Digital Transformation Digest: Microsoft's Transformative Moves, Inforum Kicks Off, and More

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

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

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Transformative times for Microsoft: There are plenty of changes ongoing at Microsoft these days. Last week, the company announced layoffs—reportedly up to several thousand—as part of a plan to reshape its sales force around cloud computing. Now news has emerged of top executives leaving Microsoft, including CIO Jim DuBois.

He held the post since 2013. DuBois' will be succeeded by Kurt DelBene, Microsoft's current head of corporate strategy, but in an interesting and telling move, DelBene won't take the CIO title. Rather, in his new role DelBene will become Microsoft's chief digital officer.

POV: As with DuBois, DelBene's duties are internal-facing. He'll be tasked with overhauling Microsoft's IT practices, which could be a considerable challenge. Meanwhile, the sales reorganization should be a hot topic at this week's Inspire conference, Microsoft's annual event for its large partner channel.

Inspiring growth: Keeping partners happy is a crucial job for Microsoft, since it derives 95 percent of its revenue from the channel. Some 17,000 partners are expected to attend Inspire in Washington, D.C. this week, but that's just a fraction of the total pool. Microsoft has 64,000 cloud partners, which is more than Amazon Web Services, Google and Salesforce combined, EVP Judson Althoff said in a blog post.

Digital transformation represents a potential $4.5 trillion market opportunity, Althoff wrote. It wants to work with partners to grab as much of that pie as possible.

To that end, Microsoft announced a number of new partner programs at Inspire, as well as what it terms a simplified partner relationship model.

First up, Microsoft is expanding its investment in the Azure co-sell program it announced last year. The program provides sales and marketing support for partners working with Azure, including incentives for internal Microsoft sales reps to co-sell Azure with partners. Microsoft is increasing its investment in the program to about $250 million, according to Althoff's blog.

Second, Microsoft is rolling out ISV Cloud Embed. Under the plan, partners can buy Dynamics 365, Power BI, Power Apps and Flow for up to 50 percent off list, and then embed them in their own applications.

Meanwhile, Microsoft is reorganizing the way it works with partners around three scenarios: "build-with," "go-to-market" and "sell-with." This blog post goes in-depth on what the changes mean.

POV: There is yet more news coming out of Inspire, including the availability of Azure Stack, which brings the cloud platform inside customers' data centers; and a new product bundle called Microsoft 365. Constellation analysts will be following the conference closely this week.

Inforum 2017: Infor kicks off its Inforum user conference in New York this week, with digital transformation expected to be a key topic of discussion. In recent years, the business applications vendor has overhauled its flagship software from front to back, placing an emphasis on improved user experience as well as a drive into micro-verticals. Myself, as well as Constellation Research VP and principal analysts Doug Henschen and Holger Mueller will be in attendance. Look for our coverage on Twitter and Constellation's website.

Legacy Watch: ERP disaster recovery: Enterprise resource planning software has slowly but steadily begun moving to the cloud, and with it, ERP's longtime bogeymen—cost and time overruns, dissatisfied users, difficult upgrades and outright project failures—could become mostly a thing of the past.

But those days have yet to arrive. In the meantime, CIO has put together an extensive roundup of ERP disasters and controversies. It's well worth a read.

Digital Transformation Digest: Amazon Prime's Explosive Growth, Next-Gen Chips Go 3-D, and More

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

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

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Amazon Prime's explosive growth: Amazon's recent move to acquire upscale grocer Whole Foods has turned plenty of heads. One likely reason Amazon bought the chain is to add more physical locations to its supply chain, thereby improving its ability to deliver not only fresh foods but other products, and also take in returns.

A big part of Amazon's business is driven by its Prime membership program. While the company doesn't reveal the number of Prime members, new data from Consumer Intelligence Research Partners says growth is soaring. There are now 85 million Prime members in the U.S., a 35 percent increase from a year ago, and double that of two years ago, as Geekwire reports.

Prime memberships have an annual fee but in return members get two-day shipping on many items as well as access to Amazon's video content service.

POV: To put CIRP's numbers in perspective, about 325 million people live in the U.S., meaning Amazon has more than one-fourth of the country signed up for Prime. Amazon has been an major force in supply chain management and logistics best practices, and as it manages Prime's growth its influence will only continue to rise.

