microsoft

  • December 5, 2019
  • Last week the Pentagon might have awarded its $10 billion contract for cloud computing to Microsoft. The program goes by the acronym JEDI for Joint Enterprise Defense Infrastructure and it has been attracting vendors like a dog attracts fleas for several years. It has been marked by fierce litigation too, so the award may not be the end of it.

    Oracle sued over the process claiming it was unfair and focused its ire on Amazon which appeared to be the leading candidate. CTO Larry Ellison made a point of showcasing the benchmarks of Oracle’s Autonomous Database against Amazon at multiple OpenWorld conferences to show Oracle’s technical dominance. Amazon had been making a market share argument of the variety that we have the most datacenters so we’re the best. But cloud computing is a 3-leged stool and you need infrastructure, software and tools to really be a contender.

    Then Donald Trump got involved as only he can as the Commander in Chief. There’s no love lost by Trump with respect to Bezos who also owns the Washington Post which Trump dismisses as the Amazon Washington Post in not so sharp distinction from his description of the failing New York Times.

    According to an article on CNBC from Saturday, “An upcoming book on James Mattis’ tenure as secretary of Defense claims President Donald Trump told Mattis to “screw Amazon” out of a $10 billion cloud contract for the Pentagon.” Mission accomplished, I guess. If true, that looks like self-dealing rather than putting the concerns of national security first and foremost, but I digress.

    But more than all of the gossip about who gets the contract there ought to be questions about what the contract will do to shape the cloud industry. Where to begin?

    Microsoft and who else?

    First, is Microsoft the only contractor in this deal or is it the prime? The difference could be big. If the company founded by Bill Gates and Paul Allen is the prime it leaves the door open for the losers in the derby to make strategic contributions. For instance, it defies logic to think that the Oracle Autonomous Database would be excluded from delivering its functionality for national defense. In my humble opinion it is the most performant and secure thing in the cloud, and I say this not to dispute other products’ greatness but only to point out that Oracle has delivered a hardware and software solution to market that achieves that purpose.

    But this brings up a thorny issue. To get the most out of Oracle’s technology you really have to buy its Exadata storage system and maybe some other pieces. It’s a standard part of the Oracle cloud system now being deployed but it might raise concerns about vendor lock-in for a customer that likes to have no single point of potential failure. For Oracle to get a piece of the contract it might have to bend a little by making its solution more open.

    That’s not far-fetched. Over the summer Oracle and Microsoft have been cozying up with grand strategies to make their systems more open to each other. A coincidence? I think not. It’s interesting to me that Oracle quit making headlines about its JEDI lawsuit after August. More interesting is that as much as Trump wanted to “screw” Amazon, he didn’t seem to offer help to his friend Safra Catz who is now CEO of Oracle.

    The cloud computing utility

    I’ve written frequently that the IT industry is commoditizing and that a utility is forming. Like the electricity industry in which many vendors adhere to accepted standards and present the appearance of a continental grid (it’s not a single grid though but that’s a story for another time), an IT or cloud computing utility might look similar.

    If all that’s true then Microsoft sits in position to become the standard setter and gate keeper. There would be a lot of contention over databases but perhaps the Oracle product might be used in large, ultra-secure situations. Maybe Oracle and Microsoft would also agree on the central importance of Exadata as the hardware foundation too. There are lots of permutations but most importantly JEDI might force a truce and foster better interactivity standards, some of which are clearly underway.

    In that kind of environment there might also be room for IBM’s Watson and Amazon’s datacenters as well as other advanced technology.

    My two bits

    I can’t fathom how the award is the end of the story. In a lot of procurements, the government puts itself in the position of choosing the best and most viable vendor and of telling all the others the equivalent of your baby is ugly. That’s not the case here. America brims with technology talent and products (a consequence of the government sponsored space race, ultimately) so each contender could have done a credible job of at least being the prime contractor.

    The big impact of the deal will be on how it shapes cooperation among the oligarchy that now controls much of our technology future. In the 1980s the CIA bought relational database technology from a startup named Oracle and a relatively young Larry Ellison became its chief support person, at least for a time. Relational databases were much better at managing data and reporting than the flat file systems then in use. Even Oracle’s company name suggests being able to predict the future in the way that the ancient Greek Oracle at Delphi did.

