| Constellation Research

VMware still under pressure as customers plot escapes, rivals gain

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

The mass exodus from VMware following Broadcom wasn't a sprint as much as it was a walk. Nevertheless, earnings results from Nutanix and Pure Storage highlight VMware customers are taking a measured approach to leaving.

First, Nutanix reported better-than-expected fiscal third quarter results and raised its outlook. The company reported non-GAAP earnings of 42 cents a share on revenue of $639 million, up 22% from a year ago. Nutanix also raised its outlook and now projects fourth quarter revenue of $635 million to $645 million.

The big technology development in the quarter was Nutanix partnership with Dell Technologies. Nutanix is supporting external storage in a move that will broaden its reach and give enterprises more options to move to its virtualization platform. Nutanix on Dell PowerFlex became available the end of April. Typically, customers would consume Nutanix storage along with its hypervisor.

The Dell deal, coupled with a more mature Cisco partnership, and a new effort with Pure Storage gives Nutanix more enterprise heft and ability to target AI workloads. Nutanix's cloud platform will also support Google Cloud.

"We continue to focus on helping customers build apps and run them anywhere," said Nutanix CEO Rajiv Ramaswami. "Our largest wins in the quarter demonstrated our ability to land and expand within some of the largest and most demanding organizations in the world as they look to modernize their IT footprints, including adopting hybrid multi-cloud operating models and modern applications, as well as those looking for alternatives in the wake of industry M&A."

Previous Nutanix earnings calls didn't usually name VMware directly and alluded to migrations as moves from legacy providers or some not-so-vague reference. This conference call was more direct as analysts and Nutanix executives mentioned VMware 13 times. Nutanix is often coming into the enterprise as a second virtualization option and growing from there.

Ramaswami also said Nutanix is developing its Kubernetes efforts. Talking about Nutanix's .NEXT conference, which was recently held, Ramaswami noted that the company is building up its customer base that migrated from VMware.

"Our customers would like us to support every external storage array that's out there. They want to see how we can make migration as easy as possible for them. And there were many customers who talked about their migration experience moving from VMware to Nutanix at the conference," he said.

According to Ramaswami, VMware isn't using pricing as much to keep accounts. Nutanix is taking a more a la carte approach and VMware is selling a complete stack.

Nutanix stands to benefit as VMware customers that signed three-year deals prior to the Broadcom acquisition come up for renewal now.

"Some did three years, some did five years with VMware as soon as they heard about the acquisition or around the time the acquisition was announced or as it started getting to be closed," said Ramaswami. "All of those customers renewals are coming up now, let's say this year or next year."

He said the one bucket of VMware customers are planning to actively migrate. Other customers will probably have to renew with VMware, but are planning for it to be the last deal. Either way, Nutanix plans to play a long game.

VMware was also a topic on Pure Storage's earnings call. Pure Storage reported strong first quarter results with non-GAAP earnings of 29 cents a share compared to estimates of 25 cents a share. Revenue in the quarter was $778.5 million, which also topped estimates.

As for the outlook Pure Storage projected second quarter revenue of $845 million and annual revenue of $3.51 billion.

CEO Charlie Giancarlo noted that Pure Storage is benefiting from its storage software, flash-based systems and subscription model to manage data for AI workloads. "Modern AI environments require a wide variety of performance levels consistently delivered across tens of thousands of GPUs," said Giancarlo, who noted AI inference and retrieval augmented generation is benefiting Pure Storage. "Q1 was a strong quarter in our breadth of AI wins."

As for the VMware hook, Giancarlo said AI workloads are forcing enterprises to revisit virtualization strategies. He cited the Nutanix partnership as an important milestone.

"This joint solution provides a modern, scalable, virtualized environment, which is purpose built for high demand data center scale workloads. Our partnership will deliver a high performance virtualized environment, providing Nutanix cloud infrastructure with Pure's enterprise data cloud using Pure FlashArray storage. We expect the solution to be generally available later this year," said Giancarlo.

Pure Storage landed multiple virtualization deals in the quarter with its Portworx offering that unifies container and virtual machine workloads.

The results from Nutanix and Pure Storage highlight the encroachment on VMware's customer base. Yes, Broadcom's VMware purchase was a financial win, but moves on perpetual licenses have rankled customers.

And the VMware angst also benefits smaller companies not just large vendors. Platform9 appears to be benefiting with private cloud migrations too.

Platform9 recently penned an open letter to VMware customers about "sweeping changes in licensing and strategy, often at odds with what was to their benefit."

The bottom line: A big chunk of VMware's customer base is up for grabs and competitors are playing the long game to win them over.

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Nvidia Q1 strong, continues to ride data center demand

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Nvidia reported strong first quarter results as its data center demand remains strong. The company’s writedown for H20 chips designed for China was also lower than expected.

