Internet traffic based on payments or other considerations. The rules passed in 2015 determined that Internet service should be governed under Title II of the Commmunications Act, a law that dates to 1934. Opponents argue that the rules overreach and are anticompetitive.

As for the group's letter, it's highly unlikely to have any effect on the vote but does serve to bring attention to the issue. It's a sure bet that once the FCC votes, net neutrality proponents will file a lawsuit and it's conceivable that the rule change will be stayed by the court pending an outcome. This debate is far from over.

Digital Transformation Digest: Kubernetes Can't Be Contained, Cisco Eyes Cloud Cost Management, Oracle and MongoDB Set for Earnings Showdown

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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Kubernetes can't be contained: Even if you're not a DevOps type, it's likely you've heard of Kubernetes, the open-source container orchestration platform that has become the industry standard in just a couple of years. Kubernetes originated at Google, which had used it and previous incarnations of the idea to run its own operations. That's undoubtedly one reason for Kubernetes' rapid start out of the gate when Google open-sourced it in 2014.

Containers are lightweight packages that include everything an application needs to execute—binaries, config files and so forth—so they can run the same across different environments and systems. Kubernetes handles the job of deploying and managing armies of containers, which offer benefits for developers, IT operations staff as well as end-users in the form of stability and performance.

It's overseen by the Cloud Native Computing Foundation, which the Linux Foundation formed in 2015. The CNCF now has 13 other open-source projects under its purview, many of which are focused on container-related functions. The group now has 160 members representing every top enterprise technology vendor; this week, Salesforce joined the CNCF in another prominent addition.

Another momentum data point: This week's KubeCon event in Austin, Texas drew greater than 4,000 attendees. That's well over three times the number who showed up one year ago.

It's not difficult to read the tea leaves, says Constellation VP and principal analyst Holger Mueller.

"Enterprises want portability and containers give them that," he says. "The more support for a container there is, the more they want it. So the flywheel is working for Kubernetes." Last week at its re:Invent conference, Amazon Web Services announced its own distribution of Kubernetes, even though it offers a homegrown container orchestration system. There's only one way to interpret that, Mueller says: "The war is over. Kubernetes has won."

Cisco buys Cmpute.io for managing cloud spend: This week, Cisco quietly struck a deal to buy Cmpute.io, a Bangalore company focused on helping enterprises manage their cloud spending. Cisco's Rob Salvagno gave the rationale for the acquisition in a blog post:

Cmpute.io’s software solution analyzes cloud-deployed workloads and consumption patterns, and identifies cost-optimization strategies. The solution helps customers right-size their cloud workload instances, minimize overprovisioning, and avoid paying for resources that don’t deliver business value.

With a multicloud strategy, customers need to budget, buy, and consume differently. Cmpute.io’s technology added to existing Cisco solutions will help our customers optimize their cloud consumption to ensure optimal business value.

Cmpute.io's team and technology will be rolled into Cisco's CloudCenter group.

POV: Terms of the deal weren't disclosed, so the price tag was likely on the smaller side. The more important thing to note is how Cisco's move ties into a broader cloud industry trend, where the market has become somewhat binary. Amazon Web Services and Microsoft Azure hold the lead in IaaS, with Google, IBM and Oracle trying to bring up their market share. Cisco, HPE and other players who attempted to launch a public IaaS but were compelled to fold their hand under too-stiff competition are trying to make money by helping customers manage multi-cloud spend, which is arguably a runaround way to compete with the IaaS leaders.

Oracle and MongoDB's dueling earnings: This is the time of year when enterprise tech industry news slows down for a bit, but there are still some notable items to watch. One is Oracle's Q2 earnings report, which is due out Dec. 14.

The quarter is typically one of Oracle's slower ones yet the numbers, when they're released, could be telling. For Q2 is the first quarter in which customers could take advantage of new programs geared toward convincing them to adopt Oracle's IaaS and PaaS.

The programs include a BYOL (bring your own license) option for Oracle's database and middleware, wherein customers can transfer their existing on-premises licenses to Oracle's IaaS. Those who move database licenses there can run them "at a fraction of the old PaaS price," Oracle said at the time.

Oracle also rolled out universal credits for PaaS and IaaS, which it described as follows:

Customers have one simple contract that provides unlimited access to all current and future Oracle PaaS and IaaS services, spanning Oracle Cloud and Oracle Cloud at Customer. Customers gain on-demand access to all services plus the benefit of the lower cost of pre-paid services. Additionally, they have the flexibility to upgrade, expand or move services across datacenters based on their requirements.