New 3-D chip design advances Moore's law: Researchers at MIT and Stanford have come up with a radical new chip design geared for the next generation of massive-scale data processing, which doesn't even use silicon. Here are the key details from MIT's news service:

Instead of relying on silicon-based devices, the chip uses carbon nanotubes, which are sheets of 2-D graphene formed into nanocylinders, and resistive random-access memory (RRAM) cells, a type of nonvolatile memory that operates by changing the resistance of a solid dielectric material. The researchers integrated over 1 million RRAM cells and 2 million carbon nanotube field-effect transistors, making the most complex nanoelectronic system ever made with emerging nanotechnologies.

The RRAM and carbon nanotubes are built vertically over one another, making a new, dense 3-D computer architecture with interleaving layers of logic and memory. By inserting ultradense wires between these layers, this 3-D architecture promises to address the communication bottleneck.

Researcher Max Shulaker explains that silicon-based chips are two-dimensional by necessity, given the high temperatures involved in manufacturing them. If companies were to layer additional sets of circuits on top of each other, the heat would damage the chip. In contrast, nanotubes and RRAM chips can be made at lower temperatures, he said.

POV: The work was funded by a combination of academic, government and private organizations and it's not clear when commercial versions of the chips will be available. But on the face of it, this is the type of innovation that will be needed to advance next-gen applications, IoT and cloud computing.

Illinois' dramatic digital transformation: The U.S. state of Illinois once had 38 different IT departments. Now it has one, after an ambitious effort led by state CIO Hardik Bhatt. He spoke to the Enterprisers Project about the process:

This brought 1,500 employees together. We organized this new department into seven horizontals, which include cybersecurity, project management, application development, and infrastructure, for example, and seven verticals, like health and human services, public safety, tourism, etc. Each of those seven clusters has a CIO who provides leadership for all of the agencies, and they all report up to me.

Bhatt also talks about Illinois' digital government and "smart state" initiatives in the interview, which is well worth a read.

Legacy Watch: The U.K.'s IT project failure maelstrom: Now for a contrasting item to Illinois. Nearly 40 percent of current IT projects in the U.K. are set to fail unless changes are made, according to data from Axelos, a joint venture between the U.K. government and Capita, as the Register reports:

Asked why IT projects fail, responded blamed: significant changes to the project brief (45 per cent); unrealistic timeframes (41 per cent); an incomplete understanding of the risks (48 per cent); projects not resourced with the right people (42 per cent); lack of a clearly defined goals (49 per cent), and overrun budgets (32 per cent).

Axelos surveyed 182 project managers for its study. The organization was formed in 2014 and its remit is to improve IT project best practices

Digital Transformation Digest: ARM Invests In IoT, Privacy Advocates Press 'Five Eyes,' and More

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

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

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Welcome to Digital Transformation Digest, Constellation's daily compendium of news and analysis covering forward-thinking enterprises, mega-vendors, startups and developers.

ARM's Interesting IoT Move: Sometimes the price tag of a technology industry acquisition belies its symbolic significance. Such is the case with chipmaker ARM's £11.7 million purchase of Simulity Labs, which makes eSIMs (embedded subscriber identity modules), as V3 reports:

eSIMs are a new version of a standard SIM card which are not replaceable, often soldered directly to a circuit board. They are used in M2M/IoT applications, where there is no need to change the SIM card, and can also be used in remote SIM provisioning (switching a SIM between providers through software).

POV: "The difference between the design and specification of chips for use in IT-oriented devices such as servers and PCs, and chips for the millions of endpoint devices that are part of IoT is seen clearly in this acquisition," says Constellation Research VP and principal analyst Andy Mulholland. "Adding discrete SIM functionality to ARM's expertise in mobile technology is a powerful move that suggests ARM has a clear competitive vision for the high-growth IoT market."

Eyes on Five Eyes: The Five Eyes Alliance, comprised of the U.S., U.K., Australia, Canada and New Zealand, dates to 1946 and is based on intelligence sharing, counterterrorism and other national security issues. The problem, says the UK nonprofit group Privacy International, is that it has operated essentially in secret for far too long. PI wants a U.S. court to shed some light on the Alliance:

The most recent publicly available version of the Five Eyes surveillance agreement dates from 1955. Our complaint was filed before the U.S. District Court for the District of Columbia.

For years, PI has tried to obtain information about the agreement and the rules governing the Five Eyes alliance via freedom of information requests and other methods.