The company reported first quarter earnings of 76 cents a share on revenue of $44.1 billion, up 69% from a year ago. Of those sales, data center revenue was $39.1 billion, up 73% from a year ago. Excluding a writedown of $4.5 billion, non-GAAP first quarter earnings would have been 96 cents a share.

Wall Street was expecting Nvidia to report non-GAAP earnings of 75 cents a share on revenue of $43.25 billion. Nvidia previously said it will take a $5.5 billion inventory charge due to chips it can’t sell in China due to US bans.

Going into the results, Nvidia’s quarter was expected to be messy due to the charges due to export controls to China. Sales of H20 products destined for China in the first quarter were $4.6 billion. Nvidia said it was unable to ship an additional $2.5 billion of H20 revenue in the first quarter.

Nvidia CEO Jensen Huang said the company’s Blackwell NVL72 AI supercomputer is now in full-scale production across systems and cloud computing providers. “Global demand for Nvidia’s AI infrastructure is incredibly strong. AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate,” said Huang.

CFO Colette Kress said in prepared remarks:

“We saw our Blackwell architecture ramp expand to all customer categories, while large cloud service providers remained our largest at just under 50% of Data Center revenue. Data Center compute revenue was $34.2 billion, up 76% from a year ago and up 5% sequentially. Networking revenue was $5.0 billion, up 56% from a year ago and up 64% sequentially, driven by the growth of NVLink compute fabric in our GB200 systems and continued adoption of Ethernet for AI solutions at cloud service providers and consumer internet companies.”

As for the outlook, Nvidia projected revenue of $45 billion including a loss of $8 billion due to H20 revenue.

Here's what Huang had to say on the earnings call:

"On export control, China is one of the world's largest AI markets and a springboard to global success with half of the world's AI researchers based there, the platform that wins China is positioned to lead globally today. However, the $50 billion China market is effectively closed to us."
"China's AI moves on, with or without us. The question is not whether China will have it. It already does. The question is whether one of the world's largest AI markets will run on American platforms, shielding Chinese chip makers from us. Competition only strengthens them abroad and weakens America's position. Export restrictions have spurred China's innovation and scale. The AI race is not just about chips, it's about which stack the world runs on. The US has based its policy on the assumption that China cannot make AI chips. That assumption was always questionable, and now it's clearly wrong."
"It's very clear that every company will have AI factories, and very soon there'll be robotics companies and those companies will be also building AI to drive the robots. We're at the beginning of all of this build out."
"We're also increasing our supply chain and building out our supply chain. They're doing a fantastic job. We're building it here onshore, United States, but we're going to keep our supply chain quite busy for several, many more years coming."

Constellation Research analyst Holger Mueller said:

"Nvidia keeps firing on all cylinders, and beats expectations despite regulatory writedowns. Nothing seems to be able to stop Jensen Huang and company. With its deals in the Middle East, Nvidia is planting the seeds for a few $100 billion in future revenue from sovereign cloud. We also know now what role China revenue could have been given the writedowns. With all the data center revenue, the other Nvidia business don't have to do well, but the question one can ask is why the automotive business is not taking off."

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Salesforce Q1 strong, outlook raised for Q2

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Salesforce delivered better than expected first quarter results and upped its outlook for the second quarter. The company said it saw strength in Data Cloud and AI annual recurring revenue.

Salesforce reported first quarter net income of $1.54 billion, or $1.59 a share, on revenue of $9.3 billion. Non-GAAP earnings were $2.58 a share. Wall Street was expecting Salesforce to report first quarter earnings of $2.55 a share on revenue of $9.75 billion.

The company’s first quarter results land a day after the company announced its $8 billion acquisition of Informatica for its data integration and management platform.

CEO Marc Benioff said the company is seeing traction due to its “deeply unified enterprise AI platform.” Robin Washington, President, Chief Operating and Financial Officer, said the company delivered “solid execution” in the first quarter.

By the numbers for the first quarter:

Salesforce has closed more than 8,000 Agentforce deals. Half are paid.
Nearly 60% of Salesforce’s top 100 deals in the first quarter included Data Cloud and AI.
More than half of Salesforce’s top 100 deals in the quarter included more than six clouds.
Data Cloud ingested 22 trillion records in the first quarter.
Sales cloud revenue in constant currency was up 7% from a year ago as was service.
Platform and other revenue in constant currency was up 14% from a year ago.
Marketing and commerce revenue in constant currency was up 4% from a year ago.
Integration and analytics in constant currency was up 10%.

