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Market Move - ADP Acquires WorkMarket to Further Extend Human Capital Management to Contingent Workers

Market Move - ADP Acquires WorkMarket to Further Extend Human Capital Management to Contingent Workers

Holger Mueller
Vice President and Principal Analyst
Constellation Research

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

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This morning ADP informed the markets about its acquisition of WorkMarket, founded 2010 and a leading platform / marketplace for freelancers.

 

 

 

 

 

 

A first move by a key HCM player, so certainly worth one of our customary news analysis blog posts, with a Market Move format angle at the end. The press release can be found here.

ROSELAND, NJ -- (Marketwired) -- 01/22/18 -- ADP® today announced the acquisition of WorkMarket, a leading cloud-based workforce management solution provider that allows companies to build and manage an integrated workforce across W-2 employees, 1099 contractors, vendors and other types of workers. With this acquisition, ADP builds on its current portfolio of industry-leading payroll and human capital management solutions that help clients and workers modernize the way work gets done while unlocking productivity, engagement and growth.
MyPOV – Good summary of the acquisition and of the potential… could have used some of the often-seen stats on the growing gig economy to underline the relevance.


WorkMarket was founded in 2010 and is headquartered in New York City. Backed by leading venture firms such as Union Square Ventures, Spark Capital and Foundry Group, as well as Accenture Ventures, WorkMarket helps companies manage their integrated workforce in a simple, secure and compliant manner. WorkMarket' s innovative solutions include tools to source and vet independent workers, manage their engagements, and pay and evaluate these workers. In addition to offering robust freelancer management functionality, the company has extended its capabilities to help clients optimize how work gets done across any labor type. Their client base spans global brands, as well as small and mid-sized businesses.
MyPOV – Good and fair summary of what WorkMarket does. The capability to optimize across labor types is what is interesting for people leaders these days.


"At ADP, we innovate by anticipating how the world of work evolves and how dynamics -- like the rise of the gig economy -- impact the needs of our clients and the modern workforce. WorkMarket allows us to provide ready access to a growing contingent labor pool and the tools to manage and pay them in a secure, efficient and compliant manner. Through this acquisition, ADP continues its tradition of helping clients keep pace with change and manage increasing complexity," said Carlos Rodriguez, president and CEO of ADP. "WorkMarket is a proven expert in freelancer management. We are thrilled to welcome their team to ours and to leverage our global footprint and bring scale to their expertise and technology."
MyPOV – Good quote by Rodriguez. Describes the goal going forward – scale WorkMarket globally and to the ADP customer base – with an eye on the core of ADP, payroll.


The rise of the contingent workforce is shaping the global workforce. ADP data shows that approximately 80% of U.S. businesses already rely on independent contractors and the number of contingent workers as part of the overall workforce is growing. According to […], by 2020 nearly 60% of human resource leaders will use a unified talent strategy for employees and contractors. With this acquisition, ADP becomes the only human capital management provider with broad functionality for HR professionals to manage and have insights into this new mosaic of labor, which will be comprised of both full-time employees and contingent workers.

MyPOV – Ok – here are the market sizing statistics. More on ADP being the only one… below.


Jeff Wald, co-founder and president of WorkMarket, said, "The WorkMarket team is thrilled to be joining ADP. We share the same vision of enabling companies and workers alike to navigate the changing labor marketplace with greater ease, and we look forward to offering our solutions to ADP's vast client base."MyPOV – Always good to have a quote of the founder of the acquired party in the acquisition press release. Judging from the presence of Thomas Buckingham (ADP acquired TMBC almost exactly 1 year ago – see here) Jeff Wald maybe around for a few years. It's always good to see the founders carrying the torch on a great scale. We will see.


 

Overall MyPOV

After overcoming the Pershing Square board challenge in fall of 2017, ADP keeps firing on all cylinders. It announced a new payroll and has more to come in 2018. Getting in early on the gig economy is a good move, as it has massive repercussions on how workers get paid. And while the new payroll supports all the gig economy requirements, there is more needed to feed that payroll: Contractor data, validation, market places – to mention a few. A key piece is also workforce scheduling, planning and simulation, something ADP will have to consider likewise – its either build, partner (existing partnerships with Kronos are in place) or acquire here, too. Future will tell.

On the concern side, one more acquisition of course. But ADP has shown it can acquire and keep momentum… WorkMarket though requires a different architecture and approach than traditional ERP / HCM software: Marketplaces, working on both sides of the firewall, marketing automation etc. are some of the prominent additional design points. It will be interesting to follow ADP through 2018 and see how soon the vendor will tackle the area. Oh, and on the claim, being the first HCM vendor, so maybe, as SAP with Fieldglass will have a word to say (but ok, ADP could say SAP is a ERP vendor). But all is good as it means choice and competition by vendors with deep pockets to help enterprises manage their heterogenous workforces of the future. Seamless employee / contractor management is the prize, with all the implications on the compliance, motivation and alignment side.

But for now, congrats to ADP for a key acquisition and to WorkMarket – that just got turbo charged. Stay tuned for more.

 
 
Future of Work Next-Generation Customer Experience Digital Safety, Privacy & Cybersecurity Data to Decisions Tech Optimization ADP AI Analytics Automation CX EX Employee Experience HCM Machine Learning ML SaaS PaaS Cloud Digital Transformation Enterprise Software Enterprise IT Leadership HR Chief Customer Officer Chief People Officer Chief Human Resources Officer

Slack Shared Channels Help Provide External Collaboration

Slack Shared Channels Help Provide External Collaboration

Alan Lepofsky
Alan Lepofsky
Vice President & Principal Analyst
Constellation Research

Alan Lepofsky - VP and Principal Analyst, Constellation Research. With almost two decades of experience in the collaboration software industry, Lepofsky helps organizations improve the way their employees work together to get their jobs done. Lepofsky’s primary research area The Future of Work, focuses on: integrating collaboration and business processes (Purposeful Collaboration), structuring work via Social Task Management, leveraging analytics and digital assistants to work more productively, the strategic impact of mobile computing on business transformation, and measuring workforce culture based on Digital Proficiency instead of age. Twitter: @alanlepoLinkedIn: https://ca.linkedin.com/in/alanlepo     , Title: Big IdeasIntelligent Collaboration: The Intersection of…...

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Why is email so popular? Because it works. If you know someone's email address you can send them a message. It does not matter which email system they use, what client they use, what device they use, where they are in the world, etc. Anyone can email anyone else. However, that ease of use also enables the issue with email, its misuse for scenarios better suited to other tools. Contrast this to social networking, where the only people that can communicate with each other are people in the same network. Within a company social networking is great. Employees can communicate, collaborate and coordinate with any of their colleagues, because they are all using the same tool. But what happens when you want to bring in someone from the outside like a customer or a partner? Typically that requires giving them an identity and password on your system. That raises all sorts of security, administration and licensing issues. It's also a pain for the user, because it means yet another ID/PW on yet another system to remember. Now multiply that over and over again by the number of external connections and you quickly see why social networking has some serious hurdles for adoption with external participation.

Slack is hoping to improve this situation using what they called Shared Channels. This feature allows two companies (who are both already paying for Slack) to communicate with each other using a channel that spans across the two different companies. So say Company A uses Slack and they want to connect with their customer Company B (who has to also be using Slack), they can create a shared channel that employees in both companies can use. This is much better than Company A having to create, manage and pay for IDs and PWs on their system for Company B's employees.

In Sept 2017 Slack announced (the beta of) Public Shared Channels, which allow anyone in Company A and Company B to join a shared conversation. Today Slack announced (the beta of) Private Shared Channels, which also allow two Slack customers to bridge their organizations, but in this case the channels are hidden, and administrators need to invite members to join. I think this will be a far more common use case than public shared channels, as most cross-company conversations are better suited to a limited audience.

It's important to note that Slack's shared channels are currently not available for Enterprise Grid customers. I hope this is rectified soon, as this feature will become increasingly important as large enterprises try and improve adoption of social tools.

Shared Channels are a great step in the right direction towards making social networking easier across organizations. But don't forget, this is just for Slack customers. Each social networking tool (Slack, Cisco Spark, Google Hangouts, Workplace by Facebook, etc, etc, etc) is still its own silo, unlike email where anyone can communicate with anyone else. Until social networking supports cross product communication (which may never happen), communicating with people that use a different products will remain a challenge.

