Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

SAP said it will acquire WalkMe in a deal valued at $1.5 billion in a move that could make implementations easier and complement its process and workflow automation efforts.

Announced at SAP Sapphire, SAP's purchase of WalkMe gives it a "Digital Adoption Platform," which aims to give employees and customers the ability to navigate applications, websites and apps to accomplish tasks and processes. These autonomous experiences from WalkMe can come in handy as SAP rolls out Joule copilots throughout its stack.

SAP said that it will pay $14 per share in cash to WalkMe shareholders, which will get a 45% premium.

SAP Sapphire 2024: SAP’s Joule everywhere plan: ‘We are not developing AI just for the sake of AI”

According to SAP, the plan is to meld WalkMe's technology into SAP's Business Transformation Management portfolio, which includes process mining and automation tools in SAP Signavio and SAP LeanIX. With better process automation, SAP can boost engagement and make its customer implementations smoother.

Christian Klein, CEO of SAP, said "we are doubling down on the support we provide our end users, helping them to quickly adopt new solutions and features to get the maximum value out of their IT investments."

SAP's Q1: Net loss on restructuring, cloud revenue growth of 24% | Constellation ShortListâ„¢ Digital Adoption Platforms | WalkMe in 2023: Adoption as Table Stakes in Digital Experience

SAP will stand to benefit if its customers derive more value. As Constellation Research analyst Holger Mueller noted, SAP only had one customer reference during its keynote at Sapphire. SAP's AI ambitions depend on migrating customers to cloud, S/4HANA

WalkMe CEO Dan Adika said his company can leverage SAP's ecosystem to drive more value. WalkMe will continue to support non-SAP applications. WalkMe launched WalkMeX, a copilot that would bring context and automation to any workflow. That copilot would be integrated with Joule.

The deal is expected to close in the third quarter and be immaterial to SAP's earnings results. WalkMe reported its first quarter revenue of $68.6 million and had 42 customers with $1 million in ARR.

Adika said on WalkMe's first quarter earnings call:

"I'm very proud to introduce WalkMeX. WalkMe’s new Gen AI contextual copilot. It's a completely new experience for the employee in the enterprise. WalkMeX allowed them to use Gen AI capabilities in the flow of work on top of any workflows. We combine the power of general purpose LLMs with our proprietary DPY technology that understand visual interface like a human does, and we created a new kind of copilot, and always on copilot that offers proactive AI assistant contextually in the flow of work. We're basically making AI real for everyone."

WalkMe Chief Revenue Officer Scott Little had noted that the company was seeing strong attach rates with systems integrators that were using the company's technology for change management. Little said:

"Remember, we are attached to their change management, business. That's where we get, that's where we get involved. They come in and do a big change program in support of an SAP, HANA update or an update for Oracle, an update for Workday, then, it's that group that comes in and brings us to the table. So, the more we see those coming down, the more we see those involving an opportunity for us to include WalkMeX. It's just going to accelerate for us."

If successful, WalkMe could make SAP's RISE program more seamless. Constellation Research’s BT150 CXOs have gripes about SAP’s RISE program. Some of the feedback:

• One CIO asked the group for opinions on SAP's RISE program and being forced from on-premises to the cloud. The goal was to have a strategy for SAP in place by the end of the year.
• CXOs weren't thrilled about SAP RISE and items like licensing credits for legacy environments. A CIO wondered what would prevent a customer from moving away from SAP--especially since the enterprise operates in a space that doesn't garner investment from the enterprise software giant.
• SAP's RISE program is viewed as an exercise in financial engineering more than something that benefits customers.

Our BT150 CXOs aren't alone. SAP's German speaking user group takes aim at cloud contracts, BTP and more | SAP user group DSAG rips S/4HANA innovation plans, maintenance increases | SAP retools for generative AI, cuts 8,000 jobs, sets 2024, 2025 ambition

My take

Overall, the WalkMe purchase has a good risk-reward profile for SAP. For starters, the price for WalkMe is a pittance to SAP, which is looking to make it as easy as possible for customers to move to the cloud and S/4HANA. WalkMe also complements SAP's process excellence portfolio. 

It's also a safe bet that WalkMe's digital adoption platform could get a big boost from SAP's ecosystem even if all it does is focus on in-house applications. However, WalkMe will continue to support non-SAP applications. The jury is out on how that support will evolve over time. 

Nevertheless, it only takes a few slides from WalkMe's investor presentations to see the rationale for SAP's acquisition. 

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

CrowdStrike delivered strong first quarter earnings with revenue growth of 33%.