As for the outlook, Salesforce said it would see a currency tailwind due to a weaker US dollar. The company projected second quarter revenue of $10.11 billion to $10.16 billion, up 8% to 9%. Non-GAAP earnings in the second quarter will be between $2.76 a share to $2.78 a share. In constant currency, growth would be 7% to 8%. Salesforce projected fiscal 2026 revenue of $41 billion to $41.3 billion, up 8% to 9%. Non-GAAP earnings for fiscal 2026 are projected to be $11.27 a share to $11.33 a share.

Here are the takeaways from the Salesforce earnings call:

Informatica. Benioff said Salesforce sees Informatica as a transformational deal at a good price. "Every AI transformation is a data transformation," said Benioff. "You have to have your enterprise data together to get the results that you want. Informatica combined with Salesforce Data Cloud and Tableau will create this incredible data business."
Slack as UI. Benioff said that Slack is where you'll go to begin and end every Agentforce conversation. "You will really like AI taking place on Slack and agents just coming right into your channels to talk to you in real time," Benioff.
AI agent washing. Benioff said that "every company does say they have agents, but with out the agents, the data, the apps and metadata framework you're not able to deliver this complete experience for the enterprise including delivering digital labor."
Finding growth. Benioff said that Salesforce is finding growth pockets inside the company, notably in small and medium sized businesses. Miquel Milano, chief revenue officer, said the company is known for structuring large deals, but Salesforce is also making it easier for companies to buy. The company booked $2 billion in business through AWS Marketplace.
Consumption models. Milano said the company is focused on its consumption motion and selling the overall platform. Thirty percent of Agentforce bookings in the first quarter were due to customers increasing consumption.

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Box's Q1, outlook highlight potential in AI agent ecosystem

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Box reported better-than-expected first quarter results and raised its outlook as its content and unstructured data platform carves out a key role as enterprises move to AI agents.

Speaking on an earnings conference call, Box CEO Aaron Levie said customers are upgrading to the company’s Enterprise Advanced plan to leverage Box AI. Box also released a State of AI in the Enterprise Survey, which found more than half of the 1,300 IT leaders surveyed expect transformation from AI in the next two years. Ninety percent of respondents are using AI agents in some capacity with unstructured data and documents a primary use case.

"Box AI Agents will enable enterprises to streamline a due diligence process on hundreds or thousands of documents in an M&A transaction, correlate customer trends amongst customer surveys and product research data, or analyze life sciences and medical research documents to generate reports on new drug discovery and development," said Levie. "None of this would have been possible even a year ago."

The Box earnings follow the company's rollout of Box AI Agent integration for Microsoft 365 Copilot, IBM watsonx Orchestrate, Google Agentspace, Slack AI, ServiceNow AI Agent Fabric and Zoom AI Companion as well as the Box Model Context Protocol (MCP) server. Box is also officially integrated with OpenAI's ChatGPT's deep research agent. If there's a foundational model such as Meta's Llama or Grok, Box plans to integrate.

Levie added that Box is also benefiting from lower compute costs for AI inference and model improvements.

"On the AI inference side, we've just been very happy about the rate of like-for-like AI model improvements that we're seeing from a cost standpoint. And that can show up in 2 ways. The first is that you can take an existing use case and it might just on a one-to-one basis, be cheaper on a kind of pretty regular basis every kind of 6 to 12 months at a minimum," said Levie. "The alternative is that you get a new capability unlock because you can -- you either get the base model just is getting much better or you can use an existing model and do multiple passes through the model for better accuracy or more complex use cases."

AI use cases will ultimately be margin-neutral, said Levie, who added that Box's pricing is based on seats and credits instead of use case based pricing.

The numbers

Box reported first quarter earnings of $3.51 million, or 2 cents a share, on revenue of $276.27 million, up 4% from a year ago. Non-GAAP earnings were 30 cents a share.

Wall Street was expecting Box to report first quarter adjusted earnings of 26 cents a share on revenue of $274.77 million.

Billings in the first quarter were $242.3 million, up 27% from a year ago. Remaining performance obligations (RPO) of $1.47 billion, up 21%, or 17% on a constant currency basis.

As for the outlook, Box projected second quarter revenue of $290 million to $291 million, up 8% from a year ago. Non-GAAP earnings will be between 30 cents a share and 31 cents a share. Wall Street was looking for second quarter earnings of 28 cents a share on $284.1 million.

CFO Dylan Smith said economic uncertainty hasn't had an impact on Box's business, but it wanted to "remain prudent" with its outlook for fiscal 2026. Box is also navigating currency fluctuations given a big chunk of its business is in Japan.

Box projected annual revenue to be in the range of $1.165 billion to $1.7 billion, up $10 million from its previous guidance, with adjusted earnings of $1.22 a share to $1.26 a share. Wall Street was looking for adjusted earnings of $1.19 a share for fiscal 2026.