 

Future of Work

Constellation's Futurist Framework (PESTEL); The Societal Outlook Pre-Davos

Constellation's Futurist Framework (PESTEL); The Societal Outlook Pre-Davos

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 Research Inc. He…...

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2018 Davos Focuses On Creating A Shared Future In A Fractured World

The World Economic Forum (WEF) kicks off January 23rd to 26th in Davos-Klosters, Switzerland.  This year’s theme is about “Creating a Shared Future In A Fractured World”.  From the program notes for this year’s event, WEF sees the following:

At the close of the 20th century, the presumption was that greater economic interdependence among countries, buttressed by liberal democratic institutions, would ensure peace and stability well into the new century. The global context today has changed dramatically: geostrategic fissures have re-emerged on multiple fronts with wide-ranging political, economic and social consequences.
Realpolitik is no longer just a relic of the Cold War. Economic prosperity and social cohesion are not one and the same. The global commons cannot protect or heal itself.
 
Politically, governance is being transformed by new and contending strategic narratives. Such narratives have emerged in response to national, regional and global divides, but many of them are bereft of the innovation, inspiration and idealism essential for transformational change. Economically, policies are being formulated to preserve the singular benefits of global integration while limiting its shared obligations. Yet, such policy prescriptions are fragmented, biased or uninformed when considered in the context of sustainable development, inclusive growth and the Fourth Industrial Revolution.
 
Socially, citizens yearn for responsive leadership that addresses local and national concerns; yet, a shared identity and collective purpose remain elusive despite living in an age of social networks. All the while, the social contract between states and their citizens continues to erode. Changing the situation on the ground requires more responsive governance, but this cannot absolve governments of their regional and global responsibilities.
 

PESTEL Approach Powers The MegaTrends In Constellation’s Outlook

Ever three to four years, Constellation publishes its futurist framework based on the PESTEL model of systems thinking.  Constellation approaches 2020 with this systemic point of view.  The full PESTEL report examines the political, economic, societal, environmental, and legislative (PESTEL) macro trends that will affect the business disruption ahead.  This framework serve as the basis for Constellation’s research foundation across seven business themes.  These PESTEL trends can be summarized as:

Success in navigating these trends will require executives to develop a strategy for dominating digital disruption.  Board rooms must be cognizant of such changes in order to make the tough decisions required to thrive in the disruption ahead.  This blog post focuses on the second area Economic Outlook

Societal (S) Shifts Showcase Self-awareness And Mass Personalization

The widening societal shifts that fracture today’s society transcend age. Societal trends and norms reflect a society split across digital proficiency, the union of understanding a technology and use of that technology.  In fact, age is no longer the deciding factor of digital proficiency.  For instance, millennials may not be more tech savvy than individuals of other generations.  However, urbanites may have more of an affinity than rural dwellers.

As technology ever deeply weaves into the fabric of life, these perceptions impact social shifts and drive populist movements fueled by mass personalization and a growing self-awareness movement.  In many cases, emotions have overpowered logic.  Convenience has taken over ethics and norms.  As society seeks simple explanations to complex problems, technology companies can expect to bare the brunt for “all good” and “all evils” of society going forward.

  • Social justice efforts move from inequality to unfairness (2018). The debate intensifies around unfairness versus inequality.  From diminishing worker powers, gig economy workers, short-term stock market incentives, cost of higher education, and mergers and acquisitions, some economic and social processes have exacerbated inequality.  Early efforts to combat this inequality reveal deep structural and societal issues. However, inequality due to lack of opportunity remains differentiated from inequality due to unfairness.  The focus on removing elements of unfairness will drive new social movements that towards a more meritocracy based model than a victimization and shaming approach.

    Constellation’s POV: Expect social justice movements to look at structural unfairness and identify how to improve access to opportunities without the bias of race, gender, religion, sexual orientation, and other traditional forms of discrimination and move towards logic vs emotion.

 

  • A movement grows for the right to be disconnected (2018). The frenzied, always-on, connected world has spurned a backlash in behaviors.  Information overload, jittery fingers, panic attacks spawn new psychological disorders.  Internet gaming disorder, electronic screen syndrome, internet addiction have all been considered for updates in the Diagnostic and Statistical Manual of Mental Disorders.  As humanity grapples with the connected world, many seek the right to be disconnected without being judged.  A movement is on to retain the right to pay in cash, not be electronically tracked, and connect when only needed, while  not being seen as a terrorist or social misfit for being disconnected.

    Constellation’s POV: Privacy will emerge as the new luxury for the super rich as they spread disinformation, remove records, and hide identity as best as they can.  Expect new services to provide these capabilities to the common person for a price and expect pressure for legislation to enable a new level of privacy – disconnection!

 

  • Super star elite cities exacerbate the digital divide. Cities such as Amsterdam, Austin, Bangalore, Beijing, Berlin, Boston, Dubai, Johannesburg, London, Nairobi, New York, Seoul, Shanghai, Singapore, Sydney, Tel Aviv, and Toronto have emerged as both tech hubs and knowledge hubs.  These Tier 1 superstar cities bring together the talent, the money, and the opportunities in a winner-takes all model at the expense of rural areas.  The result – the most innovative industries, impactful exponential technologies, elite talent, and concentration of wealth will disproportionately impact society.

    Constellation’s POV: These super star elite cities will create a spiraling stagnation and job loss of other economic regions if society fails to intervene.  In order to address the digital divide, decentralization and federated models will be required to share in the progress.  Expect technologies such as autonomous vehicles and market forces such as high real estate costs to create some opportunities.

 

  • The new suburbs emerge with autonomous vehicles. Lower density, higher quality living gain favor with autonomous vehicles adoption. Autonomous vehicles will shift forecasts for real estate demand and population density to Tier 3 and Tier 4 centers. The ability to afford lower cost real estate, enjoy lower population density, and improve commuting productivity, will create a new mass migration to the lower density, rural living.  These hubs will be easily connected to the super star elite cities as commuting options improve.  Moreover, autonomous delivery will reduce the time for shopping and procurement of goods as well, freeing up time and leading to a higher quality of life.

    Constellation’s POV:  Humans like to be near other humans as much as they like to have their own space.  Autonomous vehicles enable the quest for personal space and less density with access to super star elite cities.  This new movement to the suburbs will spawn new societal trends over the next 10 to 15 years such as the anywhere workplace, all day dining, and binge partying.

 

  • The self-quantification movement shifts to health and self-preservation.  Growing self-awareness and new technologies enable a greater level of self-improvement.  In fact, the quest for self-preservation has grown with the ability to measure and quantify the human condition.  Beyond fitness trackers, this movement has led to new fads such as wellness cocktails, fitness vacations (fitcations), and VIP c-suite physicals.  As new genetic techniques such as CRISPR arrive to do live, gene-editing, more human augmentation will occur.

    Constellation’s POV: Greater average human life expectancy from 81 years to 150 years of age will spawn a new set of societal trends. Self-quantification will increase self-awareness and test the limits of humanity as humanity augments itself.

 

  • Block chain and cryptocurrencies will change banking forever. The prospects of efficient peer-to-peer payments sans government and financial institution meddling have led to an exploration of new models of value exchange.  From currency to credits to bartering, the ability to exchange value among individuals creates new business models.  For example, in China the ability to handle peer to peer payments with ease for the common person and wide spread internet access has created a paid content model that has yet to emerge in other countries as citizens are cash rich, time poor.  Cryptocurrencies will improve efficiencies in emerging markets where the overhead of financial institutions and over regulation cannot serve the average citizen

    Constellation’s POV: Cryptocurrencies and block chain test the usefulness of centralized monetary policy. The first credible country to boldly issue a cryptocurrency will topple the centralized banking, and reserve currency, Ponzi schemes of today’s governments.  Expect individuals to shift their holdings to a model that is more efficient and vastly more private.

