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.  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…...

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Jeff Maggioncalda, CEO of Coursera, said generative AI such as OpenAI's ChatGPT-4 will have a much larger impact on education and employment than automation and other technology shifts.

Speaking on Coursera's first quarter earnings call last week, Maggioncalda said "we believe that AI represents the next major technological disruption that will dramatically change how we work and how we live."

Generative AI is a type of artificial intelligence that can produce content such as text, imagery, audio and data based on what it has learned from a massive training set of data. Generative AI has reached a tipping point as technologies such as OpenAI's ChatGPT and DALL-E have become popular. In addition, multiple technology vendors are racing to integrate generative AI into existing applications.

Generative AI guide: ChatGPT: Hype or the Future of Customer Experience

• What to Expect from Generative AI in Analytics and Business Intelligence
• Don’t Kill Innovation, But Apply Guardrails For AI
• How Generative AI Has Supercharged the Future of Work

Indeed, as generative AI revamps the workplace it's also going to create a lot of talent reskilling, said Maggioncalda. He said:

"We believe that generative AI will be integrated into applications, software, and platforms that employees are already familiar with. This integration is happening quickly, and we believe it will increase the importance of digital transformation and talent reskilling and businesses.

And this brings us to our second trend which is skills development. For years, employers have been rapidly digitizing work processes and jobs that are repeatable and predictable. And generative AI has the potential to impact an entirely new class of knowledge workers unleashing a new wave of reskilling and upskilling imperatives."

For Coursera, this disruption can increase its total addressable market. We'll all be students either learning new skills or upskilling to avoid being replaced by an algorithm. Education will have to transform to become more personalized and relevant--perhaps via generative AI. It's worth noting that Chegg recently announced CheggMate, a new AI personalized learning service built with OpenAI's ChatGPT-4.

While ChatGPT may be a long-term tailwind for online education companies and reskilling, there will be short-term turbulence. 

For instance, Chegg reported solid first quarter results, but noted that ChatGPT is hampering new sign-ups. CEO Dan Rosensweig said:

"We believe that generative AI and large language models are going to affect society and business, both positively and negatively. At a faster pace than people are used to. Education is already being impacted. And over time, we believe that this will advantage Chegg.

In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth, and we were meeting expectations on new sign ups. However, since March, we saw a significant spike in student interest in ChatGPT. We now believe it's having an impact on our new customer growth. Fortunately, we continue to see very strong retention rates, suggesting that those students who already understand the value of Chegg continue to choose us and retain us at high rates. We are also expecting a positive recovery in enrollment trends, which historically would be good news for Chegg. Because it's too early to tell how this will play out. We believe that it's prudent to be more cautious with our forward outlook."

Constellation Research analyst Dion Hinchcliffe recently outlined in a research report how generative AI is already changing work. Governments and universities will have to adapt as well as enterprises.

Maggioncalda said:

"AI will amplify and accelerate the change being felt by individuals, pushing every one of us in every job to keep learning in order to stay relevant."

Coursera's bet is that its focus on universities as well as enterprises will transform learning. Coursera has launched Coursera Coach, a virtual learning partner powered by generative AI for personalized evaluations and feedback on submissions. Coursera is also using AI to generate course content, course structure, reading assignments and glossaries based on an author's input as well as recommend modules.

Internally, Maggioncalda said Coursera is leveraging generative AI to become more efficient in areas like research and development as marketing. He said:

"What I'm hearing from our engineers is that the productivity improvements that you can get as a software coder, especially at more entry-level software coding jobs is considerable. So, I think software coding productivity is going to go way up.

Most of our performance consumer marketing teams have been using (generative AI) to help write articles, write marketing messages, write emails, et cetera. Their productivity and quality has gone up quite a bit."

Generative AI will also be embedded into all the software tools being used by workers. "I would not be surprised that most CEOs are rethinking probably not work structure but certainly productivity expectations for how the company runs and what can be done by talented people in the company," he said.

