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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Progress Report - Ultimate Software Analyst Day 2017 - Keeping the momentum

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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We had the opportunity to attend Ultimate Software’s first analyst summit, held at the vendor’s headquarters in Weston, Florida, November 16th. Always good to be at an inaugural analyst meeting, good attendance by the usual HCM analysts. 

 
 
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Deeper Insights into the Ultimate People Culture – We had the chance to get another glimpse into the Ultimate Software culture – with Chief People Officer Maza joining us for dinner. A truly remarkable story, in which more aspects get uncovered each time… this time what stood out that founder Scherr preferred to go in debt over laying off employees. And certainly, a vendor’s culture is strong when …. The waiter at the restaurant knows all about it. On the analyst day we had CEO Scherr share more on this, including the trust card and objective coin. All good principles of people leadership, built on the conviction that happy employees work better, resulting in happier and more satisfied customers. 
 
Ultimate Software Constellation Research Holger Mueller
Scott Scherr takes us through Ultimate Software History

Workforce Management on Track – One of the bigger functionality items that Ultimate announced at Ultimate Connections this spring was Workforce Management. The vendor confirmed that the new capability is on track for a January 2018 general availability. It will be interesting to monitor adoption and further roadmap – and what it means for Ultimate’s partnership with Infor. And overall the yardstick in workforce management has been moved with Kronos’ recent launch of Workforce Dimensions (see here). It certainly is a key area in HCM going forward – payroll relevance, gig economy potential and compliance aspects all make workforce management a must have capability for HCM vendors. 
 
 
Ultimate Software Constellation Research Holger Mueller
Software & Services happy together (Dodd & Rogers)


(New) Mobile Application Adoption Good – Ultimate has had an uneven mobile user experience in the past and announced to rectify this at Ultimate Connections. The mobile application (both for iOS and Android) has shipped and has seen good adoption. Mobile remains the preferred access for most HCM interactions. So, it is important for Ultimate customers that the vendor is getting this right and it certainly looks like that. Now Ultimate has to keep it that way. 
 
Ultimate Software Constellation Research Holger Mueller
2 confident sales leaders - Swick & Phenicie


Marketplace Progress Good – Marketplaces are key for modern enterprise software sales, as the days of ‘minibus load visits’ are coming to an end. HCM buyers want to see, try and buy software fast, and that means they have to look at Marketplaces. The Ultimate Marketplace, just launched recently, has made good progress in both partner adoption and market impact. And it is early days and differentiation in the field is getting hard. But a must have area for all vendors, including Ultimate so key and good to see the progress.
 
Ultimate Software Constellation Research Holger Mueller
Hartshorne plays a game
 

MyPOV

After announcing its most ambitious product roadmap agenda at Ultimate Connections in Las Vegas this spring, Ultimate has been making good on the delivery of the roadmap. And that matters, as the vendor was slowly but steadily falling behind… not so anymore if the current development speed and output can be maintained and met with customer adoption and revenue in the next quarters and years. Ultimate has made progress with its AI platform and assistant Xander and now needs to keep the momentum, to build on the leadership of being the first HCM vendor with a working assistant.

On the concern side, Ultimate must increase the speed of its UX renovation / innovation. There are too many at best mediocre UX quality screens left in the system, especially at the manager and HR professional level. Maybe Ultimate is banking on replacing a large part of that with a chat / voice based assistant – trying to leap frog this UI innovation cycle… Ultimate Connections 2018 will give us the answer into this question.

But overall a new and re-energized Ultimate Software. Committed to people, customers and R&D. On track for 1B US$ in revenue for 2018. Stay tuned.


 
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Amazon Web Services Adds Yet More Data and ML Services, But When is Enough Enough?

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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Amazon Web Services CEO Andy Jassy invoked the Lauren Hill song “Everything is Everything” at this week’s re:Invent event in Las Vegas to underscore his assertion that AWS has more than twice the number of services of any other public cloud. The question is, will the services catalog ever become – or, indeed, is it already – so extensive that it becomes unwieldy from a customer development, deployment, and cost-management perspective?

This year’s re:Invent followed the more-more-more pattern of past events, with more attendees, more exhibitors, more floor space and, you guessed it, yet more services and capabilities announced. That was certainly the case in the data and analytics arenas, with announcements across database, big-data management, analytics, machine learning (ML) and artificial intelligence (AI). Sometimes less is more, however, a point I’ll get back to in my conclusion, but let’s start with a recap of what I see as the most important data-to-decisions related announcements.

Aurora Upgrades Promise Easier Deployment, Cost Saving and Compatibility

Aurora is Amazon’s flagship database service, aimed at winning converts from the likes of Oracle Database, Microsoft SQL Server and IBM Db2 with what AWS says is comparable or better durability, availability and performance at as little as one tenth the cost. Aurora is a decidedly commercial offering, too (only available on AWS), but it’s compatible with both MySQL and, as of October, PostgreSQL, the two most popular open-source relational databases. Aurora launched with MySQL compatibility, but PostgreSQL offers closer compatibility with enterprise-focused capabilities supported in Oracle and Microsoft SQL Server.

At Re:Invent, AWS announced two Aurora upgrades. Aurora Serverless (now in preview) will deliver automatic, on-demand scaling (both up and down), which will simplify deployment, ease ongoing management and align cost with usage. Aurora Multi-Master, another preview capability, scales both reads (already available)  and writes (the part that’s new). Sometime next year this Multi-Master capability will be extendable across multiple regions. In short, Multi-Master promises performance, consistency and high-availability at scale, and with multi-region support these traits will span even global deployments.

MyPOV on Aurora upgrades: The Serverless move was a no-brainer and it was only a matter of time. Multi-Master may be a response to customer demand, as AWS claimed, but it also answers Google’s introduction of Spanner, that vendor’s globally scalable relational database. (Similarly, the DynamoDB Global Tables announcement at re:Invent answers Microsoft's introduction of global-capable CosmosDB). Global deployment is far from a mainstream demand, however, so this is more of a battle for bragging rights. The real mainstream market changer is the general availability PostgreSQL compatibility, which will make it easier to migrate workloads running on Oracle or SQL Server into AWS on Aurora without extensively rewriting queries and database functionality. It’s a less flashy announcement, but it’s the most significant in terms of winning new customers.

Neptune Graph Database Service

AWS entered a whole new database category with the introduction of Neptune, a graph database service now in “limited preview.” Graph analysis is about exploring network relationships, as in people in a social network; customers and influencers in a retail or telco environment; employees, candidates, organizations and job openings in an HR context; and network nodes and assets in a national-intelligence, security or IT-network analysis context.