 

  • Resentment and backlash emerge toward Silicon Valley for disruptive technologies and business models (since 2014).  Societies now realize the good, the bad and the ugly with how disruptive technologies can affect business models.  Expect a growing backlash against Silicon Valley, the venture capital firms, technocrats and tech geeks who decimate high paying jobs and against businesses using technology as a weapon without considering the human toll.  In addition, the growing gap in wealth and an increase in power allow Silicon Valley to reshape the world to its needs. Similar to the Occupy movements against Wall Street, these movements represent the tip of the iceberg in social unrest and populist action.

    Constellation’s POV: The technology companies will expand their tech for good programs in their fight to change public perception.  Most have an ethos to address inequality, yet expect the media to take an aggressive stance in serving a check and balance role as a growing backlash erupts.

 

  • Access trumps ownership in a sharing economy (since 2014).   From car sharing in the late 1990s, to vacation rentals to collaborative financing, the sharing economy has been inching its way into the forefront of the consumer’s mind.  Since, thought leaders such as Rachel Botsman, Lisa Gansky and Anne-Sophie Novel, have been chronicling the forces, underlying trends and players behind the movement.  Key success factors in this new business model require the identification of underutilized assets, optimization of value through time slicing of access, trading on the goodwill and generosity of others and building a reputation economy

    Constellation’s POV: A sharing economy model is not for every industry, yet this trend may affect how products and services companies shift their offerings and business models.  Expect brand promise and authenticity to power future sharing economy models.

 

  • Sacrificing privacy for convenience, loyalty, status, and security, in a post-NSA/Snowden world (since 2014).  The proliferation of digital exhaust – the plume of signals and artifacts left behind in our digital world – begs the questions of data ownership and privacy.  As organizations move toward data-driven business models, consumers and enterprises must find a balance between individual privacy rights and the desire to deliver prediction and mass personalization at scale. Moreover, the concepts of trust and transparency become paramount, as authenticity remains the Holy Grail of corporate and personal brands..

    Constellation’s POV: There is a battle for Personally Identifiable Information (PII) at the heart of many digital business models; consumer awareness of how their PII fuels business will lead to agitation for transparency and a better deal.  One will expect to see new privacy compacts emerge.

Your POV.

Have you taken account a futurist framework in your 2018 to 2020 planning?  Afraid of a business extinction event like Kodak?  Would you like to join a network of other early adopters?  Are you ready to begin your digital transformation journey?   See you at Davos! Learn how non-digital organizations can disrupt digital businesses in the best-selling Harvard Business Review Press book Disrupting Digital. 

Join like minded folks at the Constellation Executive Network. 

Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

Please let us know if you need help with your Digital Business transformation efforts. Here’s how we can assist:

  • Developing your digital business strategy
  • Connecting with other pioneers
  • Sharing best practices
  • Vendor selection
  • Implementation partner selection
  • Providing contract negotiations and software licensing support
  • Demystifying software licensing

 

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News Analysis - Google expands its global infrastructure with new regions and subsea cables - keeps investing in the Google Network as a differentiator

News Analysis - Google expands its global infrastructure with new regions and subsea cables - keeps investing in the Google Network as a differentiator

Holger Mueller
Vice President and Principal Analyst
Constellation Research

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

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The monopoly race is on between all key cloud IaaS players, the most prominent ones being AWS, Microsoft, Google, IBM and Oracle. There are always monthly press releases about new data centers being announced, opening etc. But seldom there is a 'bulk' announcement like the one that Google announced yesterday, in a blog by Treynor Sloss, that can be found here.
 

 

So, let's dissect the blog in our customary way:

 

 
At Google, we've spent $30 billion improving our infrastructure over three years, and we're not done yet. From data centers to subsea cables, Google is committed to connecting the world and serving our Cloud customers, and today we're excited to announce that we're adding three new submarine cables, and five new regions.
 
MyPOV – Capital Expenditure (CAPEX) fuels IaaS expansion, and the 30B claim stakes a ground for the other IaaS players to measure themselves on. Google is investing heavily in submarine cables by its own, that will drive up the tab. But it has advantages – read on.
  
                                                             
We'll open our Netherlands and Montreal regions in the first quarter of 2018, followed by Los Angeles, Finland, and Hong Kong – with more to come. Then, in 2019 we'll commission three subsea cables: Curie, a private cable connecting Chile to Los Angeles; Havfrue, a consortium cable connecting the U.S. to Denmark and Ireland; and the Hong Kong-Guam Cable system (HK-G), a consortium cable interconnecting major subsea communication hubs in Asia. 
 
Google Cloud Platform Datacenter Map - Source:Google
 
MyPOV – 5 new regions are a frantic benchmark for all IaaS providers. With the competition not having shared their overall 2018 objectives this is certainly a high mark. But we will have to see. The remarkable difference are the three subsea cables that will come in 2019. They connect traditionally underserved regions (e.g. Denmark (and with that Scandinavia have no fast connection to North America) – or bypass expensive land connections (e.g. Chile to Los Angeles). Interesting that the latter is a private cable for Google (the others are consortiums).  
 
Together, these investments further improve our network—the world's largest—which by some accounts delivers 25% of worldwide internet traffic. Companies like PayPal leverage our network and infrastructure to run their businesses effectively.
 
Google Network - Source: Google 
 
MyPOV – 25% of the worldwide traffic is an impressive number. The scale of that helps Google further, but is also important to keep up good network quality and SLAs, consequently Google need to invest into the network and it's good to see it keeps doing that.
 
"At PayPal, we process billions of transactions across the globe, and need to do so securely, instantaneously and economically. As a result, security, networking and infrastructure were key considerations for us when choosing a cloud provider," said Sri Shivananda, PayPal's Senior Vice President and Chief Technology Officer. "With Google Cloud, we have access to the world's largest network, which helps us reach our infrastructure goals and best serve our millions of users."
 
MyPOV – Always good to have a customer using the announced system and services, bonus if well known and demanding a huge scale like PayPal.
Curie cable
 
 
Our investment in the Curie cable (named after renowned scientist Marie Curie) is part of our ongoing commitment to improve global infrastructure. In 2008, we were the first tech company to invest in a subsea cable as a part of a consortium. With Curie, we become the first major non-telecom company to build a private intercontinental cable.
 
MyPOV – Indeed an inflection point for Google again. I remember other tech players wondering why Google invested in 2008 into a consortium…why spend capital when you can rent later? The same questions may come up around the Curie cable. A fast North / South America connection is huge – both for Google and its customers. As South America grows, so does the need for bandwidth.
 
By deploying our own private subsea cable, we help improve global connectivity while providing value to our customers. Owning the cable ourselves has some distinct benefits. Since we control the design and construction process, we can fully define the cable's technical specifications, streamline deployment and deliver service to users and customers faster. Also, once the cable is deployed, we can make routing decisions that optimize for latency and availability.
Curie will be the first subsea cable to land in Chile in almost 20 years. Once deployed, Curie will be Chile's largest single data pipe. It will serve Google users and customers across Latin America.
 
MyPOV – Good explanation of why Google is building its own cable... and the unique benefits it brings to Chile and Latin America.
 
Havfrue cable
To increase capacity and resiliency in our North Atlantic systems, we're working with Facebook, Aqua Comms and Bulk Infrastructure to build a direct submarine cable system connecting the U.S. to Denmark and Ireland. This cable, called Havfrue (Danish for "mermaid"), will be built by TE SubCom and is expected to come online by the end of 2019. The marine route survey, during which the supplier determines the specific route the cable will take, is already underway.
 
MyPOV – Interesting update on Havfrue – and shows that Google can partner with competitors – like Facebook. While there is plenty of options to network to Ireland, avoiding the land / sea / land /sea way most routes take from Ireland to the rest of Europe is an advantage.
 
HK-G cable
In the Pacific, we're working with RTI-C and NEC on the Hong Kong-Guam cable system. Together with Indigo and other existing subsea systems, this cable creates multiple scalable, diverse paths to Australia, increasing our resilience in the Pacific. As a result, customers will experience improved capacity and latency from Australia to major hubs in Asia. It will also increase our network capacity at our new Hong Kong region.
 
MyPOV – I think this is more about Hong Kong, and some appeasement for traditionally bandwidth starved Australia, something likely mot changing till someone puts more North America to Australia direct sea cable on the bottom of the Pacific.
 