DisrupTV Episode 200 - Featuring Leah Belsky from Constellation Research on Vimeo.

Doug Henschen

Former Vice President and Principal Analyst Constellation Research

Doug Henschen is former Vice President and Principal Analyst where he focused on data-driven decision making. Henschen’s Data-to-Decisions research examines how organizations employ data analysis to reimagine their business models and gain a deeper understanding of their customers. Henschen's research acknowledges the fact that innovative applications of data analysis requires a multi-disciplinary approach starting with information and orchestration technologies, continuing through business intelligence, data-visualization, and analytics, and moving into NoSQL and big-data analysis, third-party data enrichment, and decision-management technologies. Insight-driven business models are of interest to the entire C-suite, but most particularly chief executive officers, chief digital officers,…...

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Your top choice in analytics and BI should not come down to a one-size-fits-all assessment. Constellation’s 2023 Analytics and BI Market Overview report helps buyers identify a short list that fits their organization.

Analytics and business intelligence (BI) products have long helped companies become more data driven. The market is mature in many respects, but these days analytics and BI platforms are evolving in three important ways:

Cloud deployment. Supporting organizations as they move data and workloads into the cloud or multiple clouds to gain agility.

Embedding. Delivering insights where people work (not just in reports or dashboards) so more users can harness data and insights to drive better outcomes.

AI/ML augmentation. Getting more predictive and automated, taking advantage of ML, natural language (NL), and emerging forms of AI such as generative AI and large language models (LLMs). These features help organizations be more proactive, uncover insights, and eliminate manual tasks.

The Constellation Research 2023 Analytics and BI Market Overview Report, published on May 1, focuses on how well vendors are responding to these trends. Are they leading or lagging? The report also details what vendors offer in terms of more mature and expected functionality, including:

• Data integration and preparation.
• Data cataloging, data modeling and data management.
• Security, access control, and governance
• Dashboarding and reporting
• Data storytelling

Unlike other reports that deliver a one-size-fits-all, top-right ranking, Constellation Research takes a different approach focused on helping customers to develop a short list of candidates that are right for their organization. As we note in the report, “no single offering is in the proverbial top-right corner for all customers. Just as there is a huge variety of vehicles—from sedans and SUVs to pickup trucks and convertible coups, all of which have four wheels and get you from point A to point B—there is great variety among the 17 analytics and BI offerings covered in the report. The coverage includes: Amazon QuickSight, Domo, Google Looker, IBM Cognos Analytics, Infor Birst, Microsoft Power BI, MicroStrategy, Oracle Analytics, Qlik Sense, Salesforce CRM Analytics, SAP Analytics Cloud, SAS Visual Analytics, Sisense, Tableau from Salesforce, ThoughtSpot, TIBCO Spotfire, and Zoho Analytics.

Which vendor should be on your short list? Consider that the product that most reports put in a top-right corner is available on only one cloud. Can an analytics and BI system realistically be your enterprise standard if it’s not available on the cloud where all or your data or a majority of your data resides? We think not.

There are other considerations that break one-size-fits-all, top-right analysis. For example, Constellation believes that organizations that are deeply invested in an enterprise applications portfolio from the likes of Infor, Microsoft, Oracle, Salesforce, SAP or Zoho should naturally have Infor Birst, Microsoft Power BI, Oracle Analytics Cloud, Salesforce CRM Analytics, SAP Analytics Cloud or Zoho Analytics, respectively, on their shortlist. The availability of pre-built analytic content, built-in data integration, and data model consistency tied to these applications makes these offerings very compelling.

Budget is another consideration, and organizations that want truly broad deployments will want to consider the low-cost deployment options available with Amazon Quicksight (assuming they’re running mostly on AWS), Microsoft Power BI (assuming they’re running mostly on Azure) or Zoho Analytics (assuming they’re using Zoho Cloud or are willing to self-manage the deployment on another cloud).

