Salesforce is a large and well-disciplined development company. They’re pretty good at marketing too. They continue to innovate in all product areas from core platform to applications and the one criticism I’d make is that it’s information overload at times. Reminds me of Oracle.
Lately they’ve made a big deal of adding their AI product, Einstein, to every application area to provide insights and stack rank options. Given that this is the first year of Einstein, it’s not surprising that the foundational layer looks similar across all of Salesforce’s disciplines; in cloud after cloud we some version of next best… . I expect that we might see examples of this at Dreamforce.
But back to discipline. Salesforce is paying a good deal of attention to the applications level these days in addition to spiffing up its platform and it’s noticeable in banking and finance as well as in the IoT but the differences in approach are what’s most interesting.
In IoT, the company is taking a very different approach than in finance. The company recently announced IoT Explorer and the ability to develop IoT applications quickly. App building tools are a part of the platform so it’s not much of a surprise that more agile development is coming to IoT though it reveals an interesting take on company strategy.
IoT has a lot of moving parts right now and the natural inclination for some might be to try to dominate the end to end process from intelligent devices to connectivity to IoT platforms and finally on to business applications. But three of these four areas might easily not bring in a nickel for a company like Salesforce. Specialized vendors that Salesforce would have trouble competing with dominate devices and connectivity. IoT platforms is a similar area with companies like Amazon Web Services dominating. So Salesforce wisely didn’t try to compete and is dedicated to supporting the leading platforms leaving the business application area as its chosen place to compete.
By focusing on the apps, Salesforce is positioning itself as the key to capturing value from investments further up stream in devices and platforms. Typically a business might make independent decisions about those areas and the business app company better be able to work with whatever is in place and that’s the strategy.
Given the state of the early IoT market, it makes good sense to go with an app development strategy. It’s too early to have standardized apps that vendors might want to buy off the shelf so having a quick and efficient development tool set makes all the sense in the world.
On the other side of the industry there’s financial services and banking, two mature marketplaces with specific application demands and here the strategy is less about new development than it is about using the platform to make clean and effective changes to process oriented operational systems. So in banking and finance Salesforce can deploy its many platform based tools as well as partners like nCino and Vlocity to produce systems that cover the institution’s critical processes, like loan origination and customer service. Again, Dreamforce might have more to reveal here.
Oracle’s Q1 earnings announcement showed some very good numbers. Overall the company, beginning its second year of aggressive cloud promotion, is showing significant year-over-year improvements thanks to its turn to cloud infrastructure, applications, and platforms. But the numbers, read right, announce the end of the beginning of the end, of sorts, as much as they announce the end of the beginning.
Oracle is the last major software vendor to adopt the cloud as its primary medium, and while it will support its legacy customers as long as necessary (it has a good history of loyalty to customers in this regard) there’s no doubt about its direction. With a legacy installed base, moving to the cloud has been more difficult for Oracle than it has ever been for companies like Salesforce or NetSuite which were both cloud natives from day one.
To make its pivot, Oracle has had to spin up three businesses, one for infrastructure, IaaS, and one each for SaaS and platform (PaaS). Infrastructure is a low margin business because there’s a lot of low priced competition but it’s essential to the company’s strategy because there will be a fraction of its 425,000+ customers who get to the cloud by first only moving locations of their data centers. Without an IaaS business, those customers could go anywhere and keeping them in the software fold would become more difficult.
Oracle’s transition to the cloud removes the last legitimate holdout, the last objection to cloud computing almost anywhere, and with that we can call a top to an age of computing that began with mainframes more than 50 years ago. The logical question now is what’s next? The rest of the industry is not standing still and along with transitioning its customers to the cloud Oracle is continuing to invest in advanced technologies like AI, machine learning (ML), and IoT where it competes with most other vendors.
At the same time that Oracle is competing, it is also leading in database and some of its competitors are also customers. During the earnings call with press and analysts, former CEO, founder and current CTO, Larry Ellison offered a preview of Oracle OpenWorld, which will run during the first week of October in San Francisco. Ellison announced that the next version of the Oracle database would be automated so that better than 99 percent of set up and tuning could be done by the system itself using AI and ML.
So I’m calling another top, in another part of Oracle’s business, database. Most of the competition from the early days of relational databases has either departed or been absorbed by larger entities and Oracle may be the only fully independent vendor left (I can’t think of anyone else). The database industry, along with satellite industries in various forms of hardware, software, and services, once formed the backbone of a major economic driver, the tech industry. In its hayday the industry employed (and still employs) a huge number of people. But with the introduction of an automated database, coupled with an already strong cloud sector, we can see a good deal of automation and commoditization happening that, among other things, is cannibalizing itself, erasing jobs and commoditizing products based on databases.
There’s nothing to be done about it. Business runs on information but it also runs on efficiency and cloud computing and automation are part of a never ending quest to keep overhead low and profits high. The more important question for now is what’s next? What will be the next disruptive innovation, the thing that drives the economy and that hires lots of people and deploys new infrastructure.
Many people figure the next shift will look a lot like today and think IoT and things derived from it might be next in line. I don’t know. Viewed in a certain light, the IoT looks more like a further commoditization and automation of traditional technology than it looks like the next big thing. After all, the IoT is supposed to be about automation using the Internet to communicate between remote devices with sensors and the mother ship for the purpose of dispatching services and supplies, among other things. It’s hard to see how this would lead to a great expansion in employment though it certainly looks like a way to improve capital efficiency and profits.