Go here for Constellation VP and principal analyst Holger Mueller's deep-dive on Oracle's new programs. Other metrics to watch in Oracle's Q2 include trend shifts in the sale of new on-premises licenses, how well Oracle SaaS is selling across different categories, and mentions of "all-in" customer wins, particularly for Oracle cloud services.

Oracle has a long and rich history, with a market capitalization of more than $200 billion. In a bit of counterpoint, NoSQL database vendor MongoDB will issue its first earnings report since going public in October. The tech unicorn has been posting heavy losses as many hot startups do, but eyes will be closely watching MongoDB's numbers, particularly any guidance it provides on future quarters. MongoDB's leadership has long positioned the company as an alternative to Oracle's database; to that end, some of the closest observers of its numbers may be watching from a certain set of towers in Redwood Shores.

Digital Transformation Digest: EU Says Luxury Brands Can Block Amazon Sales, Inside Dell's Q3

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Cindy Zhou

CMO
Level Access

Cindy Zhou is a practicing CMO.  Prviously, she was Vice President and Principal Analyst at Constellation Research covering Digital Marketing Transformation and Sales Effectiveness. With over 18 years of practitioner experience in corporate marketing, product marketing, product management, and sales operations, Zhou has spearheaded marketing transformation at multiple technology companies. She advised Constellation’s clients on strategies to light-up demand generation, prove revenue contribution, and maximize sales productivity. Prior to joining Constellation, Zhou was Global Senior Vice President of Marketing and Sales Operations at BackOffice Associates, a global provider of data quality and information governance solutions to the Fortune 1000 and SAP SolEx partner. Before…...

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EU Court rules that luxury bands can block Amazon sales: A landmark ruling has come down in the European Union Court of Justice, which said that luxury product makers can block their wares from being sold by third parties on marketplace sites such as Amazon and eBay.

"The quality of luxury goods is not simply the result of their material characteristics, but also of the allure and prestigious image which be stows on them an aura of luxury," the court said. "That aura is an essential aspect of those goods in that it thus enables consumers to distinguish them from other similar goods. Therefore, any impairment to that aura of luxury is likely to affect the actual quality of those goods."

German cosmetics and fashion manufacturer Coty, which owns brands such as Calvin Klein and Covergirl, brought the action to the ECJ after an authorized distributor began selling its wares on Amazon. Coty and other luxury brands, such as LMVH, are loath to be associated with the likes of Amazon, with its emphasis on low prices and mass availability. To that end, LVMH has created 24 Sevres, a glossy e-commerce site where shoppers can select products from more than 150 high-end designers and get them via 2-day shipping.

POV: "This is all about brand protection and a part of preventing counterfeit goods," says Constellation VP and principal analyst Cindy Zhou. Luxury brands have taken similar issues to court in the United States as well, such as when Tiffany sued warehouse club Costco over rings labeled "Tiffany" in stores. Costco argued that it was not selling counterfeit rings but rather using the word as a general description of the type of setting used in the rings. A court ruled against Costco, ordering it to pay Tiffany more than $19 million.

"Luxury brands are all about differentiation and curating their upscale image," Zhou says. "As Amazon and other sites have a third-party seller network, it is difficult for the brands to control their distribution."

The ECJ's ruling offers protection to the LVMH's of the world from brand dilution in the EU's 28 countries, but won't have any effect on the massive consumer goods market in the U.S. Nor is it any guarantee across the EU, as the notion of a luxury good can be a bit fluid. For example, Coty brands such as Cover Girl and Clairol products are widely available for a reasonable cost in drug and department stores everywhere, hardly confined to tony retail boutiques. But overall, the ruling provides interesting fodder in a time of rapid change for cross-border trade, e-commerce, marketing and customer engagement.

Dell Technologies Q3 results—the highlights: This week Dell Technologies reported its third-quarter results, posting revenue of $19.6 billion but a net loss of $941 million. The full numbers are available here, but in this post we'll mostly focus on comments executives made during a conference call, and how they reflect on the broader market.