In addition to the points made above, the Constellation Research 2023 Analytics and BI Market Overview report is complemented by the publication of two related Constellation Research ShortLists^TM based on the market overview research:

• The Constellation Research 2023 “Multicloud Analytics and Business Intelligence Platforms” ShortList (which updates and replaces the 2022 ShortList on Cloud-Based BI). As the name change suggests, the bar has been raised. Now that every vendor included in the market overview offers a SaaS service on at least one cloud, the bar has been raised. Sure, many organizations still prefer to deploy and manage software themselves, yet every vendor tells us their vendor-managed services are their fastest-growing products. The updated ShortList recognizes eight vendors who offer their analytics and BI platforms on multiple clouds.
• Our first-ever Constellation Research “Embedded Analytics” ShortList recognizes vendors that are going well beyond traditional embedding approaches aimed strictly at software and SaaS vendors. The nine leaders on this new list are also providing embedding options for third-party productivity and collaboration apps, enterprise apps, custom apps (including low-code/no-code development options), and event architecture/triggers/alerts and, in some cases, workflow capabilities for driving business processes based on analytics.

Figure 1. from the report details trends evolving embedded analytics and shaping our new Embedded Analytics ShortList. 

As for our third ShortList in this category, the most recent “Augmented Business Intelligence and Analytics” ShortList, published in August 2022, did not merit an interim update. Constellation is reviewing multiple generative AI features and functions that are in private preview or in limited public preview at this writing. Constellation’s regularly scheduled ShortList update, due in Q3 2023, will consider generative AI and other augmented advances that are generally available by that time.

To better understand which product might be the best fit for your organization, the market overview provides in-depth analyses of each of the 17 vendors listed, including their presence on our Cloud, Embedded and Augmented Shortlists. Ten of the 17 vendors are on two of these shortlists. One vendor, ThoughtSpot, an upstart innovator pursuing the latest trends, is on all three shortlists, but the report does not put any one vendor in a top-right corner.

As is the case for all 17 products covered in our market overview, customers should read the report and consider the fit with their organization, their deployment footprint, their use cases, and their long-term plans before placing any product on their short list for request-for-proposals and follow-up pilot testing.

R "Ray" Wang

Principal Analyst and Founder Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation…...

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Temporary Slow Down Ahead

All indications from Constellation's 1000 person executive network show a temporary 3 to 6 month slowdown ahead.  This pause in general IT spending impacts mostly the North American markets.  The Middle East and Indian markets continue to show strong market conditions.  Despite the doom and gloom, clients continue to invest in rojects related to optimization, regulatory compliance, and modernization.  Pressure on Europe, South America, and APAC (sans India) continue to hamper growth. The Middle East remains a highlight along with the ANZA and the India market. North America will slow down despite providing the largest market opportunity.

Operational Efficiency and Regulatory Compliance Drive Hot Projects

Despite headwinds, Cloud, Automation, AI, and Regulatory Compliance continue to grow. In the cloud, CXO's focus on spend rationalization.  Key projects include contract negotiations, cloud optimization, code refactoring, and in some cases a move back to on-premises workloads.  Customers ask service vendors to renegotiate deals with software vendors and consolidate spend. Increasing scrutiny from CFO's drive operational efficiency budgets.

Automation and AI are working hand in hand. Every customer finds new ways to automate and reduce human interaction. Meanwhile, budget continues to grow for exponential opportunities with AI.

On the regulatory compliance, cyber security remains top of mine.  Constellation sees a lessening priority on the regulatory burden of ESG reporting and investment.  Many CXO's see AI as a means to reduce compliance risk and mitigate future risks.

Services Firms Show Mixed Results

The IT services firms that move nthe quickest will gain market share despite the current slow down.  Quarterly results show that decision makers have slowed down decision making.  Deals that took months now take quarters to close.  Here's a quick summary of the Q4 earnings of Indian majors:

• Tech Mahindra is in crisis. Tech Mahindra has had a tough time retaining talent and keeping clients.  The company really needs the big deal expertise of the incoming CEO Mohit Joshi.  Mohit has a good reputation for designing large deal solutions with clients and inspiring staff.
   