The cybersecurity giant reported first quarter net income of $42.8 million, or 17 cents, on revenue of $921 million. Non-GAAP earnings were 93 cents a share. 

Wall Street was looking for non-GAAP earnings of 89 cents a share on revenue of $905 million.

CrowdStrike is part of an industry movement to standardize cybersecurity platforms. See: Cybersecurity platformization: What you need to know  

Palo Alto Networks has made a big push to entice customers to consolidate vendors on its platform. Palo Alto Networks earlier this year set off the debate with a plan to bet that it could be the leading cybersecurity platform. Although the company said it has seen strong interest from customers, it's far too early to say the debate is settled. 

• CrowdStrike, Palo Alto Networks duel over platforms vs. bundles
• CrowdStrike delivers strong Q1 amid cybersecurity platform debate
• Palo Alto Networks launches platform deals as it aims for cybersecurity share
• Palo Alto Networks Q3 solid, says customers into platform play

George Kurtz, CEO of CrowdStrike, said about the company's Falcon platform:

"The Falcon platform’s differentiated architecture creates a wide competitive moat and uniquely enables CrowdStrike to solve the industry’s biggest cybersecurity, IT and data problems. Customers of all sizes are standardizing on the Falcon platform to achieve better security outcomes and lower their TCO."

 

For the second quarter, CrowdStrike projected revenue of $958.3 million to $961.2 million with non-GAAP earnings of 98 cents a share to 99 cents a share. For fiscal 2025, CrowdStrike projected revenue of $3.976 billion to $4.01 billion with non-GAAP earnings of $3.93 a share to $4.03 a share.  

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Hewlett Packard Enterprise delivered stronger-than-expected fiscal second quarter earnings and appears to be joining the AI server sales parade.

Last quarter, HPE took its lumps over supply chain issues that hampered its AI server sales. In the second quarter, AI systems revenue more than doubled sequentially.

The company reported second-quarter earnings of 24 cents a share on revenue of $7.2 billion, up 3% from a year ago. Non-GAAP earnings in the quarter were 42 cents a share.

Wall Street was expecting HPE to report fiscal second quarter earnings of 39 cents a share on revenue of $6.83 billion.

HPE CEO Antonio Neri said:

"AI systems revenue more than doubled from the prior quarter, driven by our strong order book and better conversion from our supply chain. Our deep expertise in designing, manufacturing, and running AI systems at scale fueled growth of cumulative AI systems orders to $4.6 billion, with enterprise AI orders representing more than 15%."

CFO Marie Myers said AI systems order conversion along with cost discipline enabled HPE to raise its outlook.

Going into the earnings results, HPE was seen as a bit of an AI-server also ran given Dell Technologies momentum. However, Dell's most recent quarter indicated expectations were overheated. HPE's results along with comments from Dell, Supermicro and Lenovo indicate that the AI server market.

Neri said on a conference call:

"The demand for HPE AI systems is accelerating at a faster pace in our solid execution enable us to more than double our AI systems revenue sequentially to over $900 million held by supply chain conversion through improved GPU availability. Our lead time to deliver  NVIDIA H100 solutions is now between six and 12 weeks, depending on all the size and complexity. We expect this will provide a lift to our revenues in the second half of the year. Enterprise customer interest in AI is rapidly growing, and our sellers have seen a higher level of engagement. Enterprise orders now comprise more than 50% of our cumulative AI systems orders with a number of enterprise AI customers nearly tripling year over year. As these engagements continue to progress from exploration and discovery phase. We anticipate additional acceleration in enterprise AI systems. orders through the end of the fiscal year."

Neri added that HPE's experience in liquid cooling via its supercomputing business is also helping seal AI infrastructure deals.

"Building direct liquid cooling systems is complex and requires manufacturing expertise and infrastructure, including power, cooling and water with more than 300 HPE patents in direct liquid cooling. HPE is well positioned to help customers meet the power demands for current and future accelerated compute silicon designs."

Neri added that HPE will launch a series of AI systems at its Discover conference in Las Vegas.

Server revenue was HPE's strongest area this quarter. Server revenue in the second quarter was $3.9 billion, up 18% from a year ago. Intelligent edge revenue (Aruba) was $1.1 billion, down 19%. Hybrid cloud revenue was $1.3 billion, down 8%.

As for the outlook, HPE said third quarter revenue will be between $7.4 billion to $7.8 billion with non-GAAP earnings of 43 cents a share to 48 cents a share. For fiscal 2024, revenue is expected to grow between 1% to 3% with non-GAAP earnings of $1.85 a share to $1.95 a share. 