    That win spawned the RDBMS revolution, we all became SQL fluent and Oracle never looked back. The JEDI contract feels like one of those moments when a government procurement can change an industry. That’s why it was so closely contested and why I think we’ll now see the industry coming together and creating new interoperability standards.

     

    Published: 1 week ago


    I’ve been writing a forecast column every year at least since W was president. Nothing’s wrong with that, lots of people do. But I often find that my forecast is more of a wish list than a true prognostication so this time I’ll dispense with the fiction of analytical rigor and just say what I think needs to happen.

    Platforms and leaders

    First, the industry is consolidating. The big and successful companies are competing on a different plane than the smaller ones. The smaller guys are working harder than ever and some are realizing they need niches, that they’re not going to be able to cover the whole CRM landscape.

    This is mostly a good thing because it clarifies the mission and lowers the costs of being in the market. I can also mean better and more verticalized software. But there are two basic kinds of these companies—those that have credible platforms and those that don’t. Among those that do I’d list several including Oracle, Salesforce and Zoho.

    Oracle and Salesforce should not surprise but Zoho might. They’ve spent decades building a global solution and platform. There is only some overlap between the two with Salesforce attacking the really big enterprises and offering a huge ecosystem. But Zoho is a powerful solution for the small to mid-enterprise. It also has a good ecosystem. One of the big differentiators is how much ERP functionality you’re likely to need and where you plan to get it. Salesforce integrates well and has ERP partners like Financial Force. But Zoho offers good back office apps as a part of their service as well as having that ecosystem.

    Another vendor in the mix is NetSuite which has been setting sales records since Oracle bought and significantly invested in them. NetSuite’s idea of CRM is eCommerce though, so customers will self-select.

    So on the flip side, there are small-ish vendors still working on their own platforms and whose development teams are measured in the hundreds. The market leaders have thousands of developers in contrast, which is why it’s time for these vendors to find a niche and try to excel. With that comes a decision point about their platforms.

    Integration

    Next, we’ve had years of AI and social media, and even years of integration. I think it’s time for a year of integration on major pharmaceuticals. We need better networking and this needs to be led by the biggest names. A consortium including Microsoft, SAP and Adobe announced the Common Data Initiative (CDI) last year which I still think is not only too little, its major purpose is more aimed at slowing the advances of Oracle and Salesforce. Oracle’s autonomous database and enhanced security present a major challenge to other DB vendors. Salesforce is drafting behind the Oracle RDBMS on this one and has that advantage.

    CDI focuses on building a common CRM data model and that sounds good, but it has too many moving parts as in potentially every vendor in the industry. Smarter people have said the better approach to making everything talk is to facilitate the communication at the API level. I agree. No surprise, some of the vendors conspicuously left off the Microsoft, SAP, Adobe invitation list, are pursuing the API approach, like Salesforce, and I think 2019 will be a banner year for more API centric networking.

    We need that approach too, not just in CRM but throughout the tech world as we continue to build what will be a true information utility in the not too distant future.

    Taking social seriously

    Social media has deep roots in CRM—recall the year(s) of social CRM—and because it does, I think there’s subtle pressure in Silicon Valley for the likes of Facebook, Twitter, and all the rest, to clean up their acts and mature their business models and security plans.

    Recent reporting shows that virtually every social network has either been compromised or willingly gave access to private information to entities that shouldn’t have had it. You can’t do CRM if customers get worried about how their data is being used. CRM is an unwilling victim of social shenanigans and they don’t want to be seen as willing partners, so the pressure is on.

    Foolish social leaders will think they can wait out the federal government on regulation but that approach could backfire when the feds deliver a set of regulations that don’t work. Remember, many of the people who would pass this legislation are in their 70’s and have an archaic understanding of tech. Smart leaders will see this and volunteer to define what’s possible.

    My two bits

    I’m looking forward to 2019. I don’t think it will be a time of runaway growth and major innovation in CRM though I would be pleased to be proved wrong. In a consolidating world, there will be some losers too so be prepared.

    I think the year ahead will impress by showing unprecedented innovation, of people and companies doing some unexpected things that make a lot of sense. I’m looking for the second or third tier of companies to be more aggressive in the mergers and acquisition arena in a bid to become more competitive. After a lot of years in this seat, I’m still having fun and I appreciate you letting me share my views.