One major aspect of the historic Dell-EMC merger that created Dell Technologies was the potential for supply chain synergies, which would not only lower the vendor's cost but also improve product availability and service. Here's how Jeff Clarke, VP of products and operations, described the state of the state:

We've seen tremendous efficiency in the supply chain particularly through cycle time improvement, lead time improvement to our customer base and managing our working capital initiatives through our facilities most notably in the form of inventory. So I think we are well along the path of managing our other cost outside the commodity and the supply chain on the product side.

Memory prices, which affect so many tech products, companies and end-users, have been rising and with little end in sight, but Dell's supply chain footprint is helping it compete:

You've seen what we've gone through which is the longest inflationary period that I can recall in memory in a decade plus. And that's a byproduct of two things; one, there hasn’t been any new DRAM capacity been brought online and then the consumption of DRAM is at the highest rates we've seen.

We have DRAM, so as much as I have said DRAM is going up in cost we have it. And we're getting a value for having it. And whether that's in our PC business, on our server business I think that is something customers are coming to us for knowing we have supply and they're obviously paying for it.

Dell introduced flexible consumption models across its product line earlier this year. They allow companies to scale usage up or down as needed while avoiding major up-front costs. The number of flexible consumption deals in Q3 dropped compared to Q2, suggesting initial customer enthusiasm for the model is waning. That's not necessarily the case, Dell CFO Tom Sweet said:

I think that things are going to vary. They are complex, they're multi-year, they take time to negotiate with and typically the larger customers, the global customers that are negotiating these types of arrangements and so I think we are going to see some variability. I think all things being equal it's entirely conceivable that we'll see an uptick in a flexible consumption models in Q4 just given natural end of year sort of activity both from a customer and from a Dell Technologies perspective.

Dell has a massive array of products, some of which will likely be consolidated over time. Clarke acknowledged a need to lower complexity for customers:

[Y]ou know, complexity doesn't mean less products, complexity can mean the number of offers per product, how many countries we offer our product in. Interestingly we treat the 180th country the same way we treat the largest country in the world. It's not clear to me the 180th country in the world needs all of the entire storage breadth of our portfolio and we can make that less complex.

The next big news out of Dell will come in about a month at the Consumer Electronics Show in Las Vegas.

Digital Transformation Digest: Microsoft IoT Central Eases App Development, UPS's Holiday Crunch Could Spark Drone Debate, and More

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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Microsoft IoT Central enters public preview: If your enterprise wants to empower line-of-business users to build IoT applications quickly, Microsoft says it has the answer in the form of IoT Central, which is now in public preview. 

IoT Central is a counterpart to Azure IoT Suite, which offers deeper customization capabilities and access to underlying services, with the tradeoff being a need for skilled developers. Both services provide quickstart application templates. IoT Central's browser-based Application Builder environment employs a wizard-like approach for creating models of IoT devices, setting application logic and parameters, and testing via simulation before live deployment.

IoT Central taps into a rising tide of interest in low-code platforms aimed at empowering citizen developers. (Microsoft has some experience in this area already with PowerApps.)

While the focus is on simpler scenarios, IoT Central applications can scale out to millions of devices, Microsoft says. It leverages multiple components of Azure IoT Suite, such as Azure Hub for device connectivity, but runs as a fully managed service. (For a deeper dive into IoT Central's technical details, go here.) Microsoft is offering a 30-day free trial for up to 10 devices; preview pricing for larger deployments is set at $0.50 per device per month.

POV: The speed and simplicity Microsoft is promising IoT Central will deliver could be compelling for many enterprises, particularly ones who have struggled to get IoT applications out quickly with other solutions (including Azure IoT suite). But buying decisions will require a thorough side-by-side assessment of the feature sets for IoT Suite and IoT Central with regard to customization capabilities and pricing. For its part, Microsoft says IoT Central offers a "medium" degree of customizability.

Still to come are important features for IoT Central such as pre-built integrations with enterprise apps. Microsoft says those are coming for Dynamics, Salesforce and other products.

"It's always good to see vendors making things simpler," says Constellation Research VP and principal analyst Holger Mueller. At Build 2016, Microsoft held a workshop for Mueller and other analysts in which they connected a Raspberry Pi to Azure IoT. The task was ultimately manageable but required a lot of steps and had some stressful moments. "It's good to see it simplified even further."

UPS faces holiday crunch—again: This year's holiday shopping season saw an uptick in online sales so strong that UPS had to delay some deliveries by one or two days, the Wall Street Journal reports. In an attempt to keep up with demand, the company has mandated that its delivery drivers work up to 70 hours over an eight-day period. While that's allowed under federal law, the Teamsters union, which represents drivers, is planning demonstrations and potential legal actions if the mandate isn't reversed.