Google has direct investment in 11 cables, including those planned or under construction. The three cables highlighted in yellow are being announced in this blog post. (In addition to these 11 cables where Google has direct ownership, we also lease capacity on numerous additional submarine cables.)
 
MyPOV – A good summary, showing the unique position of Goggle.
 
What does this mean for our customers?
These new investments expand our existing cloud network. The Google network has over 100 points of presence (map) and over 7,500 edge caching nodes (map). This investment means faster and more reliable connectivity for all our users.
 
MyPOV – Good to have a taxonomy and the 100 points of presence and over 7500 edge 
nodes are impressive. And likely the leading network.
 
Simply put, it wouldn't be possible to deliver products like Machine Learning Engine, Spanner, BigQuery and other Google Cloud Platform and G Suite services at the quality of service users expect without the Google network. Our cable systems provide the speed, capacity and reliability Google is known for worldwide, and at Google Cloud, our customers can make use of the same network infrastructure that powers Google's own services.
While we haven't hastened the speed of light, we have built a superior cloud network because of the well-provisioned direct paths between our cloud and end-users, as shown in the figure below.
 
MyPOV – Indeed the opportunity for Google is that it can run services and products on its network – that potentially other IaaS competitors cannot achieve. Or can only achieve with lengthy negotiations with network providers.
 
We're excited about these improvements. We're increasing our commitment to ensure users have the best connections in this increasingly connected world.
 
MyPOV – You bet. 😉
 
How Google sees the Google network vs the options of other IaaS players - Source: Google 
 

Overall MyPOV

In general, there is a trend of commoditization between the IaaS vendors – with differentiation getting harder to determine. One area that sticks out is the Google network. Anyone who lands in a country on this planet and turns on their smartphone can see the benefits: Gmail arrives not seconds, but often full minutes earlier than other email accounts. And of course, there are much more benefits beyond simple email – but Gmail is a tangible example that everybody can test themselves. Where it gets exciting is around use cases like Cloud Spanner. Achieving transactional consistency in under sub second is a key quality for many critical next generation applications, e.g. in the are of IoT.
 
This blog post is doing an excellent job at explaining Google investment and the benefits, but Google will have to keep pushing messaging and awareness that enterprise decision makers can evaluate these capabilities, and realize how critical they maybe for their next generation applications running on Google Cloud Platform.

 

 

 

Lastly, exciting times for the worldwide IaaS rollout. All too often users and enterprises are overseeing the heavy lifting that is necessary behind the scenes to make the 'cloud' happen. If you are lucky and every visited an undersee cable trawler / ship – you realize that there is m any aspects that go into a great user experience. Some of them salty. But for now, congrats to Google to keep investing in one of the core differentiators for Google Cloud, the Google network. 

 
 
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Constellation's Futurist Framework (PESTEL); The Economic Outlook Pre @Davos #WEF18

Constellation's Futurist Framework (PESTEL); The Economic Outlook Pre @Davos #WEF18

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 Research Inc. He…...

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2018 Davos Focuses On Creating A Shared Future In A Fractured World

The World Economic Forum (WEF) kicks off January 23rd to 26th in Davos-Klosters, Switzerland.  This year’s theme is about “Creating a Shared Future In A Fractured World”.  From the program notes for this year’s event, WEF sees the following:

At the close of the 20th century, the presumption was that greater economic interdependence among countries, buttressed by liberal democratic institutions, would ensure peace and stability well into the new century. The global context today has changed dramatically: geostrategic fissures have re-emerged on multiple fronts with wide-ranging political, economic and social consequences.
Realpolitik is no longer just a relic of the Cold War. Economic prosperity and social cohesion are not one and the same. The global commons cannot protect or heal itself.
 
Politically, governance is being transformed by new and contending strategic narratives. Such narratives have emerged in response to national, regional and global divides, but many of them are bereft of the innovation, inspiration and idealism essential for transformational change. Economically, policies are being formulated to preserve the singular benefits of global integration while limiting its shared obligations. Yet, such policy prescriptions are fragmented, biased or uninformed when considered in the context of sustainable development, inclusive growth and the Fourth Industrial Revolution.
 
Socially, citizens yearn for responsive leadership that addresses local and national concerns; yet, a shared identity and collective purpose remain elusive despite living in an age of social networks. All the while, the social contract between states and their citizens continues to erode. Changing the situation on the ground requires more responsive governance, but this cannot absolve governments of their regional and global responsibilities.
 

PESTEL Approach Powers The MegaTrends In Constellation’s Outlook

Ever three to four years, Constellation publishes its futurist framework based on the PESTEL model of systems thinking.  Constellation approaches 2020 with this systemic point of view.  The full PESTEL report examines the political, economic, societal, environmental, and legislative (PESTEL) macro trends that will affect the business disruption ahead.  This framework serve as the basis for Constellation’s research foundation across seven business themes.  These PESTEL trends can be summarized as:

Success in navigating these trends will require executives to develop a strategy for dominating digital disruption.  Board rooms must be cognizant of such changes in order to make the tough decisions required to thrive in the disruption ahead.  This blog post focuses on the second area Economic Outlook

Economic (E) Trends Show Global Optimism

In a world where the cost of capital is effectively zero and financial institutions such as pension funds must return 10 to 12 percentage annual growth, the economic outlook remains challenging.  Almost ten years after the global financial crisis of 2008, Western economies have printed their way out of shock by providing short-term liquidity.  With improving economic conditions in sight, monetary authorities must reverse quantitative easing without creating inflation or economic collapse. Meanwhile, countries with good population dynamics will drive consumer gains while those aging populations must address man power and rejuvenation. Population gains and a new middle class power Malaysia, Indonesia, Nigeria and Turkey (the MINTs) on to the global economic scene.   Amidst this backdrop, moderate inflation appears around the corner as high debt to GDP ratios and stimulus policies accelerate growth.

  • Expect US tax plan to drive greater investment in the United States (2018).  Constellation estimates between $353B to $417B of overseas cash to be repatriated in the United States. Long term investment in US infrastructure will also mean a modernization refresh budget cycle.  Meanwhile, rising U.S. interest rates and the pullback from quantitative easing will result in declining foreign investment in BRICs and MINTs without population growth as investors seek to capitalize on higher returns in the U.S.

    Constellation’s POV: The changes in the US tax code and the emphasis on fair trade by the Trump administration will result in the collapse of tax havens and less investment outside of the US.  With overseas revenues no longer taxed by the US government, organizations will expect more headquarters to remain and move to the US as tax conditions have improved.

  • Merger and acquisition activity will accelerate (2018).  The influx of cash into the US will lead to an accelerated round of inorganic growth with record mergers in the next 18 to 36 months.  The US can expect the reduction of inversions while foreign based companies will see an increase.   Corporate boards will be on point to enforce efficiency on metrics such as return on cash and inorganic growth rates.  The impact on global employment will result in reduction of jobs as mergers and acquisitions will fuel stock growth but not employment growth.

    Constellation’s POV: The rush to mergers and acquisitions must be paired with regulatory requirements for reinvestment of savings in innovation.  Since 1950, the growing reinvestment of profits into stock buy backs and dividends from 50% to almost 100% at the expense of research and development has led to stagnation.

  • Long term growth continued to be short changed by short term gain (2018). Short termism continues as shareholders seek operational efficiencies and higher profits at the expense of innovating new offerings.  This risk averse nature has hampered overall growth as profits have been mostly reinvested in stock buy backs, dividends, and mergers and acquisitions instead of new product development, innovation, and infrastructure.

    Constellation’s POV: Shareholders and board of directors must take a tougher stand on the long term view of an organization.  While operational efficiency and cost optimization must be part of the overall plan, increasing investment levels in new offerings development must be prioritized to create sustainable growth and defend from non-traditional competitors.  Boards must emphasize this balanced approach to the investment portfolio and resist the calls for short term stock buy backs.

  • Cryptocurrencies pave the way for block chain trusted commerce (2018).  Despite the hype around bitcoin, the benefits of block chain will create new opportunities in trusted commerce.  Block chain applications include land titles, cold food supply chains, academic transcripts, healthcare records, and more.  By reducing the friction in establishing trust, efficiency will be brought back to trading networks.