• Wipro increased revenue 11.5% YoY, though the quarter was flat.  Thierry Delaporte, Wipro's CEO has engineered a horizontal realignment strategy to service cloud, data and analytics, bio, product engineering, infrastructure sevices, and consulting with more focus.  The strategy is beginning to pay off for clients.
   
• Cognizant dropped 9.6% in Q4. With a $59 million "impairment of capitalized costs" related to a large volume-based contract with a life sciences customer and 1% decline in financial services revenue the arrival of new CEO Ravi Kumar S, could not come sooner. Customers have seen attrition slow and a change in morale as Ravi Kumar S sets the stage for an internal transformation of the once venerable services firm.
   
• HCLTech showed some sales finesse in winning 13 large deals. Despite a great showing, Europe and Rest of World continued ot lag. Attrition rates dropped from 21.7% in q3 to 19.5% in Q4, reflecting worsening economic conditions.
   
• Infosys showed a weaker Q4 and spooked the market along with TCS. With 8% net profit growth, the numbers were impressive. However,  Q4 revenue and profit numbers were below estimates.  Operating margins were down 1.9% YoY.  Guidance at 4 to 7% was seen as disappointing.  Attrition at 20.9% was within the industry average range.
   
• TCS showed very slow revenue growth.  With the slowest in 11 quarters, the market reacted to the industry leader's bellwether forecasts  TCS saw a number of projects defer to the next quarter as the current CEO, Rajesh Gopinathan transitions to K Krithivasan on June 1, 2023.

The Bottom Line: Expect A Pickup In Late Q3 and Early Q4

CXO's will most likely take a pause over the late Q2 and early Q3 summer time frame.  Savvy CXO's will start their negotiation processes over the slowdown to consolidate spend. Constellation forecasts increasing demand for projects in:

• Cloud rationalization
• Analytics
• Automation
• AI
• Cyber Security
• Contract Negotiations
• Vendor consolidation

These projects show the biggest opportunities and must be completed in order to achieve operational efficiency and exponential growth

R "Ray" Wang

Principal Analyst and Founder Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation…...

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The Q1 Tech Earnings Breathe Life Among The Digital Giants

With just Apple left to report in the tech earnings season, three major trends have emerged

1. Digital Ad Winter Is Thawing.  Alphabet, Meta, and Amazon are the big 3 in digital ads.  Alphabet showed declines in ad revenue but posted $69.79B a 3% YoY increase and $1B above what analysts were expecting.  YouTube dropped 2.5% YoY in ad revenue but paid subscription sales showed a 9% increase., Meta surprised the market with a 3% increase in the ad business hitting $28.6B for the first quarter.  This reversed its trend of three quarters of decline. Meanwhile the 3rd largest player, Amazon showed continued growth in ads with a 27% growth rate at $31 billion.
   
   The winners in ad monetization not only have the eyeballs but also are the dominant player in each business model. Google - search, Meta - social networks, and Amazon - commerce are showing that they are fierce competitors for digital advertising.
    
2. Cloud Revenues Slow Down But Are Not Insignificant.  Cloud adoption continues to power growth for Microsoft, Alphabet, but not Amazon. While the growth is slowing, double digit gains are nothing to sneeze at. Google Cloud gave Alphabet profits with 28% growth at $5.82 billion and finally was break even after 15 years.  Microsoft showed 22% growth in cloud revenues.  Amazon's more mature clientele shows that the market is about to enter an era of cloud optimization which means cloud revenues could take a hit. Amazon’s AWS showed this with a 16% cloud growth rate.
   
   The era of cloud optimization is coming.  Customers are starting to refactor workloads to optimize for data ingress and egress charges.  Expect more rationalization in the next few quarters.
    