Where Box sits in the AI agent ecosystem

Given Box's content platform is a repository and management system for valuable unstructured data, Levie said the company is "sitting very naturally at the center of so much of the innovation happening in AI right now."

Levie added that Box is not competing with any of the AI model providers. Instead, Box is a meeting place where models can add value to customer data. Box also serves as a secure place for content that adds a layer of governance.

"We act as a very natural kind of convening point for these AI models when customers want to be able to use data with any of these leading platforms," said Levie. "You want to ensure that data access controls are actually maintaining the security of your information. And so you don't want to be in a position where you're trying to pack too much of that intelligence into the model layer, you want to pack that into the data plane and the architecture around that, which is what Box provides customers."

By sitting in the data plane, Box has more appeal to regulated customers as well as mission critical AI use cases, he added. Levie said Box will occupy two layers of the AI stack including the software plane for end user interaction and platform via APIs. Monetization will be based on seats and usage for agent queries going into Box.

"We want to execute on both of those as fast as possible and in tandem because no single company is going to decide where all of the user does their work. It's just not possible," said Levie. "We want to make sure that you can manage your content one place and ensure that it works everywhere."

Constellation Research analyst Holger Mueller said:

"Box keeps innovating, doing the right for customers, but cannot lift its revenue back into the teenage growth numbers, which is the least investors expect from an innovative AI company. The current quarter flirted with the inflation rate, meaning that Box was treading water… The promise of AI changing how people will upgrade their future of work with documents is becoming clearer and clearer – and if Box can unleash the acceleration potential in the best practices shift, it may well grow again as it should. On the downside are the commoditization pressures that Box has been fighting since the pandemic."

Bottom line: It's early in AI agent use cases, but Box is seeing billings growth, interest for Enterprise Advanced and high-level CxO conversations. Based on those leading indicators, it's just a matter of time until Box sees accelerating revenue growth.

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Salesforce acquires Informatica for $8 billion to bolster Agentforce

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Salesforce said it will acquire Informatica for $8 billion, or $25 a share, in a deal that will give it a neutral data integration and management platform to connect Agentforce across systems.

The two companies were in talks a year ago, but couldn't agree on a price. Salesforce will fund the Informatica purchase with cash and new debt.

Salesforce said Informatica, which recently announced tighter integration with Microsoft Fabric, Databricks, Snowflake and others, will power its agentic AI vision across enterprises. Informatica brings a data catalog, integration, governance and metadata management.

What Informatica also brings to Salesforce is a neutral platform. CxOs have said that Agentforce is viewed as more of a Salesforce-specific AI agent play instead of a horizontal solution across third-party systems.

Informatica will also bring revenue to Salesforce. Informatica recently projected 2025 revenue of $1.67 billion to $1.72 billion, or growth of 4.6% at the midpoint. Salesforce said Informatica will boost non-GAAP earnings and free cash flow in the second year after the deal closes.

Salesforce revamps Agentforce pricing with Flex Credits: What you need to know | Salesforce expands ecosystem, courts developers and partners to Agentforce | Salesforce landing Agentforce deals, but Q4 and outlook mixed

Salesforce CEO Marc Benioff said the combination of Data Cloud, MuleSoft and Tableau with Informatica will "enable autonomous agents to deliver smarter, safer, and more scalable outcomes for every company."

Here's what Salesforce bought:

According to Salesforce, Informatica will do the following:

Strengthen Data Cloud as a customer data platform (CDP).
Given Agentforce the ability to interpret and act on a wide range of enterprise data.
Augment Customer 360.
Bring data quality, integration and governance for the data used by MuleSoft APIs.
Provide context for Tableau insights.
Bolster Salesforce's industry offerings.

Once the deal closes, Salesforce said it will "rapidly integrate Informatica’s technology stack — including data integration, quality, governance, and unified metadata for Agentforce, and a single data pipeline with MDM on Data Cloud." When integrated, Informatica will be embedded into Salesforce's system of understanding.

Behind the Scenes: The Force Behind Agentforce

In addition, Salesforce said it will support Informatica's ecosystem and data management products.

Salesforce will talk about the deal more on its first quarter earnings call on Wednesday. In the meantime, here are some questions to ponder.

How will Data Cloud and Informatica be sold individually? Will there be a conflict?
Will Informatica's mojo as a neutral party in data management erode as part of Salesforce? A neutral vendor in your stack is great, but also a pipe dream
How quickly can Informatica be integrated into Salesforce's platform?
And customers will look for alternatives to Informatica as they are already digesting Agentforce and pricing changes?
How will Informatica's CLAIRE AI agent efforts be affected in the deal?