Most companies use graph-analysis features that have been grafted onto relational databases to do this work. But graph databases designed for the task do a better, more flexible job when exploring millions or even billions of relationships. To give customers a choice, AWS has designed Neptune to use both the Property Graph and W3C's Resource Description Framework (RDF) models and their respective query languages, Apache TinkerPop Gremlin and RDF SPARQL.

MyPOV on Neptune: Amazon made some pretty sweeping disparaging statements about the scalability, durability and performance of existing open source and commercial graph database options. Neo4j, which is an open-source database with commercial enterprise edition and managed service options, supports both clustering and, more recently, multi-data-center deployment. Neptune is in limited preview, so we can only take Amazon’s word that it will deliver better and more reliable performance. Neptune will compete most directly with Neo4j and Titan/JanusGraph, from a technology perspective. But the real competition and biggest market opportunity is making a dent in the use of less-adept graph analysis features of more expensive databases including Oracle and Microsoft SQL Server. IBM has released Compose for JanusGraph, so it, too, is betting on a graph database service.  

SageMaker Introduces Yet Another Model-Management Environment

How many times this year have I heard vendors talking about making data science easier -- particularly ML? Let’s see, there’s Cloudera’s Data Science Workbench, IBM’s Data Science Experience, Microsoft’s next-generation Azure ML, Databricks (on AWS) and soon-to-be released on Azure… I’m sure there are more. At re:Invent AWS announced that Amazon SageMaker will join the crowd.

The idea with SageMaker (like the others) is to make it easier for data scientists, developers and data-savvy collaborators to build, train and run models at scale. A lot of these model-management environments rely on open-source notebooks, and that’s the case with SageMaker, too, as it uses Jupyter notebooks. Options for model building include a top drawer of 10 popular algorithms that AWS says have been optimized to run on its infrastructure, thereby improving performance and saving money on compute requirements. You can also use options from TensorFlow, MXNet and, soon, other frameworks, AWS promises, giving customers choice.

That’s a good start, but a key differentiator for SageMaker comes in lifecycle stages including training, where three’s a “one-click” option for serverless, autoscaling training. That’s one area where there’s typically a lot of manual work.  Other time and labor savers include auto hyperparameter tuning (in preview) and one-click deployment, also with serverless autoscaling.

MyPOV on SageMaker: The training and deployment automation features sound very promising, but you’ll have to forgive me for taking a wait-and-see attitude after so many announcements this year. The other model-management environment I was impressed by this year was Microsoft’s next-generation Azure ML, which is currently in preview. Microsoft’s environment promises data-lineage and model-change auditing throughout the development and deployment lifecycle. SageMaker doesn’t offer these capabilities currently, but an executive told me AWS expects to add them.

Data-lineage, auditability and transparency are crucial not just for regulated banks and insurance companies. Constellation sees transparency and ML/AI explainability as something that organizations and industries will demand as we embrace predictive and prescriptive systems that recommend and automate decisions. There have been plenty of examples where biases have been discovered in decision systems that impact people’s lives.   

MyPOV on Reinvent Overall

Once again, re:Invent was impressive, and the sheer number of announcements was stunning. I could site at least a dozen other notable data-to-decisions-related announcements, from AWS IoT Analytics to Amazon Translate (real-time translation) to Rekognition Video (object/activity/face detection) to Polly Transcribe (real-time, multi-language transcription). To Jassy’s point, having everything one could possibly need probably is everything to a developer. But when is enough enough?

My point is not to eliminate services and take away capabilities, but AWS CTO Wener Vogels pointed out in his keynote that the company has released a whopping 3,951 new services and capabilities since the first re:Invent event in 2012. The sheer number has sometimes been “confusing and hard to deal with,” Vogels admitted. He went on to talk about the administrative tools and services that Amazon has come out with to ease cloud architecture, development, deployment, operational management and cost/performance optimization. This includes everything from CloudFormation, CloudWatch, Config, and  CloudTrail to Config Rules, Cost Explorer, Inspector and Trusted Advisor.

So, yes, AWS is doing a lot to make working on the platform simpler, easier and more cost-effective, but I’ll close with three proposals to shift the emphasis and communications agenda a bit at re:Invent 2018.

Put the emphasis on improving existing services. Wherever possible, build on existing services rather than introducing yet another service. DynamoDB Global Tables, Backups and On-Demand Restore, for example, are examples of new features added to one of AWS’s oldest services. Werner Vogels noted that AWS likes to get new services out there even if it knows that certain features are wanting. That way it can get customer feedback on how to improve the service. I would submit that AWS is now so large, it would do well to add value to existing services first and take more time to polish new services before introducing them. I’d also make a point of highlighting upgrades to existing services at re:Invent so customers recognize the growing value of services already in use.

Put management and administrative services in the spotlight. This year there were a whopping 61 new product announcements overall at re:Invent, yet only two in the “Management” category: AWS Systems Manager and a new logging feature added to AWS CloudTrail. Systems management may not be as sexy as a new AI or ML service, but AWS should make point of using re:Invent to announce and highlight new capabilities that will help companies spend less, simplify, save employee time and get more bang for the buck. It may be that AWS Systems Manager didn’t get much limelight at re:Invent because it seems to be a makeover of Amazon EC2 Systems Manager, introduced at re:Invent 2016. According to a blog on the new AWS Systems Manager, it “defines a new experience around grouping, visualizing, and reacting to problems using features from products like Amazon EC2 Systems Manager.”  As the scale of AWS grows and companies use more and more services, I would think management tools and services would keep pace and take advantage of the most advanced technologies AWS is applying in other areas.

Bring more automation and AI to building and management capabilities. Following up on the last point, I was really intrigued by Werner Vogel’s discussion of the AWS Well-Architected Framework and Well-Architected Principles, but everything under this category seems to about white papers, best-practice documents, and case studies. That’s all great, but I sense an opportunity to turn this content into helpful services or, better still, new advisory features embedded into existing services. Point the sexy stuff, like machine learning and AI, at how customers use AWS and surface recommendations at every stage of development, deployment and operations. That seems to be the focus of some of the automation tools mentioned above, but let’s see more. Maybe even embed some of these capabilities directly within tools and services so it’s not up to administrators and managers to fix bad practices. These are areas where AWS should excel. If you help customers use AWS well and cost effectively, they will be even happier and more loyal than they are today.

Related Reading:
Salesforce Dreamforce 2017: 4 Next Steps for Einstein
Oracle Open World 2017: 9 Announcements to Follow From Autonomous to AI
Microsoft Stresses Choice, From SQL Server 2017 to Azure Machine Learning

 

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Monday's Musings: Want AI Ethics? Learn From These Four Movies/TV Shows!