    Constellation’s POV:   Leaders must move beyond the hype of bitcoin and understand how block chain will transform commerce.  Expect trading networks to emerge as the back bone of new network economies and business models.

  • War for talent and brain power amidst wave of automation and AI (2018).  With the cost of capital effectively at zero, the war for human capital will intensify.  Top talent will command massive premiums while automation, AI and robotics will drive down commoditized talent.  Hard skills and left-brain prowess will be table stakes.  However, organizations will pay premiums for right-brain expertise with a focus on creativity, soft-skills, and and leadership.

    Constellation’s POV: A massive dichotomy in pay for talent will create the new digital divide as humans compete with machines.  With a very limited pool of top talent, organizations must be prepared to pay regardless of location.  Expect manu mergers and acquisitions to be acquihires for top talent.

  • Cost of human-based employment drives a push to automation (since 2014).  Legislative and regulatory burdens on employment lead to increasing investment in technology to automate or eliminate the human factor.  A November 2013 poll from The Wall Street Journal’s Real Time Economics blog showed that 86 percent of organizations did not intend to hire in 2014. Hiring will be limited to the highly skilled and extremely talented. Budgets will prioritize human work that can be automated. Investment in automation has led to the growth of kiosks and chat bots for customer service.  A simple walk into any global McDonald’s will show how orders are now kiosk not human based. Expect automation to go up the stack from manual labor to professional positions such as accountants, lawyers and physicians.

    Constellation’s POV:  Augmenting humanity remains a large focus for organizations relying on human employment. In cases where machines lack fine motor skills, physical presence, or still do not understand the algorithms human based employment will prevail

  • Population dynamics and open markets play a key role in growth strategies (since 2014).  Brands and organizations must focus on rapidly growing markets.  Traditionally, Brazil, China, Malaysia, Nigeria, India, Indonesia and Turkey hae led the way due to population growth and the rise of a middle class.  According to the International Monetary Fund, the size of emerging market economies surpassed more than half of the world’s GDP in 2013.  These markets represent the future of hyper economic growth and are a leading indicator for enterprise growth.  Investment in Western economies and more developed economies will continue to remain from flat to up 7.8 percent.

    Constellation’s POV: Along with population growth, political stability plays a key role in overall growth strategies.  Growth projections must be balance by political unrest in Brazil, China, and Turkey.

Your POV.

Have you taken account a futurist framework in your 2018 to 2020 planning?  Afraid of a business extinction event like Kodak?  Would you like to join a network of other early adopters?  Are you ready to begin your digital transformation journey?   See you at Davos! Learn how non-digital organizations can disrupt digital businesses in the best-selling Harvard Business Review Press book Disrupting Digital. 

Join like minded folks at the Constellation Executive Network. 

Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

Please let us know if you need help with your Digital Business transformation efforts. Here’s how we can assist:

  • Developing your digital business strategy
  • Connecting with other pioneers
  • Sharing best practices
  • Vendor selection
  • Implementation partner selection
  • Providing contract negotiations and software licensing support
  • Demystifying software licensing

 

 Data to Decisions Digital Safety, Privacy & Cybersecurity Future of Work Marketing Transformation Matrix Commerce New C-Suite Next-Generation Customer Experience Tech Optimization Innovation & Product-led Growth Leadership Chief Customer Officer Chief Digital Officer Chief Executive Officer Chief Financial Officer Chief Information Officer Chief Marketing Officer Chief People Officer Chief Procurement Officer Chief Revenue Officer Chief Experience Officer Chief Growth Officer Chief Human Resources Officer Chief Product Officer Chief Sustainability Officer Chief Technology Officer Chief Analytics Officer Chief AI Officer Chief Data Officer Chief Information Security Officer Chief Privacy Officer Chief Supply Chain Officer

Smartsheet Acquires Converse.ai

Smartsheet Acquires Converse.ai

Alan Lepofsky
Alan Lepofsky
Vice President & Principal Analyst
Constellation Research

Alan Lepofsky - VP and Principal Analyst, Constellation Research. With almost two decades of experience in the collaboration software industry, Lepofsky helps organizations improve the way their employees work together to get their jobs done. Lepofsky’s primary research area The Future of Work, focuses on: integrating collaboration and business processes (Purposeful Collaboration), structuring work via Social Task Management, leveraging analytics and digital assistants to work more productively, the strategic impact of mobile computing on business transformation, and measuring workforce culture based on Digital Proficiency instead of age. Twitter: @alanlepoLinkedIn: https://ca.linkedin.com/in/alanlepo     , Title: Big IdeasIntelligent Collaboration: The Intersection of…...

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One of the main battlegrounds in collaboration this year is going to be around improving the way people coordinate the work they need to get done. Constellation Research has historically referred to this category of products as Social Task Management, but will soon be updating the name to Work Coordination Platforms. There are several vendors (see the Constellation Shortlist) with strong offerings in this space, but Smartsheet has fired the first shot of 2018 with the acquisition of Converse.ai. Below is my quick take on why bringing together task management + automation + natural language processing will usher in the next generation of Work Coordination products. With the first shot fired, it will be interesting to see how the competition (as well as big names like Microsoft and Google) respond.

 

 

Research Report: Constellation's Futurist Framework (PESTEL) & Political Outlook Pre Davos

Research Report: Constellation's Futurist Framework (PESTEL) & Political Outlook Pre Davos

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 Research Inc. He…...

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2018 Davos Focuses On Creating A Shared Future In A Fractured World

The World Economic Forum (WEF) kicks off January 23rd to 26th in Davos-Klosters, Switzerland.  This year’s theme is about “Creating a Shared Future In A Fractured World”.  From the program notes for this year’s event, WEF sees the following:

At the close of the 20th century, the presumption was that greater economic interdependence among countries, buttressed by liberal democratic institutions, would ensure peace and stability well into the new century. The global context today has changed dramatically: geostrategic fissures have re-emerged on multiple fronts with wide-ranging political, economic and social consequences.
Realpolitik is no longer just a relic of the Cold War. Economic prosperity and social cohesion are not one and the same. The global commons cannot protect or heal itself.
 
Politically, governance is being transformed by new and contending strategic narratives. Such narratives have emerged in response to national, regional and global divides, but many of them are bereft of the innovation, inspiration and idealism essential for transformational change. Economically, policies are being formulated to preserve the singular benefits of global integration while limiting its shared obligations. Yet, such policy prescriptions are fragmented, biased or uninformed when considered in the context of sustainable development, inclusive growth and the Fourth Industrial Revolution.
 
Socially, citizens yearn for responsive leadership that addresses local and national concerns; yet, a shared identity and collective purpose remain elusive despite living in an age of social networks. All the while, the social contract between states and their citizens continues to erode. Changing the situation on the ground requires more responsive governance, but this cannot absolve governments of their regional and global responsibilities.

PESTEL Approach Powers The MegaTrends In Constellation’s Outlook

Ever three to four years, Constellation publishes its futurist framework based on the PESTEL model of systems thinking.  Constellation approaches 2020 with this systemic point of view.  The full PESTEL report examines the political, economic, societal, environmental, and legislative (PESTEL) macro trends that will affect the business disruption ahead.  This framework serve as the basis for Constellation’s research foundation across seven business themes.  These PESTEL trends can be summarized as:

  • Political (P) pressures point to a lack of digital proficiency in the political class
  • Economic (E) trends exacerbate digital business disruption
  • Societal (S) shifts showcase the digital divide ahead
  • Technological (T) trends boost digital opportunities
  • Environmental (E) factors frame long-term scenarios
  • Legislative (L) lethargy drives knee jerk reactions

Success in navigating these trends will require executives to develop a strategy for dominating digital disruption.  Board rooms must be cognizant of such changes in order to make the tough decisions required to thrive in the disruption ahead.  This blog post focuses on the first area Political Outlook.