• HPE to acquire Juniper Networks for $14B: What it means
• HPE Q1 server revenue falls 23% in mixed quarter

Constellation Research's take

Constellation Research analyst Holger Mueller said:

"Who would have though 12 months ago that HPE would feature AI as the growth driver (and no longer hybrid cloud)? CEO Neri and CFO Myers said AI 7x in their prepared statements – and cloud just one time. HPE's DNA in high performance computing plays well in the AI era since systems need high performance hardware. Favorably for HPE is also that the company has the history, track record and image of knowing HPC. The concern is that intelligent edge revenue and hybrid cloud revenue are down YoY, which were the previously designated growth engines. Neri and team took also $600 million of cost out of HPE and now the question is can AI help the company grow again overall."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Databricks said it has acquired Tabular, a data management company founded by the original creators of Apache Iceberg. The companies said they're aiming to combine their open-source cred to build interoperable data formats.

The race to support Iceberg and make data formats and tables interoperable is underway. Snowflake has pushed into supporting Iceberg and said it will open source its Polaris Catalog. Snowflake also claims its Arctic large language model is more open than Databricks DBRX.

In a blog post, Databricks said "this acquisition brings the original creators of Apache Iceberg and those of Linux Foundation Delta Lake, the two leading open source lakehouse formats, together."

"The timing of this deal is obviously intended to grab some of the Snowflake Summit limelight, but also to outdo its competitor on openness messaging with the suggestion that it will have huge influence over the future of the Iceberg standard as well as Delta Lake," said Constellation Research analyst Doug Henschen. Indeed, Snowflake execs noted that a competitor is now on the Iceberg bandwagon. 

Databricks and Tabular said they plan to combine forces to improve data compatibility, so enterprises aren't limited by the lakehouse format.

Terms of the deal weren't disclosed, but the transaction is expected to close in the second fiscal quarter.

Databricks kicked off the lakehouse architecture in 2020 with the aim of integrating data warehousing and AI workloads on one platform. Databricks then worked with the Linux Foundation to create the Delta Lake project. At about the same time, Ryan Blue and Daniel Weeks, two founders of Tabular, developed Iceberg at Netflix and donated it to the Apache Software Foundation.

Delta Lake and Iceberg became the two open-source standards for lakehouse formats but became incompatible. Databricks launched Delta Lake UniForm to bring the two formats together. The project will expand its ambitions with Tabular in the fold.

"Databricks and Tabular will work with the open-source community to bring the two formats closer to each other over time, increasing openness, and reducing silos and friction for customers," said Ali Ghodsi, Co-founder and CEO at Databricks.

More Databricks: 

• Databricks launches DBRX LLM for easier enterprise customization
• What to Look for in Analytical Data Platforms for a Cloud-Centric World
• Databricks acquires Arcion for $100 million
• Databricks adds on to the Lakehouse, acquires MosaicML for $1.3 billion
• Databricks launches Lakehouse Apps, aims to be development platform
• JPMorgan Chase: Digital transformation, AI and data strategy sets up generative AI
• Databricks Data + AI Summit: LakehouseIQ, Lakehouse AI and everything announced

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

SAP said it is infusing its Joule generative AI assistant throughout its platform and applications as it made the case that the company is using AI to drive business value.

Speaking at SAP Sapphire in Orlando, CEO Christian Klein had a few missions. First, Klein had to convince customers that its Business AI innovations were worth the upgrades and more than hype. Second, Klein wanted to ensure that SAP wasn't just doing AI because everyone else is. And third, Klein had to get its customer base more excited about programs like RISE with SAP and upgrading to S4/HANA and cloud.

"The Business AI innovations we're announcing will redefine the way businesses run," said Klein, who emphasized partnerships with AWS, Google Cloud, Meta and Microsoft. He added:

"You can see that we are not developing AI just for the sake of AI. Our vision at SAP is to leverage our holistic portfolio to deliver agility at scale, increase productivity of every user and achieve more across the value chain by connecting the material, the financial and the logistic workflows across the industries."

Amazon Bedrock integrated into SAP AI Core, SAP to use AWS chips | SAP's Q1: Net loss on restructuring, cloud revenue growth of 24%

The general theme behind SAP Sapphire is that AI will be embedded throughout enterprise applications and matter to multiple CXOs role. Klein's keynote was segmented by the appeal to CIOs, CFOs, COOs and HR leaders and the theme was that SAP would deliver insights without surfacing what's underneath--like various large language models and technology like Microsoft's Copilot. SAP's Joule would be the front end that would give data context and insights while automating processes.