3. AI Story Drives Valuations - A Tale Of Two AI Stories
   The war for AI mind share in a post ChatGPT world is what’s driving tech valuations higher. While Microsoft kick started a war with Google earlier this year with Satya Nadella, MIcrosoft's CEO telling partners in Q1 that he would "bury" Google. Though Microsoft took the fight to Google in public, the reality is that Microsoft may not win the war as its servers are the oldest and it’s not taking a responsible approach to AI. The exponential amount of disinformation and misinformation will create massive cost to customers and society without the proper controls.
   
   Meanwhile, Google has the best team, the best tech, but has been too slow to roll out offerings due to its bulkanized organizational structure and internal incentive system.  Unlike Microsoft's command and control structure, collaboration is nearly impossible at a very federated Google.  Google believes that creating a new "division" may help expedite innovation.  However, Google must move faster, despite the realization that trust is important for AI adoption.

The Bottom Line: Tech Is Alive And Well Despite The Fed

The major tech players known as MATANA (i.e. MIcrosoft/Meta, Apple, Tesla, Alphabet, Nvidia, and Amazon) have shown much resilience despite interest rate hikes, massive cuts in valuations, a reset in earnings forecasts, and layoffs.  MATANA stocks are poised for a rebound but will they move past their trading ranges in Q2?  All eyes on the Fed Rate discussion this week and Apple's earnings to see what's next.

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.  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…...

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The big three cloud providers--Amazon Web Services (AWS), Microsoft Azure and Google Cloud--all appear to be hitting similar themes as they continue to battle for workloads, artificial intelligence supremacy and enduring customer relationships.

With Amazon, Microsoft and Alphabet, parent of Google, all reporting earnings, enterprise tech buyers are able to gauge just how much their companies were contributing to margins. The talking points among the big three appear to be led by Microsoft CEO Satya Nadella, who has leveraged the company's investment in OpenAI and ChatGPT to turbo charge its Azure and SaaS roadmaps.

Here's a look at the common themes from AWS, Microsoft Azure and Google Cloud.

See: Constellation ShortList™ Global IaaS for Next-Gen Applications

Optimization

In cloud computing and SaaS models, customers rarely cut budgets, according to vendors. These cloud buyers simply "optimize." Cloud vendors say they are helping customers optimize their spending to play the long-game with customers.

Nadella said:

"Optimizations do continue. In fact, we are focused on it. We incent our people to help our customers with optimization because we believe in the long run that the best way to secure the loyalty and long-term contracts with customers when they know that they can count on a cloud provider like us to help them continuously optimize their workload. That's sort of the fundamental benefit of public cloud, and we are taking every opportunity to prove that out with customers in real time."

Nadella added the enterprise customers were all about adding new cloud workloads and scaling during the COVID-19 pandemic. Historically, enterprise customers were balancing optimization with new workloads. Today, customers are moving back to optimization, but will ultimately regain balance, said Nadella.

Amazon CFO Brian Olsavsky said on the company's first quarter conference call that customers are clearly in optimization mode.

"Given the ongoing economic uncertainty, customers of all sizes in all industries continue to look for cost savings across their businesses, similar to what you’ve seen us doing at Amazon. As expected, customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter. And we are seeing these optimizations continue into the second quarter with April revenue growth rates about 500 basis points lower than what we saw in Q1. As a reminder, we’re not trying to optimize for any one quarter or year. We’re working to build customer relationships and a business that will outlast all of us."

Andy Jassy, CEO of Amazon, added that there is a difference between cost optimization and cutting. "Customers are looking for ways to save money however they can right now," said Jassy. "They tell us that most of it is cost optimizing versus cost cutting, which is an interesting distinction because they say they’re cost optimizing to reallocate those resources on new customer experiences."

Alphabet CEO Sundar Pichai said Google Cloud is "leaning into optimization." "It is an important moment to help our customers, and we take a long-term view," he added. "We are leaning in and trying to help customers make progress in their efficiencies when we can."

Ruth Porat, Alphabet's CFO, said customers are slowing cloud consumption as they optimize costs.