     

    Published: 10 months ago


    Announcements may be playing the role usually reserved for M&A activity in the CRM world right now. Generally a company purchases another when it wants to capture the benefits of another business’ R&D or established market base. But at the moment it appears that the desirable partners are too big to swallow and the result is more partnering between the big guys and the really big guys. Salesforce has been pursuing this strategy for most of the last year with Amazon, Google, and IBM. This says a lot about the state of the marketplace on several fronts.

    First Salesforce and Amazon announced a partnership in which Amazon and its AWS infrastructure service would become Salesforce’s strategic infrastructure partner when Salesforce absolutely had to deploy a data center in a foreign land.

    This makes perfect sense. As I have often said, it makes no business sense to build (in this case a datacenter) when you can purchase the solution at a reasonable price on the open market. As a competitive issue, Salesforce’s choice of Amazon is a direct challenge to Oracle because it offers a safe haven enabling Salesforce to diversify its partner portfolio while keeping Oracle and Microsoft at arms length. Given the rumors of salesforce being acquired by a big tech firm over the last few years, this seems a good way to help preserve its independence.

    Much the same can be said of the alliance with Google. This is primarily a play for more SMB business and it’s a good one. Salesforce and Google announced their partnership around G Suite, Google’s free office apps. A while ago Salesforce and Microsoft created an integration with Outlook effectively making Outlook another UI for Salesforce. This parallels Microsoft’s own integration with its CRM and Outlook. So this partly neutralizes Outlook as a differentiator in any CRM decision.

    Google integration gives Salesforce access to all those G Suite users who need CRM, especially in the SMB space. It also gives Salesforce another way to compete against Microsoft CRM. But, of course, they didn’t stop there. Salesforce also now has an integration with Google Hangouts too, an effective counter to Skype which is now owned by Microsoft.

    Away from the SMB space in the Enterprise market Salesforce also forged a relationship with Google Analytics. Not that they need more analytics but the two partners have developed plausible processes that use Google Analytics to surface macro trends and Salesforce Einstein to go the last mile, a model that works with IBM too.

    Last week Salesforce and IBM got closer with Salesforce naming IBM a preferred cloud services provider and IBM calling Salesforce its preferred customer engagement platform for sales and service. The agreement leverages IBM’s Watson analytics and its cloud as well as Salesforce Quip (more office software) and Service Cloud Einstein.

    In all of this we can see that Salesforce is working to maintain its independence by linking with anything that can enhance its CRM and make it less desirable as an acquisition target. But of greater importance, it’s these relationships and others like them that will help Salesforce reach its goal of $20 billion in revenues in a few years. When your revenue needs are this big, you need to leverage the market penetration of similar companies. And while all of the companies named are bigger than Salesforce, they each need the bragging rights of working with the most popular CRM in the world.

    Another question in all this is what’s happening with M&A activity, which seems to lull while partnerships blossom. The merger market is notorious for running hot and cold and right now it seems tepid, like there’s more opportunity for large companies like Salesforce crafting relationships with bigger partners. It’s not clear if this means there are few attractive acquisitions out there or simply that the times require different approaches to the market.

    More than once in talks since Dreamforce in November Marc Benioff has used the logic, my enemy’s enemy is my friend. This logic is being played out in the partnerships his company is spawning. On one level it’s just smart business but in the back of my mind, I see the information utility of the 21st century forming. It will resemble the current electric utility in that no single provider will dominate and a high degree of interoperability will be needed. Standards like 120 volt and 60 Hertz electricity are what give us the impression of a continental electric utility grid but in reality, the grid is made up of smaller vendors adhering to the standards.

    Likewise there’s no single vendor capable of dominating the information utility market and standards will be vital. That’s why it’s so important when a company like Salesforce announces partnerships. These incremental agreements have more significance that the press releases might allude to. They are steps on the road to something bigger.

    Published: 2 years ago


    Denis-PombriantI swear I was getting through this and trying to move on. She wasn’t my favorite candidate but when you consider the alternative she looked like George Washington in a pantsuit. Like many people I had moved on from denial and anger to Elizabeth Kubler-Ross’ next stage in the grief pyramid called bargaining. He can’t be that bad…they can tame him…I’m going back to work, he can’t chase me there…I’ll be okay.