SAP's plan is to enable Business AI to leverage multiple models. For instance, SAP and Google Cloud will integrate Joule and SAP Integrated Business Planning for Supply Chain with Google Cloud Gemini Models. SAP will use Meta Llama 3 to generate scripts in SAP Analytics Cloud. SAP will also integrate with Amazon Bedrock and add Mistral AI models. SAP's Klein also touted partnerships with Nvidia as well as Apple.

Here's a look at what was announced at SAP Sapphire:

• SAP's Joule copilot has been integrated into SAP S/4HANA Cloud Public Edition, S/4HANA Cloud Private Edition, SAP Customer Data Platform, SAP BTP Cockpit, SAP Build, SAP Build Code and SAP Integration Suite.
• SAP Ariba, SAP Analytics Cloud and multiple supply chain packages will get Joule in the second half of 2024.
• Joule will be integrated in ERP and Finance apps to close books faster, process documents and provide visualizations and insights.
• SAP SuccessFactors will get Joule to answer questions about policies and documents.
• The company said that Joule will roll out to SAP's process mining and automation tools. Joule copilot will be integrated with SAP Build Process Automation, Signavio and SAP Integration Suite to make it easier to automate processes and workflows.
• SAP is rolling out ABAP Developer capabilities in Joule to generate, complete and test ABAP code. SAP said it is fine tuning models on its proprietary ABAP code.
• Supply chain applications will get Joule analysis of supply chain planning runs, logistics and transportation management.
• SAP Intelligent Product Recommendation will get generative AI tools that estimate parameters for products. Plant managers in manufacturing industries will also interact with a digital twin to choose the proper products.
• Sales and marketing applications will get a suite of AI tools to enhance customer experiences. A generative AI tool builder will be available in SAP Commerce Cloud, SAP Sales Cloud and SAP Service Cloud.

SAP will use genAI to improve implementations

SAP said that it will leverage Joule for consulting functions leveraging insights from SAP product documentation, community posts and training materials.

According to the company: "This capability is especially critical for supporting customers transitioning to SAP S/4HANA Cloud as part of the RISE with SAP program, helping to accelerate implementation projects and save money." 

SAP Sapphire kicks off as Constellation Research’s BT150 CXOs have gripes about SAP’s RISE program. Our BT150 CXOs aren't alone. SAP's German speaking user group takes aim at cloud contracts, BTP and more | SAP user group DSAG rips S/4HANA innovation plans, maintenance increases | SAP retools for generative AI, cuts 8,000 jobs, sets 2024, 2025 ambition

The consulting copilot, available in the second half of 2024, leverages Nvidia's NeMo Retriever microservices to generate insights.

SAP noted that Joule's consulting capabilities have been tested via SAP certification exams. PwC and Deloitte plan to deploy Joule as a consultant.

Partnerships with Accenture, McKinsey and Boston Consulting Group to use SAP Signavio and LeanIX round out the consulting theme.

In addition, SAP said it has expanded its SAP Business Transformation Center to offer a new way for customers to migrate from SAP ECC to SAP S/4HANA Cloud Private Edition.

The new capability gives customers a system to choose a "lean selective data transition" and eliminate legacy data to build a clean foundation. This scenario is included in SAP cloud subscriptions and RISE with SAP.

Constellation Research's take

Constellation Research analyst Holger Mueller said:

"SAP is making progress with its AI strategy. Like fellow multi-cloud vendor Workday, SAP is at a speed disadvantage when it comes to AI as it first needs to create an abstraction layer to be able to run AI on all key cloud partners (AWS, Azure & Google Cloud). Microsoft and Oracle have their own clouds for applications. What is still missing is a lakehouse or similar architecture to create a data foundation for AI, and again SAP needs to provide multi-cloud support. Partner support and attention is at a maximum, which is good for SAP customers – with AWS and Microsoft Azure announcing 32TB memory systems to run S/4HANA. It was disappointing that the only keynote customer reference was a SAP customer that was spun out from a larger company. SAP needs to do better to present a North American references for S/4 HANA in the cloud." 

More on genAI:

• Copilot, genAI agent implementations are about to get complicated
• Generative AI spending will move beyond the IT budget
• Enterprises Must Now Cultivate a Capable and Diverse AI Model Garden
• Secrets to a Successful AI Strategy
• Return on Transformation Investments (RTI)
• Financial services firms see genAI use cases leading to efficiency boom
• Foundation model debate: Choices, small vs. large, commoditization

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

AMD outlined its AI GPU roadmap and moved to an annual cadence as it aims to compete with Nvidia.

A day after Nvidia outlined its GPU roadmap at Computex, AMD CEO Lisa Su outlined an annual cadence. The company also outlined new EPYC CPUs along with processors for AI PCs.