These cloud giants are optimizing today to set up growth in the future. Microsoft CFO Amy Hood noted that new workloads will play in the quarters ahead. "At some point, workloads just can't be optimized much further," said Hood. "And when you start to anniversary that, you do see that it gets a little bit easier in terms of the comps year-over-year."

Generative AI

Microsoft is rallying Azure and its entire cloud product line around OpenAI, ChatGPT and generative AI tools. Nadella is clearly pressing its advantage in generative AI mindshare.

Nadella said:

"We have the most powerful AI infrastructure and it’s being used by our partner, OpenAI, as well as NVIDIA and leading AI start-ups like Adept and Inflection to train large models.

Our Azure OpenAI Service brings together advanced models, including ChatGPT and GPT-4 with the enterprise capabilities of Azure. From Coursera and Grammarly to Mercedes-Benz and Shell, we now have more than 2,500 Azure OpenAI Service customers, up 10x quarter-over-quarter. Just last week, Epic Systems shared that it was using Azure OpenAI Service to integrate the next generation of AI with its industry-leading EHR software.

Azure also powers OpenAI API and we are pleased to see brands like Shopify and Snap use the API to integrate OpenAI's models."

Generative AI guide: ChatGPT: Hype or the Future of Customer Experience?

• What to Expect from Generative AI in Analytics and Business Intelligence
• Don’t Kill Innovation, But Apply Guardrails For AI
• How Generative AI Has Supercharged the Future of Work

According to Nadella, the Azure OpenAI Service is growing workloads for its CosmosDB, but also landing new customers. Microsoft is also making Copilot for Business broadly available. If you're keeping score at home, Microsoft executives mentioned OpenAI 14 times during its earnings conference call.

Pichai also talked up generative AI but focused on its own large language models (LLMs). Pichai noted Google launched its Bard conversational AI service and updated it to help with programming and software development.

"A number of organizations are using our generative AI large language models across Google Cloud platform, Google Workspace and our cybersecurity offerings," said Pichai.

Pichai's message is that Google has been using AI for years to improve search, ads, Maps, YouTube and other services. Meanwhile, Pichai said Google will make its infrastructure more efficient to optimize its own costs and bolster AI efforts. Google has a big optimization effort underway and is focusing on external procurement and its real estate portfolio.

Case Study: AWS Propels the Bundesliga Fan Experience to the Next Level

Amazon's Jassy said AWS is tackling LLMs and generative AI by focusing on enabling it with managed services. AWS recently announced Amazon Bedrock, new instances and Amazon CodeWhisperer to enable enterprise generative AI.

"Few folks appreciate how much new cloud business will happen over the next several years from the pending deluge of machine learning that’s coming," he said.

Amazon's plan is to use its savings from streamlining fulfillment and transportation operations and investing in AWS infrastructure for generative AI.

Jassy, like Pichai, said generative AI has hit an inflection point, but has been part of Amazon's DNA for years. "I think if you look at what’s happened over the last 9 months or so is that these Large Language Models and generative AI capabilities, they’ve been around for a while, but frankly, the models were not that compelling before about 6, 9 months ago," he said. "And they have gotten so much bigger and so much better, much more quickly that it really presents a remarkable opportunity to transform virtually every customer experience that exists."

Value

Cloud providers are also pivoting to ensure they provide value to customers. The big three all said they are playing the long game with customers.

"We’re going to do whatever it takes to help customers be successful over a long period of time because we’re trying to build relationships in a business that outlast all of us," said Jassy. "We’re spending a lot of time with customers trying to help them think of smart ways, not short-term ways, but smart ways to optimize their costs and to be able to scale up and down."

Nadella said:

"We are focused on continuing to raise the bar on our operational excellence and performance as we innovate to help our customers maximize the value of their existing technology investments and thrive in the new era of AI."

Hood said Microsoft said its Copilot effort should deliver some productivity improvement to customers.

On Alphabet's conference call, the word "value" was mentioned as much as it was on Microsoft's call. Executives, however, talked more about delivering value to industries, notably retail.