Constellation Research’s take

Constellation Research CEO R “Ray” Wang said:

“The bottom line is that MuleSoft was not enough. Salesforce showed why Data Cloud was important for AI. But how do you get the data into Data Cloud? A data integration company and iPaaS vendor would have to do the trick. But which one? Informatica has been on the block before and it’s old, legacy, but it has a ton of customers and some great data management tools. But it’s not the future and this what makes the difference between at $10B acquisition vs a $8B acquisition. However, Boomi would have been the smarter buy - brand new tech, an agentic framework ready to go, fast growing company, and a rock star CEO.”

The bigger question in the long run is whether the Informatica deal positions Salesforce to manage and orchestrate agents beyond its platform.

Liz Miller, an analyst at Constellation Research, said:

"Top of mind for everyone will be the question: "Is this the $8 billion missing piece to shift Agentforce from a dominant promise to a dominant reality for Salesforce customers?" What Informatica brings to the table is data integration capacity, metadata integration and serious data provenance, lineage and governance to stitch all of Salesforce's recent data innovations together.

For Salesforce customers the question will always come down to what additional value will Informatica bring to my current business goals? Does this seismically change the trajectory that my data and my processes and my outcomes are on?

The moves to watch will revolve, as they often do with Salesforce, around price. In recent weeks Salesforce has worked to simplify and streamline Agentforce pricing and there has been a long history of fine-tuning Data Cloud's consumption pricing. Time will tell if Salesforce's customers can shoulder another layer of data related costs."

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Accenture's Karthik Narain on human, AI collaboration, trust

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Karthik Narain, Group Chief Executive, Technology and CTO at Accenture, said enterprises should think about trust as the primary gatekeeper to AI adoption, eye collaboration between AI agents and humans, and architect companies to take advantage of a time where there's a "a personalized digital brain for every employee."

Narain, who appeared on DisrupTV Episode 399 and is an author of Accenture's Tech Vision, riffed on the future.

AI as the New Digital Foundation: Narain emphasized that artificial intelligence (AI) is not just another tech trend, but a foundational shift similar to what we saw with the rise of digital technologies in the 2000s. "The theme we believe is going to be very foundational for years to come, and that is all about the role of AI and how it's going to impact societies," said Narain. "All of that is going to be taken to the next level with AI."

Cognitive Digital Brain: Accenture envisions every enterprise creating a "cognitive digital brain," an intelligent system that continuously learns, makes decisions, and collaborates. "We call that concept that an enterprise will create as a cognitive digital brain," said Narain. "Over time, you will have a personalized digital brain for every employee, a digital brain for an enterprise, and at an industry level."

Trust is the Gatekeeper to AI Autonomy: Trust will be the defining factor in determining how much autonomy AI systems are granted. "We believe that the only thing that's going to be a limiting or an accelerant is going to be trust. And it's trust and autonomy that go hand in hand," said Narain. "Organizations need to inject trust in the system for AI to be able to be used. It's a combination of confidence, our own intuition, explainability."

The Binary Big Bang – Architectural Disruption: The "Binary Big Bang" describes how large language models are fundamentally changing how technology is developed and deployed. "This explosion is going to append all technologies and create a new architecture that can come together to drive new experiences and increase the digitization index of enterprises," said Narain.

AI Refinery and Trusted Agent Huddle: Accenture is operationalizing these concepts through platforms like the AI Refinery and Trusted Agent Huddle, focusing on collaborative agentic AI and responsible deployment. "The whole idea of this Trusted Agent Huddle platform that we created is the fact that there needs to be collaboration… and the humans play a very, very important role," said Narain. "Trusted Agent Huddle is not just a communication protocol, it is basically a trust protocol."

Investing in People: Cognitive Upgrade vs. Transfer: Accenture is focusing not on replacing humans but enhancing them—what Narain calls a "cognitive upgrade."

“We are upgrading our talent 80,000 to 100,000 of our employees to become data and AI proficient," said Narain. "There is all this conversation of gloom and doom, but when you reimagine a workflow or a process using AI agents, the human comes first."

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Agentic AI: Is it really just about UX disruption for now?

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Are AI agents going to reinvent workflows, processes, the future of work and enterprise efficiency? Or are AI agents just a better user experience and another excuse to sell you a different flavor of the "suite always wins?" Your answer depends on time frame.

We've detailed how it's early in the agentic AI journey and there are a few requirements needed to scale. It appears 2025 is about standards, protocols, improving AI models and orchestrating agents within the same silo-ed platforms you're currently stuck in. If AI agents go production and drive ROI, it's a 2025 story.

The disruption of the minute with AI agents is likely to be about the user experience. When you purchase from your friendly neighborhood SaaS vendor you're buying a data store and often a UI. The enterprise software vendors see this oncoming AI trainwreck and are quickly positioning themselves as platforms with consumption models.