Su said the new AMD Instinct MI325X accelerator will be available in the fourth quarter with up to 288GB of HBM3E memory and 6 terabytes per second of memory bandwidth with new AMD Instinct MI350 accelerators based on AMD's CDNA 4 architecture available in 2025.

• AMD sees AI inference, training workloads increasing in enterprise | AMD Q1 delivers data center, AI sales surge of 80% 

According to AMD, the AMD Instinct MI325X accelerator will bring a 35x increase in AI inference performance compared to the AMD Instinct MI300.

In 2026, the AMD Instinct MI400 series will be based on AMD CDNA "Next" architecture.

AMD's Instinct MI300X accelerators are being rolled out by Microsoft Azure, Meta and major server makers such as Dell Technologies, HPE and Lenovo.

Su also touted AMD's software ecosystem, which is playing catchup to Nvidia. AMD said its AMD ROCm 6 open software stack is developing its connections to popular AI frameworks.

Other AMD items of note at Computex include:

• AMD previewed 5th Gen AMD EPYC server processors to launch in the second half of 2024. These processors, codenamed Turin, are designed to continue AMD's server momentum with CPUs.
• AMD outlined the AMD Ryzen AI 300 series, the third generation of AMD AI-enabled mobile processors. These chips will be used in AI PCs and Copilot+ PCs, which are now powered by Qualcomm.
• AMD highlighted its AMD Ryzen 9000 Series processors for laptops and desktops.
• The company also highlighted its next-gen Zen 5 CPU core and AMD XDNA 2 NPU core.
• AMD also announced the AMD Radeon PRO W7900 Dual Slot workstation graphics card.

More on genAI:

• The real reason Windows AI PCs will be interesting
• Copilot, genAI agent implementations are about to get complicated
• Generative AI spending will move beyond the IT budget
• Enterprises Must Now Cultivate a Capable and Diverse AI Model Garden
• Secrets to a Successful AI Strategy
• Return on Transformation Investments (RTI)
• Financial services firms see genAI use cases leading to efficiency boom
• Foundation model debate: Choices, small vs. large, commoditization

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

The great generative AI boom for enterprise software isn't happening yet as sales cycle grow longer due to platform bets, macroeconomic conditions and cost of capital crimping budgets.

What's really happening: Enterprise technology buyers aren't buying into grand enterprise software copilots, picking sides in large language models (LLMs) and platform bets that could easily equate to technology debt if they're not careful. It's also clear that generative AI projects are stealing budget dollars from enterprise software purchases.

Simply put, we're in the pick and shovel phase of the AI buildout and that means Nvidia, server makers and that's about it. Rest assured we'll see the indigestion from the AI capacity buildout too, but that's months if not years away.

The recent earnings parade from enterprise software companies highlights the big hurry up and wait approach when it comes to AI. Here's a tour.

Salesforce predicted single digit revenue growth amid longer sales cycles. CEO Marc Benioff defended the company's first quarter disappointment and played up the long game. "When you look at the power of AI, you realize the models and the UI are not the critical success factors, it's not critical where the enterprise will transform. There are thousands of these models, some open source and some closed source models, some built with billions, some with just a few dollars, most of these will not survive," said Benioff. "They are just commodities now and it's not where intelligence lies. And they don't know anything about a company's customer relationships."

Benioff added that customers are flocking to Data Cloud, which has more than 1,000 customers. Operating chief Brian Millham, however, noted that "we continue to see the measured buying behavior similar to what we experienced over the past two years and with the exception of Q4 where we saw stronger bookings."

This post first appeared in the Constellation Insight newsletter, which features bespoke content weekly and is brought to you by Hitachi Vantara.

Millham added that "customers are getting their data estate in order as a precursor to leveraging AI capabilities, and we're seeing that with the growth of Data Cloud right now."

Nutanix said sales cycles are longer and more unpredictable. Nutanix is battling VMware, but CEO Rajiv Ramaswami noted that the company is seeing larger opportunities that "tend to have longer sales cycles can involve aggressive competitive responses and exhibit great variability with respect to timing and outcome." Nutanix isn’t a direct generative AI play, but has GPT-in-a-Box and is often lumped into a broader transformation plan.

Workday said the buying cycle is choppy. Workday CEO Carl Eschenbach reiterated comments made on the company's first quarter conference call at the Jefferies Software Conference. He said: "Last year was a pretty solid year for most software companies. I think this year, people do talk about a slightly different macro that they're dealing with. They use terms like it's choppy--it's uncertain, it's uneven. And I just think when people are going to invest in technology, they're really thinking hard and deeply about where they're going to make those investments. And I think for all of us in the software space, you have to have a strong value proposition to make sure you're a priority."