Political Outlook Reflects Governments’ Quest To Quell Unrest Not Resolve Structural Issues

Global governments face a confluence of forces with worldwide chronic unemployment, stagnant economic performance, growing social program obligations and continued polarization of political ideology.  A generation of voters are jobless at the beginning of their careers.  OECD statistics show over 73 million, or 12.6 percent, of global youth are unemployed.  Political trends play a role in the acceleration or hindrance of business disruption.  Amid those forces, governments seek to address social unrest and quell the impact of failed policies and disenfranchised citizenry:

  • The rural and urban digital divide widens with no remedies in sight (2018).  From BREXIT to the 2016 US election to the German Parliamentary elections, the digital divide between urban areas and the rural citizenry have never been greater.  Rural areas have not seen the direct benefits from high technology and globalism.  In fact, the rural class blames technological advancements and the political ruling classes for creating policies that have disenfranchised the rural areas, resulting in blight, economic depression, senseless regulation, job loss, and a decline in overall opportunity.  On the other hand, the urban class has benefited the most from the technological gains and globalist policies with greater wealth creation, career advancement, and political influence.

    Constellation’s POV: Democratic governments must address this digital divide or face continued populist uprisings and a distrust of government institutions.
  • Digital dictatorships proliferate in the name of security and order (2018).  Expect more countries incentivizing citizens to connect online in order to identify relationships, improve services, encourage commerce, track location, and identify aberrant behavior.  While some countries like China will continue to directly provide digital services in order to control its citizenry, others will encourage private companies to serve as an intermediary to provide those services.  Ten years ago, if someone told you that citizens would voluntarily provide information about all their preferences, all their friends and relationships, and all their whereabouts on a government website, one would have thought this to be crazy.  Today the proliferation of social networks, home assistants and devices, the citizenry is unwittingly providing the data for not only corporations but also governments to mine and spy on.

    Constellation’s POV: The political class and the citizens must define the rules of engagement and the tradeoff among privacy, convenience, security, and freedom.

  • Echo chamber polarization accelerates among the masses (2018).  Fake news, mass personalization of content, and tailored digital experiences have resulted in a more divided electorate.  The application of artificial intelligence to content delivery exacerbates polarization by delivering only the content individuals want to receive to feel good, avoid conflict, and validate their own beliefs.  The result – mass confusion among what content represents fact versus fiction.  The “fake news” phenomenon and the lack of intellectual curiosity will lead to greater political unrest. With no true or objective arbiter of the news, and the reliance on ad dollars to fund media, the role of journalism has died.

    Constellation’s POV: Governments must work hard to help the media reclaim their role in providing a trusted institution and objective voice or face even more polarization and potential revolution in their governments.

  • Dynamic leadership models (2018).  The need to create responsive and responsible leadership is a hallmark for success in digital transformation and jump starting growth inside organizations.  Dynamic leadership describes a model where leaders follow a set of immutable traits and balance foundational attributes of leadership.  This new framework takes into account a multi-dimensional approach and addresses the challenges existing leadership models often neglect

    Constellation’s POV: The global call for responsive and responsible leadership will require a new way to approach the timeless topic of leadership. Instead of taking a classical binary or rigid approach, learn the five immutable core traits and develop a balance of 14 foundational attributes as a guide to successful and sustainable dynamic leadership.

  • Existing policy lags the pace of change in technology and new business models (since 2014).  The impact of digital disruption on the economic, societal and environmental pillars is pushing the limits of today’s existing policy and political models.  From privacy to new people-to-people networks, policy has fallen behind the pace of change and political gridlock hurts citizens.  Just recently in the United States, city governments sought to ban sharing-economy leasing models such as Airbnb by restricting how long and what kind of short and long term rentals a private citizen could allow on his or her own property.  In another example, the Target customer data breach of late 2013 and the Equifax debacle of 2017 highlighted how American privacy legislation is woefully inadequate and needs reform.

    Constellation’s POV: The good news is that in the European Union and elsewhere, the privacy laws have sharper teeth and enhance innovation without trampling on individual rights.  Legislation such as GDPR will provide some protections for the global citizenry.
  • Pay-to-play legislative influence hinders disruptive business models (since 2014).  The high cost of campaigning for public office creates a kleptocracy in places such as the United States and the European Union.   Paying a lobbyist $10 million to create an economic impact in the billions of dollars makes business sense.  However, the pay-to-play influence model only exacerbates a byzantine set of laws that adds to overall business friction through additional accounting, legal and political costs.

    Constellation’s POV: Governments should begin the regulatory reform to update past laws, remove redundant regulations, and streamline rule making to limit excessive costs of government.
  • Technology ignorance plagues the political class in the West (since 2014).  Across the Western economies, few elected officials have science backgrounds.  Meanwhile, scientists hold eight out of China’s top nine government posts.  The lack of science and engineering fundamentals often hinders digital business discussions and the implications of technology policy are unclear to decision makers, who become timid and dependent on lobbyists and other influencers who peddle biased information. For example, lack of understanding around climate change and pollution control technology creates an emotional discussion instead of an objective scientific method approach.   Furthermore, innovative business models often must face entrenched political powers that are, for all intents and purposes, ignorant.

    Constellation’s POV: Foundations and non-profits may want to create new missions that will help provide objective data and insight without poltical biases.  Former Microsoft CEO, Steve Ballmer has led the way with election data from the Ballmer Group as one example to clear the air and bias on planning data for making policy decisions.

Your POV.

Have you taken account a futurist framework in your 2018 to 2020 planning?  Afraid of a business extinction event like Kodak?  Would you like to join a network of other early adopters?  Are you ready to begin your digital transformation journey?   Learn how non-digital organizations can disrupt digital businesses in the best-selling Harvard Business Review Press book Disrupting Digital. 

Join like minded folks at the Constellation Executive Network. 

Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

Please let us know if you need help with your Digital Business transformation efforts. Here’s how we can assist:

  • Developing your digital business strategy
  • Connecting with other pioneers
  • Sharing best practices
  • Vendor selection
  • Implementation partner selection
  • Providing contract negotiations and software licensing support
  • Demystifying software licensing

 

 Data to Decisions Digital Safety, Privacy & Cybersecurity Future of Work Marketing Transformation Matrix Commerce New C-Suite Next-Generation Customer Experience Tech Optimization Innovation & Product-led Growth World Economic Forum Leadership Innovation Chief Customer Officer Chief Digital Officer Chief Executive Officer Chief Financial Officer Chief Information Officer Chief Marketing Officer Chief People Officer Chief Procurement Officer Chief Revenue Officer Chief Supply Chain Officer Chief Experience Officer

Digital Transformation Digest: Rootstock Buys Kenandy in Cloud ERP Consolidation, Microsoft Intros Encryption for Skype, EU Plots Major Supercomputing Investment

Digital Transformation Digest: Rootstock Buys Kenandy in Cloud ERP Consolidation, Microsoft Intros Encryption for Skype, EU Plots Major Supercomputing Investment

Chris Kanaracus
Chris Kanaracus
Managing Editor, Constellation Insights
Constellation

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

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Constellation Insights

Rootstock buys Kenandy: There is ERP consolidation happening in the Salesforce ecosystem, with Rootstock's announcement it will buy Kenandy. Both companies have built out ERP applications for manufacturers and distributors using Salesforce's technology platform. Here are the key details from the announcement:

“By combining the talent, skills and intellectual property of both companies, Rootstock will achieve greater economies of scale to compete with the likes of Oracle-NetSuite, Microsoft and SAP, while giving us the ability to create more cutting-edge capabilities for Kenandy and Rootstock customers,” said Patrick Garrehy, CEO of Rootstock.

The combination of Rootstock Cloud ERP, Salesforce Sales Cloud, Salesforce Service Cloud and the underlying Salesforce Platform technologies, such as Salesforce IoT and Einstein Analytics, form a compelling choice for manufacturers, distributors and supply chain organizations aiming to compete more effectively and better serve their customers.

POV: Kenandy was founded in 2010 by Sandy Kurtzig, a Silicon Valley pioneer. It has raised more than $50 million in venture capital and at one point was valued at $350 million. Terms of the deal with Roostock weren't disclosed.

While there are many questions left unanswered, including how Rootstock will rationalize the combined company's product portfolio, the deal is an important additional validation of Salesforce's platform as fit for mission-critical application development. Rootstock competitors include the likes of Plex, SAP ByDesign, Epicor and Infor, which may seek to capitalize on customer uncertainty, as with any acquisition. But Rootstock has been gaining good momentum of late, even managing to replace SAP at Mipox, which makes polishing abrasives. That deal will see the rollout of Rootstock to some 400 users in 12 countries.