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 Convergence of Technology, Society, And AI Ethics Is Already Among Us

Over the past year, almost every conversation on artificial intelligence involved a discussion on ethics, humanity, and policy.  Sometimes a picture is worth a thousand words.  In this case, one can look to Hollywood for a few good suggestions to ponder.  Four AI geek classics bring out unique points to consider in any AI ethics conversation:

1. The Matrix (1999) Shows Why Humans Are Different

The Matrix raises many philosophical points from perceptions of reality.  For instance, has a general artificial intelligence fully manipulated humanity? Does morality exists in a dreamed state?  As with Descartes’ meditations, what ethics apply when reality is blurred?  Understanding that humanity has the capability to break the rules and create new rules drives a key design point in considering design of general artificial intelligence.

2. Assassin’s Creed (2016) Highlights The Heart Of Humanity – Free Will


Callum Lynch’s gains memories of his ancestor Aguilar de Nerha and trains as a Master Assassin before taking on the secret Templar society.  The Assassins upheld the extremity of free will while the Templars represent determinism.  The Templars advocate a utopian world where control and the perfection of humanity is in a state of order and discipline at the expense of free will.  While the real world must balance free will and determinism, if society enables a general purpose artificial intelligence go too far and take away free will, the essence of humanity will vanquish.

3. Ghost In The Shell Addresses Security Required For Augmented Humanity, Cybernetics, And AI Convergence


Ghost in the shell shows a world where robotics, computer technology, and bio medical engineering have enabled humanity to not only control augmented prostheses and cyberbrains.  Those with cyberbrains face a risk where cyberhackers can control their unwilling victims.  The movie highlights the societal implications of digitization and unchecked control as human augmentation goes mainstream.

4. Person of Interest Explores The Implications Of Trading Privacy For Security, Convenience, And Order With AI


The block buster five season series explores the creation of a general purpose AI designed to protect the post 9/11 world.   Thee series explores the trading of privacy for convenience, security, and order and what happens when an AI is unleashed on the world where humans are irrelevant.

The Bottom Line: There Will Be No Universal Ethics For AI But Time Is Of The Essence

Ethics reflects values humanity has placed on itself as a rules of engagement.  Applying a universal set of ethics will be a fools errand.  However the discussion of what contextual attributes, values, biases, and controls must be held in a public forum in order to find the right balance for humanity and machine to co-exist.

Time is of the essence.  Our smartest minds must work on this soon and establish AI Ethics the same way society approached bio medical ethics.

 

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This report provides a framework on how to realize the path to full AI, design for infinite ambient orchestration, build any AI-driven smart service and identify when to automate with AI.

Purchase the report now or login to the Constellation website for access.

Your POV.

Ready to roll out your plans for AI?  Do you understand the business model implications?  Who will you partner with for AI?  What are the ethical considerations that must be addressed?  What’s your favorite show or movie htat addresses AI ethics? 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
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  • Sharing best practices
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Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales .

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Event Report - Kronos KronosWorks - Kronos unleashes the Falcon - launches Workforce Dimensions

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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We had the opportunity to attend Kronos’ yearly user conference, held at the Aria in Las Vegas from November 12th till 15th 2017. The conference was well attended, similar to last year, we sensed an increased partner interest and exhibition demand, compared to 2016. 

 
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Kronos unleashes Falcon – launches Workforce Dimensions. Complete new products / product suites are seldom launched by surprise. But Kronos managed to do this – keeping the cloth of confidentiality on its new product, Workforce Dimension, for over 3 years. The approach that Kronos took was remarkable: It formed a separate team, with the objective to disrupt Kronos. The team was physically separated from the existing R&D team and laid the foundation for Falcon, the codename for what is today Workforce Dimensions. Moreover, Kronos took the time to listen and had the stamina, guts and discipline to get Workforce Dimensions built out to the point of functional parity with its two other key products – Workforce Central and Workforce Ready. Truly remarkable, and a departure from the typically seen ‘announce first, deliver later’ approach in enterprise software.


 
Holger Mueller Constellation Research Kronos Kronosworks 2017
Workforce Dimensions


Workforce Dimensions – a modern WFM management system. In Workforce Dimensions, Kronos has done many things right, but let’s start with the most crucial ones: Kronos has re-started with a brand-new domain model. Often overseen, but if gotten right, a key capability to support 21st century best practices, that often were hard if not impossible to achieve on older systems. Moreover, Kronos takes advantage of machine learning, to power interesting capabilities like Workforce Advisor and assure compliance. And lastly, Kronos Dimensions is built on a new platform the D5 platform… and D5 runs on Google Cloud Platform (GCP). The last decisions are likely going to be key, as all SaaS vendors are moving to IaaS platforms (instead of running on inhouse data centers). 


 
Holger Mueller Constellation Research Kronos Kronosworks 2017
Ain makes commitment to existing customers


Commitment to Workforce Central and Workforce Ready. When new products are announced, customers that have experience in the enterprise software market right away are concerned on existing R&D commitment and support / maintenance of existing products. The only way for vendors to address these concerns is to issue roadmaps and deliver on the R&D, support and maintenance commitments. At launch of the new product, vendor cannot do more than make the commitments, and Kronos has done well making these. For instance, the vendor committed 100M US$ in R&D for both Workforce Central and Workforce Ready in 2018. Now Kronos has to follow up and deliver to keep customers comfortable. The last thing vendors with new products want to see happening is a RFP. 


 
Holger Mueller Constellation Research Kronos Kronosworks 2017
Kronos Workforce Dimensions beta customers


Google Cloud Platform is the IaaS for Kronos Workforce Dimensions. SaaS vendors are picking their IaaS partners, as they can turn capital expenditure (CAPEX) into OPEX… if done right it should yield in more budget for R&D of the SaaS product. Kronos choice of GCP is not the typical first choice, so quite a coup for Google. But the machine learning and performance capabilities of GCP are something all SaaS vendors have noted. A good choice by Kronos from all we can tell at the end of 2017.


 

MyPOV

It’s seldom that new enterprise products are announced in the era of SaaS. But with the DNA of most products still reaching into the 20th century, they all need a considerable re-thinking in regards of their capabilities vis a vis 21st century best practice needs. Kronos making the decision to start from scratch is certainly a good one, given the legacy of Workforce Central and Workforce Ready. More important Kronos has also entered the HCM market, as it announced that it will scale up the Workforce Ready HCM capabilities up to enterprises with 10k FTE. What this means for the good partner relations that Kronos has with all the larger HCM and ERP vendors remains to be seen, but Kronos is certainly now in a position of strength. The remarkable ability to announce with a ready product is also a sign of competitive market weakness… most vendors in enterprise software don’t have the luxury to build their next generation product for 3+ years – and still grow. Likely Kronos will be able to exert some competitive pressure on the other players in Workforce Management.