UPS has had these holiday congestion issues before, despite hiring thousands of additional seasonal workers as driver helpers and distribution center staff. It expects to deliver 750 million packages between the U.S. Thanksgiving holiday and December 31, a rise of 5 percent over last year, according to industry publication Freightwaves.

POV: As the world's largest package delivery company, UPS is a crucial bellwether in the rapidly changing world of logistics. It is currently in contract negotiations with the Teamsters, who are working under a five-year pact that expires July 31. The new deal will most likely be for a similar term.

While the bulk of negotiations will concern working hours, wages and benefits, talks could also broach the role of self-driving trucks and other autonomous forms of delivery in UPS's operations. The company has been testing drones for years, including one earlier this year that launches from a truck's roof, delivers a package adjacent to locations along the driver's route, then returns to its docking station.

The drones have huge potential for UPS's bottom line, as they could save many millions in fuel otherwise burned by trucks going to those routes and would also provide obvious operational efficiencies. They also could have a negative effect on the UPS driver fleet's livelihood. The Teamsters have said they are "closely monitoring" the development of drones at UPS and based on their statement, won't be avid proponents of them.

Overall, the next few years will be interesting times at UPS as it juggles the challenges of meeting consumer demand, negotiating with its workforce and managing the rollout of new technologies.

Researchers predict most software will be written by computers in 2040: Scientists at the U.S. Department of Energy's Oak Ridge National Laboratory argue in a newly released paper that by 2040, the bulk of software code will be written by machines, with humans playing a highly diminished role:

The combination of machine learning, artificial intelligence, natural language processing, and code generation technologies will improve in such a way that machines, instead of humans, will write most of their own code by 2040. This poses a number of interesting challenges for scientific research, especially as the hardware on which this Machine Generated Code will run becomes extremely heterogeneous. Indeed, extreme heterogeneity may drive the creation of this technology because it will allow humans to cope with the difficulty of programming different devices efficiently and easily.

The authors cite a variety of projects and technologies that already exist for machine-generated code, including the Defense Advanced Project Agency’s (DARPA) Probabilistic Programming for Advancing Machine Learning and Microsoft's DeepCoder. In the future, "if a human does need to write some code, they may find that they spend more time using autocomplete and code recommendation features than writing new lines on their own," they write.

POV: The paper is worth a read (h/t to the Register) but is framed as speculative, and perhaps rightfully so. Its authors give no specific reason for the 2040 prediction, and barely get into important software development topics such as requirements gathering, testing and security. But the paper's focus on the very real problem of increasing hardware heterogenity, and how machine-generated code could help mitigate it, is a provocative one.

Digital Transformation Digest: CVS-Aetna Merger Is All About the Analytics, IBM Rolls Out Power9 Systems for AI Workloads, and More

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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The CVS-Aetna merger is all about the analytics: CVS Health has made its bid for Aetna official after months of speculation, saying it will pay $69 billion for the insurer in a deal that on the surface has as much risk as reward. The plan is to leverage CVS's nearly 10,000 retail pharmacy locations—an increasing number of which also contain MinuteClinc care centers—along with Aetna's substantial subscriber base, many of whom are already CVS customers, adding new services while driving down costs along the way. CVS is using about $4 billion of its own cash, with the rest coming from new debt and equity.

In a statement, CVS and Aetna characterized the merger as "a natural evolution for both companies as they seek to put the consumer at the center of healthcare delivery." The companies plan to drive the merger's success through their respective analytics and data platforms. Each brings somewhat differing strengths to the table. Aetna has for years been building out a deep data science and predictive analytics bench (and has had great success using it to combat fraud), while CVS has invested in a analytics platform from Epic, the large EHR (electronic health records) software vendor, among many other ventures.

The potential combinations of CVS's retail purchase and pharmacy data—both of which are tracked through its ExtraCare rewards program—along with Aetna's rich pools of provider-side data are all about creating a personalized health care experience that leads to reduced costs and improved patient health, the companies say. Here's one example provided by CVS and Aetna:

Twenty percent of Medicare patients are readmitted to the hospital soon after being discharged at significant annual costs, much of which is avoidable. Readmission rates can be cut in half if patients have a complete review of their medications after discharge from the hospital to help them manage their care at home.