    But noooo! A brief story in the New York Times today says Donald Trump, incipient POTUS is planning to hold a technology conference next week. It’s right here under this headline, “Trump Plans Technology Conference With Silicon Valley Executives.” The article by David Streitfeld, Maggie Haberman, and Michael D. Shear covers a lot of ground what with Trump also seeming to have cancelled the next generation of Air Force One today, which is also in the piece.

    Says the article, “The list of those being invited was not immediately clear, but they could include Mark Zuckerberg of Facebook, Timothy D. Cook of Apple and Sundar Pichai of Google.” Sure, that’s right, Silicon Valley CEOs have nothing scheduled that far out so of course they’ll all trudge over to Trump Tower. Whatever it is, when a president asks for your time, he’s doing it in the name of all the American people so you more or less have to attend.

    The one saving grace in all this might be (and we really don’t know all the details yet) the fact that these are all consumer technology mavens so far. Maybe Trump has a punch list of social media enhancements to go over or maybe he intends to build a wall between our electrons and the rest of the world. Or maybe Trump just wanted to call a fly-in for rich guys to compare private aircraft. His is bigger, you know.

    Regardless, I’ll withhold judgment on Trump’s tech chops until I know if this is just show and tell for social media or if he really wants the skinny on what to expect in areas like machine learning, AI, the IoT, and a half dozen other techno-wizbangs that will rock his world soon. I’ll begin to worry when Ellison, Benioff, and Gates get summoned.

    Published: 3 years ago


    thMicrosoft recently rebranded its business software offerings and the effect is largely positive though it must be emphasized that in performing the exercise, deck chairs moved though the cumulative effect remains to be seen. One of the effects is surely that the ERP and CRM solutions are now all offered online as the Dynamics 365 moniker implies.

    Straight off, the re-branding takes Microsoft somewhat away from directly competing in CRM or ERP with the likes of Salesforce, Oracle, and SAP. But as a practical matter this hasn’t changed except that they can now absent themselves from some of the chest pounding these vendors have occasionally engaged in. The new bundling comes in two flavors—Business Edition with financials, sales, and marketing, and Enterprise Edition with operations, sales, marketing, customer service, field service, project service, something called power apps, and [work]flow.

    This new packaging appears to be aimed at Salesforce because the other vendors Microsoft is likely to be compared with all have conventional ERP solutions as well. So with this move, Microsoft highlights the distinction between Salesforce and the rest of the industry.

    But this only goes so far. As a practical matter Salesforce has the largest and most robust ecosystem in the business with a raft of ERP providers including Financial Force, IntAcct, Kenandy, and others like Sage, which offers a hybrid solution for small business. NetSuite is also well integrated with Salesforce and with Oracle so the rebranding might be most effective as an internal approach to streamlining offerings. It might also suggest the company sees good opportunity selling CRM to its ERP base and vice versa.

    Regardless, the increased emphasis on AI and machine learning industry-wide may be more telling. The last few years have seen a quiet move from transaction orientation in business to more agile relationship building. To be effective at this you need two things. First, and most obviously, you need an integrated solution set that can easily share process data across a range of platforms including desktops, tablets, and hand-held devices. Second, the applications need to do some of the work identifying opportunities once left only to people.

    For instance, apps that can understand email well enough to schedule an appointment, send information, or take a next step in a process are being highly prized for good reasons. All major vendors are making strides in this direction so Microsoft’s direction is congruent.

    In an October 10 posting on his site, CRM Search, old friend Chuck Schaeffer observes,

    At this point Dynamics 365 is little more than a change in branding, bundling and roadmap. Microsoft is making a [conscious] decision to do away with the ERP and CRM monikers in favor of business process labeling. While the messaging is understandable, the industry at large has tried multiple times over to do away with the three letter acronyms. Yet decades later we still identify these business applications as ERP, CRM, SCM, HCM, MRP, MEP and so on. Maybe this time will be different. But I doubt it.

    It’s the idea of process that has my attention. We live in a process centric world and as I’ve written in my books vendors might want transactions but they’ve come around to the idea that transactions come at the end of well-designed processes. So we might want to still consider discrete blocks of functionality like ERP and CRM but at the end of the day, their value is directly proportional to the value they deliver to the customer.

    And guess what? The game is about to change again from uni-dimensional process orientation to something more dynamic called Business Agility. Watch this space.

     

     

     

     

    Published: 3 years ago