On the concern side, Workforce Dimensions is a new product. Though Kronos has done a good job working with launch customers, presenting them at KronosWorks etc. – the proof will be in the pudding when a few dozens of customers are live. There are a lot of moving parts when creating a new platform and a new SaaS product, that runs on an IaaS platform, and they have to be all in line. There is nothing prompting a concern at the moment, but Kronos still has to master this. Kronos customers are now on the pickle to determine their upgrade decision and path. The older platforms have enough pain points (just mention Java on Desktop. Flash, UI, reporting) to force the hand of decision makers to look at Workforce Dimensions soon. And lastly Kronos needs to get the ecosystem ready, there will be a lot of services and support work needed. But this is a good problem to have.

Overall a great KronosWorks for Kronos and its customers. Kronos has created an attractive, modern Workforce Management system that will give all its customers pause to think about upgrade plans. Not only has Kronos managed to address challenges of the past, but has also shown vision in regards of user experience and best practices, to make the evaluation of Workforce Dimensions almost a no brainer for the install base. A great start for a brand-new product. Stay tuned.

 

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

Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.
 
 Tech Optimization Next-Generation Customer Experience Revenue & Growth Effectiveness Data to Decisions Future of Work 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

Digital Transformation Digest: AWS re:Invent—Innovation Versus Overload, Major IoT Data Marketplace Taking Shape

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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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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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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Constellation Insights

AWS re:Invent—Innovation versus overload?: This week saw the Las Vegas Strip taken over by Amazon Web Services' re:Invent conference, which drew more than 40,000 attendees over several days of keynotes, sessions and in particular a slew of news announcements.

The company issued nearly two dozen press releases related to re:Invent, some of which covered multiple new services. And nearly all of AWS's new services for machine learning, container orchestration, databases and many other areas are available in preview, at a minimum. AWS may have its critics, but it would be hard for them to say it is selling vaporware.

AWS is delivering new features at a staggering speed in a bid to maintain its lead over Microsoft, Google, IBM and Oracle in the cloud. One question re:Invent 2017 seemed to raise is how much customers can comprehend, let alone consume.

Then there's the overall focus of the event's content. The past couple of re:Invent conferences heavily featured marquee customers such as General Electric discussing their journey to the AWS cloud. This year's edition featured some of that as well, but the emphasis seemed more on messaging to developers than painting a broad vision for enterprise IT leaders, notes Constellation VP and principal analyst Holger Mueller.

Still, on other fronts AWS used re:Invent as a launch pad for efforts aimed at getting a bigger piece of the enterprise pie. It previewed Enterprise Contract for AWS Marketplace, which is described as follows:

Enterprise Contract for AWS Marketplace is an agreed upon standardized contract template between enterprise software buyers and sellers that resolves challenging terms including liability, dispute resolution, IP protection, warranty, and more across multiple vendors. Participating customers using Enterprise Contract for AWS Marketplace are able to eliminate lengthy procurement negotiations that can delay projects for months.

The contract will be generally available in the first quarter of next year. Companies that are participating in the preview include AppDynamics, CA Technologies, NetApp and Trend Micro, among many others.

While AWS's partner program is growing quickly, and customers are certainly using ample amounts of third-party products on its platform, re:Invent's main focus was on AWS's own services. The key for AWS is to not just continue its torrid pace of innovation, but to make sure its new services work holistically and smoothly, lest customers who came to the cloud in search of simplicity and lower cost find themselves tangled in a kettle of "services spaghetti," as Constellation VP and principal analyst Doug Henschen puts it.

IOTA launches IoT data marketplace: There are hundreds of cryptocurrencies in existence today, but IOTA's entry is one of the most popular, with a market capitalization of about $3 billion. That may help explain why 20 prominent industrial and technology companies have joined up with blockchain startup IOTA on its new marketplace, which is aimed at monetizing data generated by Internet of Things devices. IOTA founder David Sønstebø paints a dramatic vision for the project:

While every filament of our digital zeitgeist is unequivocally telling us that data is the fuel of the future, there is an important distinction: unlike oil, which is finite and whose properties are well known in terms of what it can produce (and pollute), data is for all practical purposes limitless.

On the one hand, data wants to be free in the sense that its storage and transmission costs less and less over time; on the other hand, large quantities of data are extremely valuable and are not free to generate. These diametrically opposed conditions cause a gridlock that needs to be broken in order for Big Data to become truly big. A major cause of this is the fact that, while data sharing is becoming cheaper from a technological perspective, it is prohibitively expensive to sell fine, granular data in real-time due to intermediary fees — not to mention all the red tape one has to cut through in order to complete a single data purchase. These conditions make real-time data trade all but impossible.

IOTA's cryptocurrency technology, Tangle, is similar in theme to a blockchain distributed database, but has a different implementation approach. The company is banking that IOTA can support a marketplace where IoT data can be sold securely, quickly and cheaply. Microsoft, Fujitsu, Accenture, Bosch, Orange and Schneider Electric are among companies who have signed up for a pilot program that will run over the next two months.

Privacy would seem to be a major stumbling block for any large-scale IoT data marketplace. IOTA's announcement only briefly touches on this aspect:

The final result of the data marketplace will be a public report including several case studies that go into detail on the potential and the barriers we will face when rolling out a marketplace in full-scale production. Major emphasis will be dedicated to the impact of the EU’s General Data Protection Regulation (GDPR) on the planned future live data marketplace.

GDPR is a sweeping consumer data protection measure. It has serious teeth and will surely put IOTA's plans to the test. Watch this space.

Data to Decisions Tech Optimization Digital Safety, Privacy & Cybersecurity Chief Customer Officer Chief People Officer Chief Information Officer Chief Digital Officer

Digital Transformation Digest: Amazon Web Services Launches Container and Security Services, New Blockchain Interop Group Forms, and More

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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Andy Mulholland
Andy Mulholland
Vice President and Principal Analyst, Constellation Research Constellation Research

Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems. Coverage Areas Consumerization of IT & The New C-Suite: BYOD, Internet of Things, IoT, technology and business use Previous experience: Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...

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Constellation Insights

AWS unveils new services for containers, security: Amazon Web Services is making a flood of announcements this week during its re:Invent conference in Las Vegas, and one of the most promising is Fargate, a service that allows customers to deploy application containers at scale without needing to manage the underlying infrastructure. While container orchestration technologies such as Amazon ECS and Kubernetes provide deployment and management help, they can only go so far, and that's Fargate's selling point. Here's how AWS evangelist Randell Hunt describes it in a blog post:

To put it simply, Fargate is like EC2 but instead of giving you a virtual machine you get a container. It’s a technology that allows you to use containers as a fundamental compute primitive without having to manage the underlying instances. All you need to do is build your container image, specify the CPU and memory requirements, define your networking and IAM policies, and launch. With Fargate, you have flexible configuration options to closely match your application needs and you’re billed with per-second granularity.