POV: CVS and Aetna's merger is unprecedented from an industry standpoint, making the cultural adjustments found with any corporate merger perhaps more difficult than most. (One wonders if the belief that Amazon will enter the retail pharmacy business helped make CVS pull the trigger on such an expensive deal sooner rather than later—particular as competitors such as Walgreens are stumbling financially.) It must also pass antitrust muster with U.S. authorities.

CVS and Aetna are giving themselves an ample timeline for clearing that hurdle, saying they expect the deal to close in the second half of next year. The integration work that follows will no doubt play out over a number of years, but CVS and Aetna will have to make serious decisions about their analytics strategy going forward much sooner. The good news is that both companies have strong technical leadership in the persons of CVS CIO Stephen Gold and Aetna EVP Meg McCarthy.

IBM launches new Power Systems geared for AI: While IBM has lagged behind Amazon, Google and Microsoft in the cloud platform market, it's hoping to be the leader in AI workloads with the introduction of new Power Systems Servers that incorporate the Power9 microprocessor.

Built specifically for compute-intensive AI workloads, the new POWER9 systems are capable of improving the training times of deep learning frameworks by nearly 4x[2] allowing enterprises to build more accurate AI applications, faster.

The system was designed to drive demonstrable performance improvements across popular AI frameworks such as Chainer, TensorFlow and Caffe, as well as accelerated databases such as Kinetica.

As a result, data scientists can build applications faster, ranging from deep learning insights in scientific research, real-time fraud detection and credit risk analysis.

IBM has the U.S. Department of Energy as an initial Power9 customer; the agency will use the chips in its Summit and Sierra supercomputers. Google also plans to use POWER9 in its data centers.

POV: IBM has been working on Power9 for four years, and the fact that the likes of Google, which has developed its own AI-oriented chips, is using them speaks to the progress Big Blue has made. The Power9 systems also incorporate GPUs from NVIDIA

Power 9 supports up to 5.6 times more I/O and double the threads than "its x86 contemporaries," IBM said, in an allusion to Intel's x86-based servers that hold a 90-plus percent market share in data centers. IBM is hoping to capture 20 percent of the market through Power9 by 2020, Network World reports. That may be a lofty goal but IBM will certainly try its best. One way it will surely seek attention for Power9 is through deep learning benchmarks and its PowerAI software.

Earlier this year, it announced the results of tests using a 64-server Power system with 256 NVIDIA GPUs on the Caffe deep learning framework, saying it had bested a team from Facebook's AI research arm. The question is whether IBM can succeed in getting customers to move deep learning projects to its cloud—which will surely offer Power9-based instances soon—or make the investment in them for on-premises systems.

New York AG, senators demand net neutrality vote delay: As with all major policy decisions, the Federal Communications Commission held a public comment period concerning its upcoming vote to overhaul so-called net neutrality rules. Underscoring the topic's interest among the public, the period drew more than 22 million comments. The problem, says New York attorney general Eric Schneiderman and a group of 28 senators, is that more than a million comments supporting net neutrality being overturned may have been fake ones posted via bots.

The FCC board has a Republican majority, led by chairman and prominent net neutrality critic Ajit Pai, and it seems a foregone conclusion that the rules will be voted down. Net neutrality, which was passed in 2015 after years of debate, prohibits ISPs from favoring legal Internet traffic based on payments or other considerations. But opponents characterize the rules as an overreach that's been bad for competition and ultimately, consumers.

"A transparent and open process is vitally important to how the FCC functions," the officials said in a letter to Pai. "The FCC must invest its time and resources into obtaining a more accurate picture of the record as understanding that record is essential to reaching a defensible resolution."

POV: Thousands of the fake comments used the actual names and addresses of New York residents, which amounts to identity theft, Schneiderman wrote in a post on Medium. Schneiderman's office asked for relevant records in the course of its investigation nine times, but the FCC provided "no substantive response," he wrote.

This week, the FCC's inspector general agreed to cooperate in Schneiderman's investigation, but it's not clear whether anything will stop the Dec. 14 vote from occurring. For one thing, the public comment period has been over for some time, making it difficult from a procedural perspective to call for a makeover. Still, net neutrality proponents have other options; federal law states that decisions made by agencies such as the FCC can be overturned if they're deemed to have been made in an "arbitrary" or "capricious" manner.