In the US, PI has made freedom of information requests to the National Security Agency, the Office of the Director of National Intelligence, the State Department, and the National Archives and Records Administration. All four agencies are subject to the Freedom of Information Act and all agencies have withheld the records PI seeks.

Our complaint seeks to compel disclosure of the current version of the agreement and records relating to the rules governing the government’s exchange of intelligence with the other members of the Five Eyes alliance.

PI "is seeking the agreement’s legal standards and limitations, not operational details," the statement adds.

POV: It's not clear whether PI's effort will be successful, but the Five Eyes Alliance does play a crucial role in privacy policy. Go here to read Constellation Research VP and principal analyst Steve Wilson's take on how the group can best set guidelines around cryptography.

Integrating data integrators: Private equity firms have made aggressive investments in enterprise software companies over the past 12 to 18 months. The trend is continuing with a $1.26 billion deal between Clearlake Capital and Centerbridge Partners that will merge data-integration vendors Syncosrt and Vision Solutions.

The company will go forward under the Syncsort name. Syncsort started out with a focus on data-sorting for mainframes but has since broadened its focus toward other types of data transformation. It positions itself as a "Big Iron to Big Data" specialist. Vision Solutions, meanwhile, focuses on data protection and backup for IBM Power Systems.

POV: Go here for a look at Constellation VP and principal analyst Doug Henschen's in-depth profile of Syncsort. As for this week's announcement, it makes a good deal of sense, Henschen says.

"Where Syncsort has long specialized in data-integration and processing options for the mainframe, Vision adds cloud migration, cloud backup and cloud disaster-recovery-as a-service for IBM Power, including IBM i and AIX deployments," he says. "It's a one-stop-shop that offers a broader and more cloud-centric focus than Syncsort could previously support."

Legacy Watch: The VAs half-billion dollar boondoggle: Cost and timeline overruns are sadly nothing new when it comes to U.S. government IT projects, but a particularly troubled effort at the Veterans Administration stands apart from the pack.

Hewlett-Packard Enterprise Services was awarded a $543 million contract four years ago to create a real-time tracking system for medical devices. A major reason for the project was a desire to ensure equipment is regularly sanitized in order to prevent disease and death, the Austin American-Statesman reports:

But the contract has been beset by a host of problems, including failed operational tests, questions over the reliability of equipment tags and fundamental concerns over whether the department’s WiFi can support the system, according to thousands of pages of emails, reports and documents obtained by the American-Statesman using the Freedom of Information Act.

The issues come as the VA prepares to replace its pioneering but ancient medical records system, VistA, at a cost of up to $16 billion. While VistA is 40 years old, its lack of viability going forward isn't due to core structural reasons, but rather neglect on the part of government officials, as an in-depth Politico report compellingly argues.

The Time Is Now for a Public Debate Over Cryptography Policy

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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Steve Wilson

Former Vice President and Principal Analyst
Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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Last week, the so-called "Five Eyes" nations of Australia, Canada, the U.K., the U.S. and New Zealand took part in their annual meeting on counterterrorism, intelligence-sharing and cybersecurity. While cryptography, particularly ways law enforcement could get around it in the interest of fighting crime, was expected to be a major part of the agenda, an official communication issued following the meeting hardly mentions cryptography, and does so in fairly bland, noncommital terms:

[E]ncryption can severely undermine public safety efforts by impeding lawful access to the content of communications during investigations into serious crimes, including terrorism. To address these issues, we committed to develop our engagement with communications and technology companies to explore shared solutions while upholding cybersecurity and individual rights and freedoms.

This vaguely worded commitment does little to advance an important issue, says Constellation Research VP and principal analyst Steve Wilson. "A genuine crypto policy debate needs to be had, and needs to be seen to be had," Wilson says.

The 1990s saw widespread debate over cryptography, one that didn't really have a winner, Wilson notes. "Most cryptographers said that encryption should be commercially available, that export controls were counterproductive, that government control was futile and that our enemies would roll their own," he says. While these points were not necessarily accepted by governments, there did come a detente whereby access to cryptographic technologies was freed up.

Today the argument has moved to new fronts. In the U.S., the FBI's demand that Apple create a backdoor allowing access to an alleged terrorist's iPhone prompted strong pushback from the company and public. (The Bureau ultimately hired outside help to crack the phone.)