AWS is also adding support for Kubernetes in Amazon ECS, in a long-awaited move. Kubernetes is an open-source project that originated at Google and has grown in popularity quickly.

Another significant AWS announcement concerns GuardDuty, a new managed threat detection service that can be turned on easily through AWS's management console. GuardDuty runs separately from customers' instances, so there's no performance hit or local agents required.

GuardDuty uses machine learning to spot anomalous events among API calls and network activities. It incorporates homegrown AWS technology and also integrates with third-party products. In AWS's view, GuardDuty is a must as customers scale up their cloud usage:

Identifying and assessing anomalous behavior across multiple accounts, networks, and instances at this scale can be like trying to find a needle in a haystack. ... Customers also have to collect API access and network flow logs and correlate them with threat intelligence sources, applying algorithms to identify anomalies based on known threats. And, often, as soon as the algorithms are well-tuned, the threats evolve and the algorithm requires rework. ... Amazon GuardDuty generates anomaly alerts that are tailored to each customer’s AWS use, and AWS continuously updates the threat intelligence sources Amazon GuardDuty employs.

General Electric, one of AWS's marquee customers, has activated GuardDuty across the thousands of applications it has running on AWS. It took "a matter of hours" to deploy GuardDuty across GE's AWS landscape, GE global chief information and security officer Nasrin Rezai said in a statement.

POV: GuardDuty received supportive comments from top security officials at the Financial Industry Regulatory Authority and Netflix as well. This week, AWS also announced customer wins with the National Football League, the Walt Disney Company, Expedia and Turner. While re:Invent is packed wall-to-wall with technical content and product announcements, for a provider like AWS, high-profile customer references send clear signals of validation to the broader market and decision-makers higher up the chain.

Constellation analysts Doug Henschen and Holger Mueller are in attendance at re:Invent. You can follow their coverage here on Constellation's website, as well as on Twitter at @DHenschen and @holgermu.

Blockchain startups launch Interoperability Alliance: A trio of startups is hoping to drum up support for the Blockchain Interoperability Alliance, a new group aimed at developing standards that foster easier and broader adoption of blockchains. Here is the value proposition as outlined by the group:

The group, which consists of Wanchain, Aion and ICON, isn't hoping to establish consensus on a single blockchain protocol, which would be impossible given the proliferation of types, particularly for cryptocurriencies. Rather, the goal is to figure out ways for different protocols to communicate seamlessly.

POV: While it appears to have a fairly modest beginning, the Alliance's goals are on target. "Though the fundamental reason for blockchain lies in the authentication of the decentralization of business processes to support the any-to-any transactions that lie at the heart of ubiquitous digital business, one of the principal barriers lies in gaining some ‘centralized agreement’ from participants," says Constellation VP and principal analyst Andy Mulholland. "Currently, multiple alliances and companies are working to provide commercial solutions, but though all use similar core technology, and go under the title of blockchain, there are substantial differences. Any move that brings these various alliances together and starts a move towards some consolidation is to be welcomed."

Legacy Watch

Doctor denied license over her refusal to use computer: Electronic medical records are a booming business, but one 84-year-old doctor in New Hampshire who keeps handwritten patient records is bucking the tide, to the point she no longer has a license to practice medicine. CNN has the details:

Why? "Because electronic medicine is for the system, not for the patients," said the 84-year-old, who is originally from Poland. "The system is destroying human relations between the doctor and the patient."

Konopka's refusal to keep electronic records, though, has played a part in a judge denying her request to regain her license to practice, which she voluntarily surrendered in October after allegations of misconduct were brought against her, according to the judge's ruling.

The allegations against Konopka started in October 2014 when a complaint brought to the New Hampshire Board of Medicine accused her of "improper prescribing practices" regarding a child patient, according to the state. After an investigation into the allegation, the board reprimanded Konopka in May.

Konopka, who denies misconduct, signed a voluntary surrender of license in September, in which she agreed to give up her license effective October 13, allowing her time to "provide scheduled and emergency treatment," according to the surrender.

POV: Konopka filed dozens of affidavits from patients speaking in her support with the court, but to no avail so far. Elsewhere in the CNN story, she describes herself as an "enemy of the system" that the establishment is trying to "destroy." Konopka had been seeing about 20 patients per week at her solo office, charging them $50. One told CNN that her other doctors "had their heads shoved into their computers" while Konopka gave her full attention.

But there are other, important wrinkles to Konopka's story. Due to her lack of computer literacy, she is unable to access the state's online system for monitoring the prescription of opiod-based drugs. Given the United States' longstanding opoid abuse epidemic, Konopka's inability—or unwillingness—to comply is obviously problematic.

While it's not clear how Konopka's situation will play out, it does raise some interesting points in an era where technology is continually transforming the way we work and receive services. Is she is a Luddite refusing to modernize at her patients' expense (and in violation of law)? Does her insistence that computers have depersonalized medicine—even as they introduce efficiency—have merit?
Data to Decisions Digital Safety, Privacy & Cybersecurity Matrix Commerce Tech Optimization Chief Customer Officer Chief Procurement Officer Chief Supply Chain Officer Chief Digital Officer Chief Revenue Officer

Constellation Digital Business Transformation survey highlights potential risks; Checklist for your Enterprise Transformation strategy

Andy Mulholland
Andy Mulholland
Vice President and Principal Analyst, Constellation Research Constellation Research

Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems. Coverage Areas Consumerization of IT & The New C-Suite: BYOD, Internet of Things, IoT, technology and business use Previous experience: Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...

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2017 Constellation Research survey on Business Transformation published just before the 2017 Constellation Connected Enterprise event found respondents in 48% of Enterprises surveyed reporting that they have a defined Digital Strategy for their entire organization. Pretty impressive, adding a further 21% stating that they have a strategy for some of their key departments and it seems that 69% of our surveyed Enterprises have mastered this complex matter and are on the home run.

At the other end of the spectrum were the 18% of respondents who said there was no strategy, maybe that’s a deliberate policy to wait and see what happens to others before making a move. The most interesting group are the 12% who stated themselves to be ‘not sure’ if their enterprise had a Digital strategy. Given that there is no common structure in the replies from the 69% who reckoned they have a strategy, it suggests that a sizable proportion are not really clear as to what Digital Business is, and how Enterprise Transformation will be achieved.