MongoDB cut its outlook for second quarter and fiscal year. CEO Dev Ittycheria said, "we had a slower than expected start to the year for both Atlas consumption growth and new workload wins, which will have a downstream impact for the remainder of fiscal 2025."

Ittycheria said MongoDB still had a large opportunity to gain share and become a standard and that it will be "a substantial beneficiary of this next wave of application development" revolving around AI. For now, MongoDB saw lower consumption due to a spotty macroeconomic environment and go-to-market changes.

UiPath's first quarter had a lot of issues, but longer sales cycles were one of them. Sure, UiPath's quarter was a disaster as CEO Rob Enslin resigned, but deliberation time for purchases was also extended. Incoming CEO Daniel Dines said: "While we had a healthy start to the quarter, we saw the pace slow as we progressed through the second half of March and into April. This was primarily due to the impact of a challenging macroeconomic environment that we see persisting with mid-market customers, as well as a change in customer behavior particularly with large multi-year deals."

These enterprise software executives aren't seeing the generative AI boom yet, because the technology hasn't really hit the application layer. And when genAI drives enterprise software deals it's unclear whether buyers are going to swallow copilot upcharges. Today, the genAI spending is on infrastructure moving into tools and data platforms and then hitting applications.

In the end, enterprise software valuations moved too far too fast without anything to back them up. Constellation Research CEO Ray Wang said, "valuations without cash flow are the key issues." Wang noted the buy and sell side of enterprise tech are dealing with three factors driving the market.

• Exponential efficiency is forced by 5% interest rates.
• AI arbitrage as we replace human work.
• Margin compression as new business models require a 10X improvement at 1/10 the cost.

Not every enterprise software play is struggling. C3 AI reported a better-than-expected first quarter but is showing growth on a much smaller base than the companies that were pummeled over recent quarters. C3 AI is also working a layer above the application providers seeing longer sales cycles. C3 AI CEO Tom Siebel said the genAI era will rhyme with previous technology cycles:

"The AI era will be no different and the same game is going to play out as we move forward. The bulk of the value is going to accrue to the applications that leverage the entire AI stack and deliver value to the business. Silicon will get commoditized. It always gets commoditized. Infrastructure will get commoditized. It always gets commoditized. What doesn't get commoditized in the long run are the applications and that's where C3 AI plays."

If Siebel is right--and there's no reason to think he's wrong--genAI will drive enterprise software for years to come. When this evolution plays out is anyone's guess.

More on genAI:

• The real reason Windows AI PCs will be interesting
• Copilot, genAI agent implementations are about to get complicated
• Generative AI spending will move beyond the IT budget
• Enterprises Must Now Cultivate a Capable and Diverse AI Model Garden
• Secrets to a Successful AI Strategy
• Return on Transformation Investments (RTI)
• Financial services firms see genAI use cases leading to efficiency boom
• Foundation model debate: Choices, small vs. large, commoditization

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Nvidia CEO Jensen Huang outlined the company's roadmap through 2027 including a new GPU platform called Rubin, a new CPU in Vera and networking gear. Huang added that Nvidia will follow an annual cadence.

Speaking at Computex in Taipei on Sunday, Huang said, "our company has a one-year rhythm. Our basic philosophy is very simple: build the entire data center scale, disaggregate and sell to you parts on a one-year rhythm."

Huang's talk served as a sequel to his GTC keynote with some highlights for the years ahead. Nvidia’s revenue has surged amid the AI boom.

• Nvidia's 10Q filing sets off customer guessing game
• Nvidia acquires Run.ai for GPU workload orchestration
• Nvidia Huang lays out big picture: Blackwell GPU platform, NVLink Switch Chip, software, genAI, simulation, ecosystem
• Nvidia today all about bigger GPUs; tomorrow it's software, NIM, AI Enterprise

At a high-level:

• 2025: Nvidia will launch the Blackwell Ultra GPU and Spectrum Ultra X800 Ethernet Switch 512-Radix. Nvidia has been pushing hard into AI networking with the launch of NVLink 5 Switch, CX8 SuperNIC, Spectrum-X800 Ethernet Switch and Quantum-X800 Switch.
• 2026: The company will launch the Rubin GPU, Vera CPU, NVLink 6 Switch, CX9 SuperNIC and X1600 InfiniBand/Ethernet Switch.
• 2027: Rubin Ultra GPU will launch along with three other-yet-to-be-named items.

In a nutshell, Nvidia is launching new platforms on even-numbered years with updates and enhancements in odd numbered years.