Boomi CEO Steve Lucas said: “I think SAP will always exist. Workday will always exist; Oracle will always exist. Here's the real question. The real question is, how much of that exists in the future? I believe is their UI will go away entirely.”

How would SaaS vendors be valued if they were actually headless systems where enterprises used AI agents to create the user experience? Consider the following developments:

Salesforce is using Agentforce to become more of a platform and break down its various cloud silos--Service, Sales, Data, Commerce etc. The UI becomes Agentforce over time with a credit model.
Google outlined at Google I/O how the dream is about being a universal AI assistant that would traverse various services and devices. That's a consumer dream, but those customer experiences and the tools behind them (Gemini, Agentspace and data and AI platforms) appear on Google Cloud.

A screenshot of a cell phone

AI-generated content may be incorrect.

Microsoft CEO Satya Nadella has repeated referred to Copilot as a user interface to AI-based applications that are delivered via agents. Nadella said at Build that Microsoft "is bringing together agents, notebooks, search and create into a new scaffolding for work." "Beyond horizontal knowledge work, we are introducing agents for every role and business process," he added.
SAP executives argued that Joule will be an always-on AI assistant to optimize processes and drive returns. Via Liz Miller, Muhammad Alam, member of the SAP Executive Board, said enterprises should standardize on Joule as their agent of choice. "You can either further complicate your landscape by adding yet another layer of tech, whether from workflow providers or from platform providers, where you knowingly or unknowingly, shift more towards the iceberg," said Alam, who leads the SAP Product & Engineering Board area and has global responsibility for all business software applications. Alam noted that the idea of best of breed AI agent systems doesn't work (as if he'd say anything else). He acknowledged that the enterprise suites didn't innovate fast enough even as he through a few jabs at ServiceNow.

A screenshot of a computer

AI-generated content may be incorrect.

ServiceNow also is a big AI agent play and is all about platform. As a result, it doesn't seem hamstrung by UI issues.

Add it up and you have a bunch of vendors talking AI agents that may merely be defending their cross-selling models and interfaces that put a face on their software.

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Anthropic advances with Claude 4, APIs, MCP highlight a move upstack

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Anthropic launched a set of developer tools that make it easier to build AI agents and launched new Claude 4 models. The news, outlined at Anthropic's first developer conference, highlights how large language model companies are branching out.

For enterprises, the most interesting item from Anthropic's conference is new API capabilities. Anthropic launched a code execution tool, a Model Context Protocol (MCP) connector, Files API and the ability to cache prompts for up to one hour.

These API tools ride along with the launch of Claude 4 Opus and Sonnet 4. The combination means that an AI agent can use the MCP connector to an application like Asana to reference tasks and work, upload relevant reports via Files API and analyze progress with the code execution tool.

Speaking during a chat with Chief Product Officer Mike Krieger, Anthropic CEO Dario Amodei said he has been surprised by the MCP support. "I was surprised at the pace at which everyone seems to have standardized around MCP," said Amodei. "It was very strange. We released it in November. I wouldn't say there was a huge reaction immediately, but within three or four months it became the standard. There's this feeling of being on the spaceship."

This workflow, outlined in an Anthropic blog, highlights how the company is building out a toolbox for AI agents.

Anthropic's developer conference kicked off in the same week as Microsoft Build and Google I/O. Both of those conferences were also AI agent heavy.

Here's the news in a nutshell:

Anthropic API has a code execution tool that will give Claude the ability to run Python code in a sandbox to produce insights and visualizations. Claude then becomes more of a data analyst that can handle use cases such as financial modeling, scientific computing, business intelligence and statistical analysis.
The MCP connector on Anthropic's API will connect Claude to any remote MCP server without code. Claude will now connect, retrieve tools, reason, execute tool calls, manage authentication and return a response with integrated data. MCP has garnered wide support in a short amount of time.
Files API simplifies storage and access of documents for Claude applications. Instead of managing file uploads in each request, you can upload documents once.
The extended prompt catching will improve agent workflows without more expense.
Claude Opus 4 and Claude Sonnet are advances in coding and reasoning, respectively. The models can alternate between reasoning and tool use, use tools in parallel, and work well with GitHub Actions.

In addition, Claude Opus 4 and Sonnet 4 are hybrid models with two modes: Near instant responses and extended thinking for deep reasoning. Both models will be available on Anthropic's API, Amazon Bedrock and Google Cloud Vertex API. Pricing is on par with previous Opus and Sonnet models.

Amodei said the industry is headed to a world where you can dispatch agents to do things and models overall will become more autonomous. "We're heading to a world where a human developer can manage a fleet of agents, but I think continued human involvement is going to be important for the quality control and make sure agents do the right things and get the details right."