Do these points challenge that these Enterprises really have a genuine Enterprise wide transformation strategy?

As a comparison change the question to; do have an Enterprise ERP strategy? The answer would be almost certainly a clear yes and in answering the further questions as to who is responsible for what, etc. replies could be expected to be broadly similar. Of course, ERP is a well understood and mature Enterprise capability, but it wasn’t always so, and many will remember the pain and expensive reworking that accompanied the first years of deployment when similar ambiguities were seen.

To each question the survey exposes significant differences in the responses made, suggesting strategies that are focused on transforming a part of the Enterprise rather than a cohesive and complete strategy for the whole Enterprise. Maybe this shouldn’t be a surprise as past Business changes driven by technology have usually ended up as emerging through piece meal adoption as reality and understanding of the Business requirements changed during deployment.

There is a truism that Business Management talks of ‘adoption’ with a vision of the outcomes, but Technologists talk of ‘deployment’ focusing in the nitty gritty details. The project budget is established around the Business vision and expected outcome whereas the technology costs relate to current actions. It’s hard to undertake an Enterprise wide cohesive Transformation

To lead such an important change with the difficulties of determining the outcome paybacks and against the cost of investments will take firm leadership able to take full accountability. Asked who leads the Digital Transformation Strategy an encouraging 29% stated the CEO which seems to line up with the level of the task. It was must less encouraging to find in joint second place with 19% each was the CIO and amazingly No One. That last response amazing! How a cohesive and effective Enterprise strategy for transformation can take place in 19% of Enterprises with nobody responsible stretches the imagination.

Further responses placed the CTO in the role with a score of 18%, adding that to the CIO score of 19% leads to the conclusion that 37% of Enterprise Digital Business Transformations are expected to be successful without the direction of a Business Manager. The picture looks better if the roles of the CDO and CMO at 8% and 7% respectively are added to the CEO score of 29% bringing Business led transformation up to a respectable 44% of Enterprises.

Unfortunately, when asked the most important goal for the Enterprises Digital Transformation strategy the results again point towards confusion of what Digital Business delivers. Not surprisingly the response goals related pretty well to the role of the person nominated to lead the Transformation!

The roles of the CIOs and CTOs related directly to 27% of responses stating the objective is to modernize the IT systems to reduce cost! Similarly the 9% of Enterprises stated the whole point of their Digital Transformation strategy was to improve collaboration seems to align with the CMO leaders, As does the 41%, looking to reach out and engage customers more successfully for greater revenue relate to the CEO leaders. The remaining 23% are planning to increase visibility into their business to operate better is less clear.

Overall the picture is of substantial execution inconsistency from a group of Enterprises who have stated that they have are taking a business-critical move into a new generation of Business enabling capabilities. The steadily increasing use of technology to engage online through connecting the Enterprise to the Internet, Web, Cloud, and Mobility all illustrate the importance of deployments being made in globally ‘standardized’ manner as much of the Business value lies in support interactions outside the Enterprise.

Digital Business defines a new generation of Business valuable interactions that build on, and massively extend, these initial steps into online Digital business. Driving deployment against internal Enterprise operational targets certainly is a necessary part of the whole, but needs to be recognized as a potential move towards a dysfunctional enterprise as internal goals lead to non-alignment to external market expectations.

Why should this be so, what’s the explanation, does it identify a weakness in strategy execution, and if so is there a recommendation to increase the success factor? All of these points can actually be answered by looking at the success factors of the early adopters who have successfully made some level of Transformation to grow revenues and market share through becoming a Digital Business.

The winners, defined as the well-known Enterprises are noted for having succeeded in disrupting their market place at the expense of their competitors have achieved their success by building an across Enterprise team representing all the roles, and others such as CFO, and Head of Sales, to ensure a cohesive Transformation. The alternative is not an Enterprise transformation but a departmental project, which is likely become a series of departmental projects lacking integration of Business capability to leverage the combined resources of the Enterprise.

Seen this way the apparent confusion on roles and responsibilities that emerged from the Constellation survey starts to be seem more understandable, but the lack of agreement on what is the Enterprise goal for Digital Business transformation is a real danger point. Consider that the goal is a transformed Enterprise into a Digital Business that has mastered and deployed an Business, Technology and Organizational structure built on wholly new techniques such as Machine Learning and Augmented Intelligence.

Reality means the any transformation will be implemented in a series of steps, each transforming a specific high value business element. The danger is that a succession of successful projects will result in a transformation ending in a dysfunctional Enterprise with operations isolated by their individual Digital Business investments.

Business Managers who lived through the last major transformation when Business adopted Business Process Re-engineering and Technology Managers struggled to deploy an aligned ERP technology strategy should recognize this danger. Constellation recommends the Digital Business Transformation Strategy should be treated as an Enterprise wide strategy executed by a cross discipline team ideally reporting to the CEO. Each member has the responsibility to define and contribute their own business unit Transformation objectives to the Enterprise team to ensure alignment around four simple headings;

What;

The definition of the departmental capability transformation in full including Enterprise wide implications.

Why;

The benefits case covering the direct outcome together with internal, external and Enterprise potential.

When;

Identification of any timing issues that would call for prioritization such as external market pressures to compete versus internal efficiency improvement.

How;

Contributing ideas on products and methods to enrich Enterprise knowledge to establish common best practice and ensure individual Transformations integrate to provide the overall Enterprise Transformation

New C-Suite Innovation & Product-led Growth Tech Optimization Future of Work AI ML Machine Learning LLMs Agentic AI Generative AI Analytics Automation B2B B2C CX EX Employee Experience HR HCM business Marketing SaaS PaaS IaaS Supply Chain Growth Cloud Digital Transformation Disruptive Technology eCommerce Enterprise IT Enterprise Acceleration Enterprise Software Next Gen Apps IoT Blockchain CRM ERP Leadership finance Customer Service Content Management Collaboration M&A Enterprise Service Chief Information Officer Chief Technology Officer Chief Digital Officer Chief Data Officer Chief Analytics Officer Chief Information Security Officer Chief Executive Officer Chief Operating Officer

Digital Transformation Digest: The Privacy Implications of Pervasive App Trackers, VMWare Cloud Hits the Gas on AWS, Microsoft and SAP Deepen Partnership

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

Android app user-trackers proliferate: Yale's Privacy Lab, along with the French nonprofit Exodus Privacy, have released research into 25 tracking tools tucked into popular Android apps, such as Twitter, Skype and Uber. While there's no inherent surprise that mobile apps contain trackers, the apparent pervasiveness should give end-users and especially regulators serious pause. Here's how Yale puts it:

Publication of this information is in the public interest, as it reveals clandestine surveillance software that is unknown to Android users at the time of app installation. These trackers vary in their features and purpose, but are primarily utilized for targeted advertising, behavioral analytics, and location tracking.