As Rootstock noted in its announcement, a key part of growing the business lies not just in application functionality, but smarter and smoother implementation processes. As a combined entity, with a more diverse set of customers the company should be able to mature those processes faster.

Microsoft previews encrypted Skype: Going into 2018, online privacy is a hotter topic than ever. Microsoft is hoping to capitalize on this with the introduction of end-to-end encryption for Skype. Here are the key details from its announcement:

With Private Conversations, you can have end-to-end encrypted Skype audio calls and send text messages or files like images, audio, or videos, using the industry standard Signal Protocol by Open Whisper Systems. The content of these conversations will be hidden in the chat list as well as in notifications to keep the information you share private.

After the recipient accepts your invite, all calls and messages in that conversation will be encrypted end-to-end until you choose to end it.

POV: Microsoft's decision to base Skype encryption on Signal is an interesting one. The messaging protocol has gotten the thumbs-up from the likes of Edward Snowden and to date, there have been no reports of it being cracked or compromised. Overall, encryption is fast become a must-have, rather than nice-to-have feature in messaging applications, and Skype has lagged behind other products in this area.

As of now, only members of Microsoft's Skype Insider program can test out the features, but general availablity will likely follow later this year. Still, there are gaps in the functionality; video and group chats aren't included, and the fact encryption will be an opt-in, rather than fully baked into the product, are weaknesses that Microsoft will hopefully address soon.

EU creating €1 billion supercomputing fund: The European Commission is planning to join with member states to fund €1 billion into supercomputer research, in a bid to keep pace with the U.S. and China and ease privacy concerns. But it appears that due to Brexit, the effort may not include the UK. Here's how the EU described the project in a press release:

Supercomputers are needed to process ever larger amounts of data and bring benefits to the society in many areas from health care and renewable energy to car safety and cybersecurity.

Today's step is crucial for the EU's competitiveness and independence in the data economy. Today, European scientists and industry increasingly process their data outside the EU because their needs are not matched by the computation time or computer performance available in the EU. This lack of independence threatens privacy, data protection, commercial trade secrets, and ownership of data in particular for sensitive applications.

A new legal and funding structure – the EuroHPC Joint Undertaking – shall acquire, build and deploy across Europe a world-class High-Performance Computing (HPC) infrastructure. It will also support a research and innovation programme to develop the technologies and machines (hardware) as well as the applications (software) that would run on these supercomputers.

POV: The goal is to invest €1 billion in public funding by 2020; private contributions will also be solicited. Currently, the EU doesn't have any supercomputers in the top-10 rankings globally in terms of power. The EU wants to acquire two pre-exascale supercomputers and at least two midrange machines by 2020, which is an ambitious but doable goal, particularly given the level of funding it plans to commit. The machines will be jointly owned by participating member countries and private companies and institutions.

As of yet, the U.K. hasn't signed onto the proposal and a government spokesman declined to give a reason why, according to Bloomberg. Resolving the U.K.'s role in the project should be a crucial task for EU officials, but one made uncertain by the prospect of Brexit and exactly what relationship the U.K. will have with EU countries going forward.

Data to Decisions Digital Safety, Privacy & Cybersecurity Future of Work Tech Optimization Chief Executive Officer Chief Financial Officer Chief People Officer Chief Information Officer Chief Digital Officer

News Analysis - SAP HCM On-Prem Option for SAP S/4HANA - or is this S/4HCM?

News Analysis - SAP HCM On-Prem Option for SAP S/4HANA - or is this S/4HCM?

Holger Mueller
Vice President and Principal Analyst
Constellation Research

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

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It’s a new year and new product announcements are coming out – normally in the consumer space, given CES looming large. Looks like SAP did not want to stand back and had a major announcement in the HCM space: The announcement of a new, on premises (yes you read this right) HCM product, planned to be available in 2023, a record time range of 5 years out. Definitively worth a news analysis, the press release can be found here.



 


So let’s jump into my customary dissection of a press release:

Nearly six years ago, SAP acquired SuccessFactors, providing our customers with the best cloud-based human capital management (HCM) solutions on the market. Since then, the number of customers using SAP SuccessFactors solutions has nearly quadrupled, and we continue to see increasing momentum toward the cloud for HCM globally and across all industries.

MyPOV – Good description of the status quo both in regards of product and go to market strategy and reality. SAP customers had the choice to keep their existing, R/3 based SAP HCM product (which isn’t a bad product btw.) on premises. Many used the SuccessFactors Talent Management functions in parallel, in the cloud. SAP’s strategy was to use EmployeeCentral as the fix point for HCM automation and then gradually move its customers to a cloud based, maybe SuccessFactors based architecture (my speculation) was foiled for reasons outside of SAP HCM product / go to market makings with the overwhelming on premises adoption of SAP S/4HANA. 


Our investment strategy follows this market demand, with the bulk of the planned innovations for our HCM portfolio focused on SAP SuccessFactors solutions.

MyPOV – This is the reassurance statement for the SAP SuccessFactors customers – the last thing SAP wants them to get nervous and look at other cloud based HCM products. 


SAP also continues to support our customers using SAP ERP HCM, our on-premise HCM solution. While an increasing number of them are migrating to SAP SuccessFactors solutions to accelerate their digital HR journeys, we also recognize that every customer journey is unique and must be undertaken at each customer’s own pace. For some SAP customers this includes a desire to deploy their HCM solution in an on-premise environment for the foreseeable future. 

MyPOV – Good for SAP to acknowledge customer reality. Vendors can strategize and build on product as much as they want – they need customers to follow. When they don’t follow – later more – investments have to be adjusted. The ‘some SAP customers’ are the first 1000 (and numbers growing) SAP S/4HANA on premises customers. The foundation of what SAP wants to be the new ERP suite of the 21st century, it’s 21st century version of R/3. 


To support these customers’ needs, we plan to offer a new on-premise HCM option based on SAP ERP HCM with a comparable functional scope (except for the SAP E-Recruiting application and SAP Learning Solution).”  It is intended to be deployed alongside, and integrated with, SAP S/4HANA. The solution is planned for availability in 2023, with maintenance planned at least through 2030.

MyPOV – And the cat is out of the bag… a new HCM “option” (press release aficionados will cherish the absence of naming this “product” or at least “solution”) with a comparable scope to the current SAP HCM solution is planned for 2023. As readers know, the current SAP HCM is supported till 2025. So this will require some precision upgrading by the SAP install base and is pretty much a product road map / deliver plan that allows for very little slippage. The product comes with the ‘default’ 7 years of maintenance, that if there is any success is likely to extended. Also interesting that the new HCM option is going to be deployed next to S/4HANA, SAP calls this ‘side car’. Actively wondering why this HCM option is not offered as part of S/4HANA. Quick reminder: Originally S/4HANA was a copy of R/3, and now simplification and improvements have been and are being added. And no surprise the cloud intensive HCM functions of Recruiting and Learning are being excluded. These would be hard to size from a system capacity perspective for customers, customers are likely going to be happy to keep e.g. the video processing and playback to the cloud. 


To recognize our customers’ existing investments, it is our intent to offer a license conversion program. Details are planned to be finalized in 2018 although the solution will not be available for purchase until eventual availability. At that time, it is intended that customers can license the new solution and start migrating to it using planned SAP-provided migration tools and services. As the underlying solution is intended to be based on SAP ERP HCM, we expect this to be a nondisruptive transition. It is planned that customers running an integrated ERP and HCM deployment in one instance today can move to a partitioned deployment model and run the offering on a separate instance.

MyPOV – No surprise – SAP wants to make it easy for customers to adopt the new product. License conversion on the commercial side, migration help on the implementation side. Will be great to see / learn more details and good to see SAP setting an internal target of 2018… not much will happen till then on the customer side. 


We are pleased to provide options to meet our customers’ preferences across cloud, on-premise and hybrid operating environments and will continue to provide updates on our solution road map and ongoing innovations.

MyPOV – Boilerplate, good – but eventually acknowledging that the customer is king, and vendors have to meet customers where they are, where they want to stay and be. 