Pichai's talk about value revolved around customers, but also creating returns for shareholders. Google Cloud delivered profits in the first quarter.

Part of the value from cloud providers will be providing the scale needed for generative AI. Jassy said:

"All of the Large Language Models are going to run on compute. And the key to that compute is going to be the chip that’s in that compute. And to date, I think a lot of the chips there, particularly GPUs, which are optimized for this type of workload, they’re expensive and they’re scarce. It’s hard to find enough capacity."

AWS' bet is that its investment in chips such as Trainium will provide value as customers look for underlying compute.

The numbers

• AWS reported first quarter operating income of $5.12 billion on revenue of $21.35 billion, up 16% from a year ago. In the year ago quarter, AWS had operating income of $6.52 billion on revenue of $18.44 billion.
• Microsoft Cloud reported fiscal third quarter revenue of $28.5 billion, up 22% from a year ago. Microsoft doesn't break out its operating income for Microsoft Cloud, which includes Azure, Office 365 Commercial and the commercial portion of LinkedIn, Dynamics 365 and other cloud properties.
• Google Cloud reported first quarter operating income of $191 million on revenue of $7.45 billion, up 28% from a year ago. In the first quarter a year ago, Google Cloud had an operating loss of $706 million.

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.  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…...

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Welcome to Constellation Insights, the news and analysis arm of Constellation Research. With the launch, we'll be bringing the enterprise technology market breaking news and analysis complemented by Constellation Research's team of analysts and community of hundreds of CXOs.

Here's a look at what we're planning in the days and months ahead.

• Constellation Insights will 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 conferences. The buy side stories in enterprise tech are everywhere. After all, every company is going digital.
• We'll curate and surface contextually relevant research and community CXOs. We'll harness the brainpower of our analysts on multiple formats including Constellation TV.
• Constellation Insights will help vendors and thought leaders tell their stories.
• And we'll tap into Constellation Research's community of CXOs to surface thoughts on emerging tech trends.

Simply put, this'll be a fun adventure. Constellation Research shares my passion for enterprise tech, sits in the middle of the buying cycle and features personalities and brain power that’ll only expand my horizons (and hopefully yours). Stay tuned.

Dion Hinchcliffe

Vice President and Principal Analyst Constellation Research

Title: About Dion Hinchcliffe Dion Hinchcliffe is an internationally recognized business strategist, bestselling author, enterprise architect, industry analyst, and noted keynote speaker. He is widely regarded as one of the most influential figures in digital strategy, the future of work, and enterprise IT. He works with the leadership teams of large enterprises as well as software vendors to raise the bar for the art-of-the-possible in their digital capabilities. He is currently Vice President and Principal Analyst at Constellation Research. Dion is also currently an executive fellow at the Tuck School of Business Center for Digital Strategies. He is a globally recognized industry expert on the topics of digital transformation, digital workplace, enterprise collaboration, API…...

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To any objective observer, it’s evident that the digital world has recently undergone a remarkable cycle of innovation -- with very tangible and widely felt results -- in new forms of digital value, including money itself. From cryptocurrency and non-fungible tokens (NFTs), to central bank digital currencies (CBDCs) and other blockchain-based digital assets like stablecoins, the world of finance is currently in the midst of evolving rapidly like few times in history.

Yet not many topics also conjure up such strong sentiment as ones concerning finance. So I find that there is either too much hype or unwarranted skepticism on this subject, when rational consideration is needed instead. This is particularly true when it comes to governments and non-governmental organizations (NGOs) starting to innovate with and wield the powerful new technologies that underpin these new advances. There is also the risk of inaction, as the Center for Capital Markets notes, which is "trailing other countries developing a favorable regulatory environment for digital assets" which can result in ceding the substantial financial and innovative potential they can deliver to our economies.

In order to provide the most approachable, neutral, and therefore readily applicable understanding of the possibilities, I’ve developed a new in-depth report, which I’m pleased to announce below, based on extensive research into the possibilities of the two most important foundational technologies involved in the future of money and digital assets.