At Privacy Lab, we’ve studied the data from Exodus output, providing insight into the origin of advertising trackers, the companies behind them, and their surveillance practices. Network activity originating from these Android apps crosses multiple countries and legal jurisdictions. Lack of transparency about the collection, transmission, and processing of data via these trackers raises serious privacy concerns and may have grave security implications for mobile software downloaded and in active use by billions of people worldwide.

Exodus looked at more than 300 apps on Google Play with its web-based privacy auditing software, which is available as open-source. More than 75 percent of them exhibited tracker signatures, but the percentage could be even higher when taking into account new, unidentified trackers or ones added to new versions of apps over time, the researchers said.

While the research focused on Android and Google Play, many trackers are multiplatform, meaning they could well reside inside apps on the Apple store as well, Yale noted.

POV: Any mobile app user knows the drill when they click on the "Install" button, particularly when the app is free of charge: Up pops a long list of permissions the app makers want, both for functionality purposes but also monetization. Yale and Exodus's work shows just how far app makers can go in tracking users, and how feeble the current standards for transparency and privacy oversight are.

For some apps are doing far more than using tracker data to serve up targeted ads, as Yale notes:

Perhaps more disconcerting is the potential impact of advertising trackers on the finances and healthcare of users. One app analyzed by Exodus, Mon AXA (“My AXA”), is developed by a multinational insurance and financial firm, and was found to contain six trackers. Exactly what information is shared is unknown, though the data stored by the app is extremely sensitive.

Skeptics will say that app users have only themselves to blame for giving up access to personal data, but that argument falls quite short when the notion of hidden tracking code comes into play. Yale and Exodus say their work demands a call to action and its hard to disagree. While serious regulatory actions may not be on the horizon in the U.S., laws elsewhere such as the upcoming General Data Protection Regulation in Europe, may force the issue. (Go here to read an excerpt from an in-depth report on GDPR and its implications for marketers by Constellation VP and principal analyst Cindy Zhou.)

VMWare Cloud hits the gas pedal on AWS: Just a few months after its initial availability on Amazon Web Services, VMWare has added a series of significant new features to VMWare Cloud for the IaaS provider.

One big move is VMWare Cloud availability in AWS's U.S. East region, its largest overall by far by capacity. This adds to initial availability in the U.S. West region, and introduces disaster recovery scenarios for VMWare Cloud on AWS. That crucial capability was sure to come down the pipe, but by introducing it so quickly VMWare is sending enterprises the message that it wants and is ready to support mission-critical vSphere workloads on AWS. DR will be powered by VMWare Site Recovery for protecting workloads in both hybrid and pure-AWS scenarios.

The update also introduces support for environments with tens of thousands of virtual machines; reserved instance pricing; the ability to bring on-premises licenses to AWS; live and bulk application migrations with no retrofitting; and partner product integrations with Veeam, Druva, NetApp, Avi Networks, RightScale and others.

POV: VMWare gave public IaaS a try with vCloudAir, but ultimately sold off the business to hosting company OVH earlier this year and began focusing on supporting leading IaaS providers such as Microsoft and AWS. The latter remains the market leader in share and therefore it's no surprise to see how much engineering muscle VMWare is putting into cloud feature development for AWS (customers can expect a quarterly release cycle).

Microsoft, SAP partnership picks up steam: While Microsoft and SAP have been partners and mutual customers—Redmond runs one of the world's largest SAP ERP installations—the relationship took a big step forward this week, and it has positive implications for enterprise IT decision-makers. Here are some of the highlights.

SAP's HANA Enterprise Cloud will run on Azure at a date not yet disclosed. HEC is an SAP-managed service for its enterprise applications that has been available in SAP data centers as well as those of third-parties, such as IBM; adding Azure support bolsters HEC's coverage and options for customers around the world.

Microsoft is also moving its legacy SAP financials module over to the newer SAP S/4HANA version. This is a significant step, albeit one many initial S/4HANA customers have taken first. It will be quite some time before Microsoft fully unravels and upgrades its highly customized SAP ERP landscape.

Perhaps more significantly, SAP is planning to move "more than a dozen business-critical systems to Azure," including the S/4HANA finance software used to support its Concur division. Further details weren't available, but the plans sound significant. Overall, the projects will generate important insights Microsoft and SAP can share with joint customers, both at the corporate and user group levels, about running SAP applications on Azure.

For more, go here to read Constellation VP and principal analyst Holger Mueller's in-depth analysis of the announcement.

Data to Decisions Digital Safety, Privacy & Cybersecurity Matrix Commerce Next-Generation Customer Experience Tech Optimization Chief Customer Officer Chief Information Officer Chief Supply Chain Officer Chief Digital Officer Chief Revenue Officer

Microsoft and SAP join forces to give customers a trusted path to digital transformation in the cloud

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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When SAP and Microsoft announced the plans to move more of SAP load to Microsoft Azure in Spring of 2016 (here is the news analysis blog post), it was clear this was a partnership that was bound and needed to happen. Customer overlap, technology partnership and ecosystem synergies all made this partnership nothing in the massive surprise category… But in the meantime, the partnership has been quiet – apart from some joint plans for SAP SuccessFactors. So, it’s good to see some new traction and plan in the partnership, unveiled on November 27th. 

 
 
 
So, let’s dissect the press release in our customary way – it can be found here:

REDMOND, Wash., and WALLDORF, Germany — Nov. 27, 2017 — Microsoft Corp. and SAP SE on Monday announced integrated offerings to provide enterprise customers with a clear road map to confidently drive more business innovation in the cloud. In a bold show of commitment, the two companies also announced they will be deploying each other’s cloud solutions internally. Through their unique partnership, the companies will co-engineer, go to market together with premier solutions and provide joint support services to ensure the best cloud experience for customers.

MyPOV – No surprise – Microsoft and SAP will drink their own champagne and use each other products / services… the emphasis on clear roadmap maybe some self-reflection on the fact that there has not been too much roadmap traction in the past 18 months. Good to see co-created and supported offerings and services – that’s what prospects and customers expect from both vendors when they partner.



SAP HANA® Enterprise Cloud — SAP’s private managed cloud service — on Microsoft Azure will allow customers to run SAP S/4HANA in a secure, managed cloud. Additionally, Microsoft will deploy SAP S/4HANA® on Azure to help run its own internal finance processes, and SAP will move its key internal business critical systems to Azure. Finally, SAP Ariba is currently utilizing Azure and is exploring further use within its procurement applications. Together, SAP and Microsoft will help companies make the most of running SAP applications in the cloud.