"There are strong technical arguments that forcing exceptional access mechanisms into encryption algorithms will weaken the systems, making them more vulnerable to criminal attack," Wilson says. "But the arguments are difficult and technical. Most lay people, lawmakers include, continue to harbor naive visions of how encryption works, which leads to presumptions that cyber lock-picking is doable. Backdoors make encryption vulnerable by design and that's a bad thing."

However, civil libertarians and technologists shouldn't reject the governments' desires out of hand, Wilson said. Points to consider:

• Has the threat of terrorism and organized crime become quantitatively and qualitatively worse since the 1990s?
• To what extent are unbreakable, encrypted messages being used by terrorists? Are there no side channels, metadata or insiders available to law enforcement to monitor criminal activity?
• Have there been mathematical advances in the past 20 years that might enable new ecryption methods with safe backdoors?

"I'm not a good enough cryptographer or social scientist to know the answers, but I do know the right people to ask," Wilson says. "I know that we need to ventilate these issues, engage the experts and trust their answers, if we are to move on without too many further distractions."

Digital Transformation Digest: Microsoft Shakes Up Sales Org, Baidu Doubles Down on AI, and More

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

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

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Microsoft shakes up its sales org: Reports began emerging just prior to the U.S. holiday weekend that Microsoft was about to undertake a major reorganization of its sales force with an eye on shifting emphasis toward cloud sales. The timing coincides with the end of Redmond's fiscal year on June 30. While Microsoft itself has been fairly mum about the details, it did confirm changes are being made "to better serve our customers and partners."

Geekwire obtained a copy of an internal memo outlining those changes, which are set to be rolled out as soon as this week. The major ones include a business model segmentation into enterprise and SMC (small, medium and corporate) customers. Microsoft is also aligning enterprise sales teams around six verticals, which include manufacturing, financial services, retail, health, education and government, according to the site.

POV: It's hard to run a business these days without some level of interaction with Microsoft, and that means these organizational changes could be widely felt. It's also no surprise that Microsoft is trying to re-orient sales around cloud. But this type of reorg is standard for Redmond as it begins each new fiscal year, so time will tell if the changes are lasting or prove to be merely experimental. Constellation will have more on the Microsoft reorganization later this week.

Baidu makes more big moves in AI: While Chinese Internet giant Baidu is still mostly a consumer-focused company, one of many reasons to keep tabs on it from an enterprise perspective is its ongoing investments in artificial intelligence. Just a few months after unveiling Project Apollo, an open-source platform for autonomous vehicles, Baidu has announced that more than 50 partners have joined the ecosystem. They include car manufacturers such as Ford and Daimler; suppliers such as Bosch, NVIDIA and TomTom; and ridesharing companies, startups and universities.

Baidu's intentions for Apollo are grand. COO and group vice president Qi Lu, a former key executive at Microsoft, termed Apollo "the 'Android' of the autonomous driving industry," yet more open than the mobile OS, as Venturebeat reports.

Meanwhile, Baidu also announced the acquisition of Kitt.ai, a Seattle-based chatbot platform startup. Kitt.ai has more than 12,000 developers already using its Snowboy hotword detection service, with products deployed in smartphone apps, cars, homes and other locations, according to a company blog post.

Oracle CEO Mark Hurd takes a grilling: Oracle recently held a media day at its Redwood Shores, Calif. headquarters and as part of the event, CEO Mark Hurd was interviewed at length by Recode's Kara Swisher and then took questions from analysts and journalists in attendance. The result was one of the livelier sets of interactions you'll see between a top vendor executive and the ink-stained classes.

Now Recode has helpfully provided a full transcript of the event, which is well worth a read. Sure, Hurd gets in his talking points and manages to get in some of his trademark filibustering, but for the most part he's kept on his toes.

Legacy watch: The IT industry's 'working dead': Technologies come and go in the IT industry, and with them related careers and job roles. CIO.com has published a must-read feature (note: registratin required) on some of the latest tech gigs on the chopping block. The list has some usual suspects, such as COBOL programmers, that we suspect will be able to survive much longer than they have already. Still, the post is full of smart observations such as this one from James Stanger of industry group CompTIA:

“The IT jobs I see threatened are the repetitive ones and those that focus on only one type of OS or vendor system,” he says. “Today it’s not about the vendor or OS; it’s about where the information resides and how useful you are at storing, manipulating, and securing that information. It's all about connecting multiple systems now.”