The Foundational Digital Asset Technologies in the Cloud

These two cloud technologies are a) blockchain and b) distributed ledgers. Both provide the strongest basis for breakthrough new digital systems to better serve citizens, that can either store value intrinsically and/or account for value in the real-world. They have been proven on the largest global scale to be safe, effective, highly secure, and trustworthy in next-generation financial systems when used properly.

Both of these technologies are extensively validated by real-world use in some of the most challenging operating environments in the world, reliably conducting trillions of dollars in transactions every year in the private sector in a way that is extraordinarily difficult to disrupt or exploit.

Now they have become the leading options for public sectors technology leaders to use to blaze a new trail to offer citizens better ways to engage in financial activity or store, use, verify, and trust public sector records.

Thus, I am very pleased to formally announce the recent release of my major new research report, “The New Digital Assets Imperative for CIOs in the Public Sector” It is designed to specifically help top IT leaders in government grapple with the enormous opportunity of digital assets to improve public services, while fully addressing and properly managing head-on the reputational and operational risks.

This 47-page report explores the growing imperative – a strong word, but a reality that my research also shows is the most likely path – for the digital transformation of finance as well as public sector services. For transform it will. Government agencies with the most insight into these new technologies, fluency in their full capabilities/nuances will be the ones that gain the ability to create strong visions that can be well-realized. These realizations can be incremental or they can be major, durable new re-imagining of what is possible to serve the public, suppliers, peers, and other stakeholders. Many now believe that doing so will is becoming essential to be a modern digitally-enabled government.

For its part, the White House has been clear over the last year in a major executive order and related frameworks that responsible innovation in digital assets is encouraged and even necessary for global competitiveness and to protect the public. For their part, various Federal Reserve banks have engaged in initial pilots for the digital dollar, which is explored in the report. As part of this narrative, my new research paper explores the journey the government has taken in providing specific directives including the ramifications of the guidance it has given.

To these ends, my report is intended to provide public sector CIOs and their staffs with a guide to exploring, reasoning about and then capturing the opportunities inherent in the increasingly fertile world of modern digital finance. It explicitly helps IT leaders navigate the overarching need to manage risk while balancing that with the immense potential rewards.

On the technology side, commercial cloud offerings for blockchain and distributed ledgers have emerged, grown in maturity, and have become well-established and extensively vetted options for digital assets. Some of these offerings are now capable of supporting robust public sector scale operations. The report explores the specific qualities needed in such platforms to achieve a world-class digital assets infrastructure, whether it is public cloud, hybrid, or private.

A CIO's Guide to Digital Assets

This report covers:

• A pragmatic exploration of the U.S. public policy environment that has matured around digital assets, including CBDCs, to manage risk while capturing the benefits.
• Explores the fundamentals of digital assets and their significant potential benefits to stakeholders, especially the general public.
• Articulates the range of modern digital assets that can be developed by the public sector.
• Forecasts the size of the public sector digital assets infrastructure industry through 2032.
• Examines the attributes of a cloud-based digital assets infrastructure that can safety used as a basis for public sector offerings and services.
• Makes specific recommendations on how to navigate the selection and adoption of a modern digital assets infrastructure.

You can find the full research report available to our Research Unlimited subscribers.

I’m also very pleased to announce that Amazon Web Services and their Gov Cloud team has made a courtesy copy of the report available to the general public, which can be found here. Please don’t hesitate to reach out to me if you have questions or comments about this report or to share your experiences on the forefront of public sector digital assets.

My Related Research

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How Decentralization and Web3 Will Impact the Enterprise | ZDNet

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AWS re:Invent 2022: Perspectives for the CIO

The Cloud Reaches an Inflection Point for the CIO

How a Transformation Platform Reimagines Success

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The CIO Must Lead Business Strategy Now

Building a Vision for Government 2.0 | ZDNet

The Strategic New Digital Commerce Category of Product-to-Consumer (P2C) Management