MyPOV – Great paragraph summing up the scope of the announcement. SAP HANA Enterprise Cloud (HEC) gets a new home option on Azure (next to SAP, that will keep offering the service), SAP Ariba is considering expanding its use of Azure (hoping for details). And of course, both are using each other – Microsoft is upgrading its SAP systems to S/4HANA on the finance side, SAP will run its internal systems on Azure. Should be good CAPEX savings for SAP, and good load / utilization of Azure, meaning a better return on capital for the Microsoft investments into Azure (assuming the load will move from SAP based HEC to Azure based HEC).



SAP CEO Bill McDermott (left) and Satya Nadella, CEO at Microsoft, double down on their commitment to partnership

“As technology transforms every business and every industry, organizations are looking for the right platforms and trusted partners to help accelerate their digital transformation,” said Satya Nadella, CEO of Microsoft. “Building on our longtime partnership, Microsoft and SAP are harnessing each other’s products to not only power our own organizations, but to empower our enterprise customers to run their most mission-critical applications and workloads with SAP S/4HANA on Azure.”

MyPOV – Good quote by Nadella, describing the scope of the partnership announcements.



Enterprise companies are increasingly moving business-critical systems to the cloud for the benefits digital transformation provides: better customer relationships, more empowered employees, streamlined operations, new business models, and new products and services. […] As leaders in enterprise software, SAP and Microsoft are aligning closely to provide customers with the safe and trusted path to digital transformation.

MyPOV – This paragraph looks like it was bolted into the press release later, just to mention digital transformation. It’s not clear how moving the underpinning of HEC from SAP infrastructure to Azure enables digital transformation. Both vendor could / should have mentioned this.



“We are taking our partnership to the next level with this new capability to run SAP S/4HANA in the Microsoft Azure environment,” said SAP CEO Bill McDermott. “The world’s significant businesses trust Microsoft and SAP. Together, we will help companies win the customer-driven growth revolution.”

MyPOV – Good quote by McDermott – but introduces another benefit / goal for enterprises – customer driven (aka organic) growth. Another message next to digital transformation.



SAP and Microsoft both will run SAP S/4HANA on Azure for their internal operations. Microsoft is transforming its internal systems — which include legacy SAP finance applications — and will implement the SAP S/4HANA Finance solution running on Azure. Microsoft also plans to connect SAP S/4HANA to Azure AI and analytics services for more efficient financial reporting and more powerful decision-making. SAP is migrating more than a dozen business-critical systems to Azure for the optimal efficiencies, flexibility and innovation the platform offers. This includes the SAP S/4HANA software supporting Concur, an SAP company.

MyPOV – Good to see more details on the mutual plans to use each other services, products and platforms. It was time or Microsoft to upgrade its SAP systems, and given the partnership with SAP – where else than Azure would Microsoft run them? Interesting that the press release shares that Microsoft is using Azura AI and analytics services for better reporting and decision making… The SAP answer would be using the SAP Digital Board Room – but that product is not mentioned here. And Microsoft has to use its own AI of course. Too bad SAP doesn’t share what it is moving to Azure… let’s not hope these are email, Lync and other services. Kudos for sharing that the (also Seattle based) Concur serving S4/HANA system, will move to Azure. So, SAP is running multiple S/4HANA instances… certainly a good pilot.



Both companies will document the internal projects to provide customers with guidance and enterprise architecture for deployment of SAP applications on Azure.

MyPOV – Good to see – can’t wait to learn more on the progress and details.



With SAP HANA Enterprise Cloud on Azure, customers get the best of both worlds: application management and product expertise from SAP and a global, trusted and intelligent cloud from Microsoft Azure, including the range of Microsoft cloud services.

MyPOV – Good summary – but surprises that data residency / privacy aspects have not been mentioned. As well as which Azure locations will start with the HEC offering, and then roll out – a key aspect for customers making decisions to use HEC on Azure.



Enterprise customers of all types, such as The Coca-Cola Company, Columbia Sportswear Company, Coats and Costco Wholesale Corp., count on SAP and Azure today for their businesses.

“The strategic partnership announced between Microsoft and SAP is an extremely important development for the Coca-Cola System,” said Barry Simpson, senior vice president and chief information officer at The Coca-Cola Company. “The value of aligned engineering, sales and delivery between these two strategic partners will allow our system to accelerate our digital agenda. This is a very positive and exciting development for us.”

“SAP and Microsoft are key partners with Costco, and this alliance will help drive our cloud strategy and digital business forward,” said Jim Rutherford, senior vice president of Information Systems at Costco Wholesale.

“Microsoft and SAP are strategic partners helping us grow our wholesale and direct-to-consumer businesses. Their close alignment is an integral part of advancing our technical architecture and cloud strategy to better serve our customers around the world,” said Mike Hirt, vice president and chief information officer at Columbia Sportswear Company. “We produce innovative products that allow our customers to pursue and enjoy their outdoor passions. Our partnership with Microsoft and SAP is essential to us continuing to deliver on that commitment.”

“With SAP HANA on Azure, we have the data intelligence to operate more efficiently across all aspects of our business and accelerate the delivery of finished goods to our customers,” said Hizmy Hassen, chief digital and technology officer, Coats. “The Microsoft and SAP alliance provides us with the assurance we need for our innovation in the cloud.”

MyPOV – Nothing is better than customer proof points for a partnership – and Microsoft and SAP can bring some big ones to the table. Few cloud partnerships can muster Coca-Cola Company, Costco, Columbia Sportswear Company and Coats for a launch press release (and these may only have been the ones starting with a ‘C’ in case anyone noticed).


 

Overall MyPOV

A partnership that was about to happen, the question is really what took both parties so long… one can speculate that hopes for the cloud version of S/4HANA staled these plans for a bit, but just speculation. There is little that Azure wasn’t ready to run HEC in fall of 2016 than compared to today… and surely customers are happy to see SAP and Microsoft ‘drinking their own champagne’ – but no need to wait before those internal processes were agreed on.

For customers the partnership is a win… as SAP can spend less CAPEX (over time) into HEC as load moves to Azure… and hopefully put this back into more R&D (e.g. for S/4HANA) – and a better return on capital for Microsoft as Azure gets more utilization. If all goes well it means customers will have to pay less for running S/4HANA, while it is being operated by a vendor who does (amongst other things) infrastructure management (IaaS) for a living, compared to SAP (who is certainly in the SaaS and PaaS – but less and less (if at all) in the IaaS space).

On the concern side this partnership needs to pick up steam, show customer traction, value and customer success… both vendors know how to do this – now they have to deliver. Stay tuned.


 
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