The Anthropic CEO noted that use cases for these autonomous models and agents would be for software development, cybersecurity, scientific research and biomedical. Amodei also said that it's possible that MCP will hook up to real world data and equipment.

Constellation Research's take

Holger Mueller, an analyst at Constellation Research, said Anthropic's moves are an example of foundational model players moving upstream and branching out. For instance, OpenAI is moving into hardware and Cohere is focused on collaboration as is Anthropic.

Mueller said:

“The LLM vendors are working up the stack into the PaaS layer. Anthropic is a great example of this move with its latest release. Not only is it providing more MCP support, but also giving developers the ability to upload files easier, leverage analytic libraries, and provide a longer context window.

Anthropic's moves will give developers the ability to build agents in a more efficient way. It is good news for CxOs, as they have more choice as LLM vendors move up stack and bump into the traditional PaaS players. Ironically, some of these new competitors will be partners and even investors in Anthropic. It will be interesting to see how these relationships will develop further since Anthropic is on a collision course with ancient software offerings."

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Microsoft Build 2025: Agentic AI Meets Enterprise Data Decisioning

Michael Ni

Vice President and Principal Analyst
Constellation Research

Michael Ni is Vice President and Principal Analyst at Constellation Research, covering the evolving Data-to-Decisions landscape—where CDOs, CIOs, and CPOs must modernize data infrastructure, integrate AI into decision-making, and scale automation to improve business outcomes. Ni’s research examines how enterprises operationalize AI, automate decision-making, and integrate data management and analytics into core business processes. He focuses on the challenges of scaling AI-driven decision systems, aligning data strategy with business goals, and the growing role of data and decisioning “products” in enterprise ecosystems. With 25+ years as a product and GTM executive across enterprise software, AI platforms, and analytics-driven technologies, Ni brings a practitioner’s perspective to…...

Rise of Microsoft’s Open Agentic Web and why it matters to CDAOs and AI leaders

Microsoft is tackling data silos, disconnected agents, and contextless AI head-on.

Among a stack of announcements, including Copilot Studio, Microsoft Fabric, Entra, and the Model Context Protocol (MCP), Microsoft is building an operating system for intelligent, agentic decision-making. This is Microsoft aiming to do for enterprise AI what Windows did for personal computing: orchestrate it all.

At Build 2025, CEO Satya Nadella framed the moment clearly: “We are in the mid-innings of a major platform shift.” His message? Expect architectural transformation from the market to defining how data, logic, and action converge. And Microsoft is not alone this month in announcements where AI is not an app, but an embedded behavior in every enterprise decision.

If you’re a CDAO or analytics leader trying to decode what this means, here’s your guided tour through the most meaningful announcements—and what to ask next.

Multi-Agent Systems Are the New Platform Battleground

Microsoft is laying the foundation for a new paradigm: AI agents that coordinate, collaborate, and drive enterprise workflows autonomously.

What’s New:

Multi-agent orchestration in Copilot Studio: agents can delegate, coordinate, and execute together.
MCP + NLWeb: Microsoft is laying the foundation for an "agentic web" with standardized context and delegation, as well as interfaces for discovery and use.
Entra Agent ID: Governance and identity management for agents, just like users.

Why it Matters:

This is about composable agents, not monolithic AI apps. Microsoft wants enterprises to build ecosystems of AI that interoperate. This month saw similar announcements from hyperscalers, application platform vendors, and integration and orchestration vendors.
MCP could become the TCP/IP of agentic systems-controlling context, state, and trust across your enterprise AI stack, including across Microsoft’s solutions. Interfaces set the boundaries of vendor solutions, so expect some wrestling for control.
Agent identity, traceability, and lifecycle governance become core responsibilities of the CDAO. Note: While governance is both critical and a new moat for agentic platforms, it’s a complex enough subject that I’ll cover it in a separate blog.
Raises new questions for data and analytics leaders: Who governs your data and analytics agents? Who secures them? If Microsoft owns identity, delegation, and context, is it the new Active Directory for AI.

Fabric Expanding BI to Decision-Making

Microsoft isn’t stopping at Power BI dashboards. Fabric is evolving into an execution platform that unifies your view of data, integrating operations, analytics, and AI-driven decision-making.

What’s New:

Cosmos DB is now mirrored into Fabric (OneLake) for real-time, semi-structured data, opening up operational capabilities on top of analytic workloads.
Digital Twin Builder brings physical-world data into AI loops.
Power BI gets full-screen "Chat with Your Data" and data agents.