The move into CPUs is notable, but not unexpected. Huang said that the combination of integrated GPUs and CPUs can boost speed by 100x while only increasing power consumption by a factor of three. If this Nvidia cadence sounds familiar that's because it rhymes with how smartphone makers operate. There's a big splash in one year, followed by an incremental update and then rinse and repeat.

Here's a look at other items from Nvidia at Computex:

• Nvidia said its Nvidia ACE generative AI microservices were available. These technologies are designed to make it easy to animate and operate digital humans that can be used in multiple industries. These digital humans could be deployed across 100 million RTX AI PCs.
• Nvidia NIM inference microservices are available for download by developers. NIM was outlined at GTC.
• ASRock Rack, ASUS, GIGABYTE, Ingrasys, Inventec, Pegatron, QCT, Supermicro, Wistron and Wiwynn will all build systems based on Nvidia's latest chips for everything from cloud, data center and edge systems.
• Delta Electronics, Foxconn, Pegatron and Wistron are using Nvidia reference designs to build, simulate and operate their robotics-enhanced facilities. Huang appeared on stage with a series of robots powered by Nvidia's platforms.

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Sports teams have unique technology requirements, vendor relationships and the challenge of melding digital and physical experiences. In the end, running the technology infrastructure is the ultimate customer service and relationship game.

DisrupTV caught up with the CIOs from the Boston Red Sox, Bruins, Celtics and New England Patriots this week.

Here are some of the takeaways from Michael Israel, CIO New England Patriots, Josh Carley, VP, Technology, TD Garden & Boston Bruins, Brian Shield, SVP, CTO Boston Red Sox and Jay Wessland, CTO Boston Celtics.

Melding the customer and digital experiences. Shield said the challenge for a ballpark like Fenway is building out technology while keeping the ballpark's legacy and appeal intact. Behind the scenes, the Red Sox want to be as predictive as possible. Shield said:

"You want to know everything that is happening at concessions and attendance, but the way we're delivering the data is much different. In the past you'd put it in a report or dashboard. Today you want AI to predict what's happening."

Wessland said technology in the NBA has moved well beyond video into every part of operations. As a result, you have to pick projects selectively with smaller teams.

Carley said that technology has to provide value to the guests. "From a leadership perspective I've had to differentiate fandom from the business. Once you disconnect them you have to reconnect them somehow for engagement," said Carley. "I want  a ring just as much as the guys on the ice do."

Learning to juggle. Israel runs IT for Gillette Stadium as well as the businesses of the Kraft Group, which includes the Patriots. Fan and customer engagement, point-of-sale experiences and how technology is used are all on the to-do list during an event. "I don't think I've watched 15 minutes of a football game in the time, I've been here," said Israel.

Shield said a sports team CIO has to blend multiple skills together including digital leadership, software engineering, product engineering and customer service.

Building teams. All of the CIOs from the Boston sports teams have relatively small staffs relative to other enterprises. As a result, team building is critical. Staff development is critical and as a team you want a core technology group, some free agents via consultants and contractors, a few hall of famers and all stars. Player development is critical. "I will meet you halfway if you're going to invest in yourself and I will be investing in you and that has been throughout my career," said Israel.

Collaboration. Sports team CIOs have unique challenges and the four leaders across the Boston sports teams frequently meet up to talk shop. That collaboration has moved down the hierarchy to staff. "There are a lot of things that apply to the average business, but there are a lot that's unique," said Wessland.

The information exchange among the teams is critical when staying ahead of emerging trends and how they would apply to the fan experience.

Vendor management and strategy. The Boston sports CIOs said they lean heavily on vendors to be more strategic partners.

"We have a lot of vendors and we're trying to make sure that we're always best of breed, and evaluating them against one another," said Shield. "It's thinking about it as sports franchise as a service across Fenway Sports Group."

Requirements for a sports franchise technology vendor include the following:

• Implementation help in the sales process as well as usage. Implementing a tool that has 50 features and you're using three doesn't work.
• Post sales services. Sports CIOs expect an ongoing relationship. The marriage experience has to be better than the courtship.
• Ability to scale projects in a time frame. Sports CIOs said that the offseason is the season for technologies projects and upgrades.
• Realizing sports teams are unique. Technology vendors often view sports teams as big wins, but it's an opportunity and a threat. The Boston sports team CIOs all noted that executives throughout the leagues all talk. If a vendor is doing a great job it can go from one club to 20 clubs quickly. If a technology vendor doesn't deliver for one team it isn't going to expand to others because all of the CIOs talk.