 

Overall MyPOV

Pinch me – it’s 2018 and we analyze a press release about an … on premises product. Reality in Europe (and some other parts of the world) is though that customer want a cloud ready product, that could be operated in the cloud if they desire, but then deploy on premises. Data safety, data statutory, privacy and performance arguments are the  most prominent reasons customer want to stay on premises. Of course there is a substantial portion of sticking with what has worked and is familiar since half a century…

At the end of the day the SAP HCM product strategy got run over by the SAP S/4HANA strategy and adoption reality. I have been pointing out the lack of HCM (and CRM) messaging, road map and positioning in S/4HANA (to the point of having an informal bet with the former head of SAP SuccessFactors on SAP needing an on premise adoption option for HCM in 2018 as a consequence, made at the SuccessConnect analyst summit in 2016…). SAP customers bought a suite and want a suite back. At the moment they see fragmentation across the board, at least for HCM, CRM and Procurement. With 9x%+ of 

SAP S/4HANA customers opting for on premises SAP was faced with the option of extending the old R/3 code and maintaining it for longer than 2025. But that would have taken off upgrade pressure on customers to move to S/4HANA… and SAP wants return of R&D from S/4HANA and some revenue. Even if SAP had provided a full suite (incl. payroll) in SuccessFactors, in the cloud today, on premises minded and bound customers would not have taken it. And a customer upgrading to S/4HANA (with no HCM in it) would have to either keep operating some R/3 infrastructure for HCM automation or move to the (non-existing) full automation of HCM in SuccessFactors… that would have opened up potential selection of other HCM suites. And with SAP competition pushing suites (beyond HCM), the overall S/4HANA upgrade could be questioned. 

So SAP customers found themselves in a tough spot: Influence SAP through the user group to extend R/3 based HCM support (and the rest) beyond 2025 – and operate on an aging on premises infrastructure. Or reap the benefits of S/4HANA investments and force / influence SAP to undertake a S/4HCM (my naming!) project. I call it S/4HCM as I expect SAP to undertake the same process it did for e.g. Finance with S/4HANA – now again for HCM. Take R/3 based HCM, move it to a new product / code line, simplify, update to 21st century, take advantage of Leonardo (my speculation) etc. – a repeat of the S/4HANA approach and process, just for HCM. Now tons of branding pros and cons on this one. The SAP user groups had to choose between a rock and a hard place: Keep old R/3 or move forward with S/4HANA. At the end it seems (e.g. in Germany with DSAG) the active customers, using, adopting and planning to use S/4HANA have won inside of the user groups). 

With all the challenges, there are also some kudos for SAP into this. Announcing a new product to be available 5+ years from now is probably a record for the enterprise software industry (for the observers, Oracle held that with a 4 year ETA for the called Oracle Fusion in 2008). This gives customers a chance to plan on the long-term side and monitor SAP’s progress. The other side of the coin is of course that SAP will now push the S/4HANA upgrade path even more. Deploy the new SAP ERP sidecar option and move to the new ‘digital core’ (as SAP calls it). 

At the end of the day this is a great lesson learnt that customer adoption ultimately dictates product investment and road maps. Vendors can only move and entice customers on a value based proposition so far… with the bulk of S/4HANA being on premises the writing was on the wall that SAP needed an on premises strategy for HCM (and likely for CRM and Procurement). Now the question is… what does this mean for SAP’s CRM and Purchasing plans. We can only speculate…


 

 

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Digital Transformation Digest:T-Mobile's New IoT Play, SAP Keeps the On-Premises Flame Burning, Ford Drives Further into Smart Cities

Digital Transformation Digest:T-Mobile's New IoT Play, SAP Keeps the On-Premises Flame Burning, Ford Drives Further into Smart Cities

Chris Kanaracus
Chris Kanaracus
Managing Editor, Constellation Insights
Constellation

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

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T-Mobile goes narrow, but aims big with new IoT play: Self-styled "uncarrier" T-Mobile is staking a big flag in IoT (Internet of Things) with Magenta, a narrowband network that at $6 per device per year, drastically undercuts that of Verizon's comparable offering for IoT devices:

At one tenth the cost of Verizon’s Cat-M plans ...T-Mobile’s new NB-IoT plan takes advantage of narrowband technology, and the efficiency it provides, to significantly lower the costs of connecting things and unleash the next wave of IoT innovation.
 
T-Mobile’s new NB-IoT plan lights up new capabilities to connect massive numbers of devices with small and steady streams of data at low cost. NB-IoT is much more affordable than Cat-M and is already the globally-preferred standard to power the rapidly expanding world of IoT applications. Because it can operate in guard bands – the network equivalent of driving down the shoulders on the highway -- NB-IoT carries data with greater efficiency and performance and doesn’t compete with other data traffic for network resources.

POV: T-Mobile made the announcement in conjunction with the Consumer Electronics Show, ongoing this week in Las Vegas. It's a splashy move to say the least and is clearly T-Mobile's biggest bid for enterprise business to date. It's worth nothing that the $6 pricing model is on a limited-time basis, but T-Mobile can deliver adequate performance at even two or three times that much money, the network should gain traction quickly. It could also help drive down pricing on IoT networking from other carriers, particularly Verizon. Overall, the market seems set to gain a viable new option, which is always good for customers and competition.

SAP plans new on-premises HCM app: Like all enterprise software vendors, SAP has been pouring resources into building out a cloud application portfolio. But the reality is that many of its customers will keep large parts of their application footprint on-premises for the foreseeable future. SAP has acknowledged that reality in a new announcement about its HCM (human capital management) software strategy.

Nearly six years ago, SAP acquired SuccessFactors, providing our customers with the best cloud-based human capital management (HCM) solutions on the market. Since then, the number of customers using SAP SuccessFactors solutions has nearly quadrupled, and we continue to see increasing momentum toward the cloud for HCM globally and across all industries.

Our investment strategy follows this market demand, with the bulk of the planned innovations for our HCM portfolio focused on SAP SuccessFactors solutions.

However, SAP is also developing a new on-premises HCM application that is comparable in scope to the existing one, with availabilty in 2023 and support extended through at least 2030. SAP will offer a license conversion program, the details of which have yet to be completed.

POV: SAP competitors may seize upon the announcement as somehow evidence of SuccessFactors' inferiority, but the reality is a bit more complicated. The vendor's customer base is deeply rooted in some of the world's most conservative industries and it's not surprising that there's enough demand for a new on-premises HCM application. To that end, SAP is essentially obligated to provide new innovations to customers that have dutifully paid annual maintenance fees, but still have no inclination to move to the cloud.

Ford launches smart cities push with Autonomic: Automaker Ford is teaming up with a startup called Autonomic to shape a new vision for smart, connected cities. The companies see data from autonomous vehicles, bicycles and next-generation public transportation as a crucial wellspring of insight into how future cities will live and breathe, but at the same time, a difficult matter to wrangle. Here are the key details from a Ford blog post:

If we play our cards right, we can help allow for millions of people to move into cities and keep streets less congested, not more. We can connect people living in transit deserts to the city center for better jobs. We can manage our curbs better, remove parked and idling cars, and instead plant more trees and share fresh air with more in our community.

Building an ecosystem such as this requires the large-scale connection of bits of distinct data that flow from a variety of sources. And those sources — public transportation services, self-driving cars, cyclists and even infrastructure — will need to speak the same language and communicate with each other if we’re to realize the true potential of this type of ecosystem.

The first step along that path is to establish a platform that enables that kind of communication. That’s why Ford is working with Autonomic ... This platform can manage information flow and basic transactions between a variety of components in the transportation ecosystem — service providers, personal vehicles, bicycles, pedestrians, mass transit systems and city infrastructure, including traffic lights and parking locations.

POV: CES is a perennial place for brands to lay out ambitious technology strategies; Ford's partnership with Autonomic falls in line with that trend. Ford's plans are promising in their outlines. The company compared its planned collaboration with Autonomic as designed to build "a box of Legos" that can be snapped together to fit differing needs, not a monolithic, one-size-fits-all platform. This is the right approach given how much variety and complexity the world's cities contain. It will be interesting to see how their collaboration unfolds over the course of 2018.

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