Why it Matters:

Fabric simplifies the incorporation of real-time operational data on top of traditional analytic data, extending dashboards to decision-making platforms. Examples include Digital Twin monitoring to track manufacturing flow and e-commerce personalization that can search for unstructured concepts like “comfortable.”
Fabric is absorbing ETL, MDM, and governance, all as SaaS. Expect data platform players to subsume and simplify the unification of simple data, even as they extend their catalog capabilities to encompass business meaning.
Forces the question: What decisions could your ops teams automate if they had simplified, real-time access to both analytics and agents?

Agent Development is Now a Developer Discipline

What is Microsoft Build without a flurry of announcements for the developer-centric audience? Of course, Microsoft had announcements on equipping developers for a future of agent-driven logic and automation.

What’s New:

New CLI tools, Terraform support, User Data Functions, and Windows AI Foundry, a unified platform for local AI development.
Copilot APIs + GitHub Copilot enable agentic DevOps.

Why it Matters:

Microsoft is reshaping its substantial developer stack for an open agent ecosystem.
Think app store + automation layer: Enterprises need SDKs, deployment tools, and agent lifecycle management, including testing, usage metering, and trust scoring.
GitHub Copilot becomes an entry point for agent-based engineering. Consider the “7 tickets in 7 minutes’ example given on stage. Think of a GitHub ticket flow: a new ticket is automatically picked up by an agent. Multiple agents were tasked with evaluating and developing work plans to diagnose and resolve the issue. Developers can then review, approve, or create new GitHub tickets that they can assign to an “agent peer.”

Data-to-Decision Loop Embedded in the Flow of Work

This is where AI moves from being a project to becoming a standard template for workflow design.

What’s New:

Power BI and Copilot Studio integration.
Enhanced semantic modeling with natural language response tuning to make data AI-ready.
Analytics + Transactional flows (what Microsoft has named “Translytical task flows): enabling write back, trigger workflows, and act from a report.

Why it Matters:

Microsoft leverages its ownership of the tools people use by making it easy to publish agents to multiple channels, including embedding decision-making capabilities into Excel, Teams, and PowerPoint.
Analysts become answer engineers, providing guides for common questions and answers alongside semantic business context. Power users become low-code AI builders. Every employee gets closer to acting on insight.
The wave of BI becoming conversational, contextual to what each user, and executable continues. This will require enabling report and dashboard builders to start acquiring new skills in semantic modeling, tuning, and trust engineering.
The coming question for data and analytics leaders is how to architect for domains of data ownership.

Build 2025 Wrap Up

This Build wasn’t about new products—it was about a new architecture for enterprise decisioning. One where data, context, and AI agents converge in a shared, governed substrate that Satya has named the “open agentic web.

With the announcements across the industry, data and analytics leaders have a lot to parse as AI-driven decisioning redefines the enterprise stack, focusing on decision automation and intelligent execution.

I’d love to hear your take. Are these announcements aligned with where your data and AI strategy is heading? What questions do you have about how Microsoft’s analytics and agentic architecture will impact your teams, stack choices, and decisioning workflows?

ðŸ—£? Drop a comment, challenge an assumption, or share how you're planning to engage with Fabric—I'm listening

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Workday delivers strong Q1, says 60% of customers using its AI

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Workday reported better-than-expected first quarter earnings as the company benefited from "continued efficiencies." Workday said that more than 60% of its customers are now using Workday Illuminate AI.

The HCM and financial software company reported first quarter earnings of 25 cents a share on revenue of $2.24 billion, up 12.6% from a year ago. Non-GAAP first quarter earnings were $2.23 a share.

Wall Street was looking for non-GAAP earnings of $2.01 a share on revenue of $2.22 billion.

Carl Eschenbach, CEO of Workday, said the quarter was solid and "a testament to the durability of our business and the relevance of our platform."

CFO Zane Rowe added that the company is focused on "executing in this uncertain environment and are reiterating our fiscal 2026 subscription revenue guidance of $8.8 billion while increasing our fiscal 2026 non-GAAP operating margin guidance to approximately 28.5%."

During the quarter Workday launched new Illuminate Agents, added new customers including United Airlines and Mutual of Omaha Insurance Company and saw traction in the technology and media vertical.

As for the outlook, Workday projected second quarter subscription revenue of $2.16 billion, up 13.5% from a year ago. Subscription revenue for fiscal 2026 will be $8.8 billion, up 14%. Non-GAAP margins for fiscal 2026 will be 28.5% up from the 28% projected for the second quarter.

Constellation Research analyst Holger Mueller said:

"Workday had a good quarter, breaking $2 billion in subscription services in a quarter for the first time. Despite restructuring and reducing headcount by about 7.5%, all its key costs in R&D, sales and marketing and G&A were still up. The impairment charge for restructuring practically halved its operating income from 3.2% to 1.8% of revenues. Eschenbach and team are managing Workday on a razor thin margin, and evidently do not want the vendor to slip back in to the red."

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