Wessland summed it up:

"The one rule I have about vendors is that everybody makes mistakes, everything gets into trouble. Everybody screws up. Good vendors know how to correct mistakes, get themselves out of trouble and move forward and go on. That's a partnership. A bad vendor gets into trouble and can't get themselves out. Those are the vendors you can't work with. We have vendors that are also sponsor partners and all of those combinations. The expectations are the same from a vendor standpoint. They have to be a good vendor. It's got to be good relationship."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

MongoDB cut its second quarter and fiscal 2025 outlook as the company said it saw slower than expected demand for Atlas consumption and new workloads.

The company's outlook came amid a solid first quarter. The company reported a net loss of $80.6 million, or $1.10 a share, on revenue of $450.6 million, up 22% from a year ago. Non-GAAP earnings in the first quarter were 51 cents a share.

MongoDB was expected to report non-GAAP earnings of 37 cents a share on revenue of $439.91 million.

• MongoDB adds to Atlas platform, scales partnerships, lexibility

The problem for MongoDB is that the first quarter growth for its Atlas platform was slower than expected even though it was up 32% from a year ago. In addition, MongoDB's outlook was light in the previous quarter too. 

CEO Dev Ittycheria said, "we had a slower than expected start to the year for both Atlas consumption growth and new workload wins, which will have a downstream impact for the remainder of fiscal 2025." He elaborated on the earnings call:

"Atlas consumption growth was below our expectations in the first quarter. We saw less seasonal improvement than expected, and this dynamic was true with customers across tenure, industry, size, and geography. We believe this indicates a more challenging macro environment than expected at the beginning of the year. A new dynamic we saw in Q1 was the growth rate of more recently acquired workloads started to slow down earlier than expected. While the macro environment had an impact, we also believe this is probably due to the go-to-market changes we instituted last year."

Ittycheria said MongoDB still had a large opportunity to gain share and become a standard and that it will be "a substantial beneficiary of this next wave of application development" revolving around AI.

As for the outlook, MongoDB projected second quarter revenue between $460 million and $464 million with non-GAAP earnings of 46 cents a share to 49 cents a share. Analysts were modeling revenue of $471.54 million with non-GAAP earnings of 57 cents a share.

Fiscal 2025 revenue will be between $1.88 billion to $1.90 billion with non-GAAP earnings of $2.15 a share to $2.30 a share.  Wall Street expected fiscal year revenue of $1.94 billion with non-GAAP earnings of $2.43 a share.

Earlier this month, MongoDB outlined its product and business strategy. The general idea is that MongoDB aims to become a standard and a platform for AI application development. That vision is on track, but enterprises are moving slower than anticipated.

MongoDB outlined a few areas it will fix. 

• The company is focusing on workload acquisition across new and existing customers. 
• MongoDB will increase investments in its enterprise channel. 
• It will focus on large accounts that drive the most return. 
• Build out the MongoDB ecosystem. The company landed Accenture as its first system integrator to join the MongoDB AI Application Program.
• MongoDB will invest in the high-end in the market and said it was optimistic about companies accelerating legacy app modernization with AI. "We recently completed the first two Gen.AI powered modernization pilots, demonstrating we can use AI to meaningfully reduce the time, cost, and risk of modernizing legacy relational applications," said Ittycheria. "We see that AI can significantly help with analyzing existing code, converting existing code, and building unit and functional tests. Based on our results from our early pilots, we believe that we may be able to reduce the effort needed for app modernization by approximately 50%. We have a growing list of customers across different industries and geos who want to participate in this program."

Ittycheria was asked about the broader software slowdown across categories. He said:

"I have been through multiple cycles. With every cycle, when you go back all the way to the mainframe, to client server, to the internet, and now cloud and mobile, the cost of building applications went down. You saw an explosion of more apps and consequently more data. With AI, you're going to see a step-fold increase in the number of apps  being built to run businesses. But that's going to take some time. As with any new adoption cycle, the adoption happens to what people commonly refer to as S-curves. And I think we're going through one of those S-curves when I see the macro environment. Partly it's related to this technology transition, but partly it's also related that the macro environment is not great.

What we talk about in macro, remember, ultimately we're a database or a data platform and the usage of our platform is directly or very tightly correlated to the performance of the end-customer's business. If they're selling 100 widgets a week and all of a sudden now they're selling 80 widgets a week, that will mean that they're using the database less intensely. So when we see broad-based slowdown across different customer cohorts of different sizes, across different industries and across different geos, that strikes us as pretty much a macro issue.

We have close to 50,000 customers, so we have a pretty good feel for what's happening right now. And that's why we feel that there's definitely a macro element to it. With regards to AI essentially crowding out new business, we definitely think that that's plausible."