For the moment, it’s enough to understand that the next major economic move will stand on the shoulders of the current paradigm and that it will be steeped in technology. Iron and stationary steam engines gave way to steel and mobile steam engines. The next decades are likely to look like the cutover from iron to steel. It will be an interesting time, as the Chinese say.
I am having a flashback to the latter decades of the 20th century when manufacturing was all about making things smaller. There was a running joke about sending things to Japan to get shrunk but I don’t recall it. I do remember a meme that said if car production had followed a curve anything like the one in Moore’s Law that you could get a Rolls Royce for a buck and change though.
We’ve seen the phenomenal shrinkage of most hardware devices in the last decades. Computer rooms now fit in your pocket or even on a wrist and headphones rest inside the ear as the economy careens toward zero marginal cost for most things. It hasn’t all been good or bad it just is—I am not in the camp that complains that our jobs are decamping for lower cost places. News flash, that’s what always happens in a capitalist system as innovations commoditize. The question isn’t how do we protect old jobs, that’s a fool’s errand. The trick is to invent new ones.
A friend has a book coming out soon for which he asked me to write a few pages on this phenomenon. I chose color TV. You might scratch your head at that because today everybody knows that TV comes from the Far East. But in the 1990s there was a great commotion about the Japanese stealing our TV industry just because they’d invested in glassblowing in a big way that enabled them to make big picture tubes that were reliable and affordable.
Back then some business people might have gotten up in the morning fretting about how to make picture tubes but that was then. When the TV business went west we did what we always do in such situations. We invented other things like the World Wide Web, mobile devices, and we scaled up venture capital so that it is practically equal to one of the top 20 economies on the planet. We also invented LCDs and plasma and there are some Nobel Prizes in the bottom of some American closets for those efforts but they’re mostly made in the Far East today too. What are we up to? Among other things we’re curing cancer, experimenting with nanotechnology, building the IoT, and lots of other cool stuff, thank you very much.
This long-winded intro is intended to position Salesforce’s latest announcement—App Cloud Mobile—in context. Essentially they’ve taken all of the functionality that started life as a desktop developer’s platform and shrunk it down to your palm. The offering includes a no-code environment with Salesforce’s Lightning capabilities as well as the clicks and code development capabilities of Force and Heroku.
It’s all in keeping with some broad trends to inspire 100 million new people to learn app development, to better position information in the heart of business decisions, and to change the paradigm of wasteful business practices to one that respects information and derives better margins from smarter practices rather than inflation.
There’s a lot to the announcement and I direct you to the company’s video for more information here. And a Gartner report here. All this is great news for businesses of all kinds and their customers but we can’t overlook the commoditizing influence tools like this provide. As I’ve alluded to before, we are already deep into the commoditization of IT and tools like this simply accelerate the trend. Just as in TV days we need to identify higher value add for basic technologies. I suspect for IT and app development we will immediately need to develop the intellectual tools not to develop apps faster but to identify the right apps to build.
Introductions like App Cloud Mobile bring these realities into sharp focus. It’s up to us to figure out how to optimize what we have and it’s quite a bit.
Platform is changing everything
If you think that cloud platforms are simply a nice alternative to software licenses, you should think again. It’s human nature to apply new technologies to old problems and that’s what such an approach really does. But sooner or later, and that means now in this case, the market figures out the true impact of new technology and things change in significant ways. Platform is like this. For almost 15 years we’ve seen SaaS and its variants taking up space in the market and picking off niches that were less desirable to the big license software vendors. That idea crossed the chasm just before the Great Recession, which muffled the impact for a few years but today, subscriptions are back with a vengeance. All of the shows I’ve been to lately are put on by cloud vendors and all either have platforms or want to convince you that they are well behaved citizens in almost any major platform ecosystem. So cloud computing + subscriptions = massive change, but…
Subscriptions are the tip of the iceberg
Subscriptions are the first of a long line of new business models that will disrupt business as we know it. The world doesn’t need to move completely to a subscription economy or even a majority subscription economy before subscriptions and other models will have a significant impact on the vendor customer relationship — hint, it’s already happening. I got this from my own observations but they were crystallized by Jeremy Rifkin through his book, The Zero Marginal Cost Society which I read on airplanes, mostly. Rifkin’s thesis is simple. If you can subscribe, rent, borrow or, even better share, something (possibly even make it with your handy dandy 3D printer), the marginal cost to the consumer becomes something close to zero. Ditto for home generated electricity from roof to solar panels and greatly reduced logistics needed. The implications are significant because an economy with even 20 percent of its commerce done through subscriptions, exchanges, and sharing makes it very difficult for a conventional company to show growth and profits. So what happens to Capitalism? Thomas Piketty is fascinated by…
Capital in the Twenty-first Century
Piketty’s book, which I also read on airplanes and, which at 577 pages gives you some idea of the amount of travel I have been doing, sees the twentieth century with its wars and economic disruptions as an outlier to history. Piketty thinks the average growth rate of the global economy will settle back into a long term range of 1 to 1.5 percent (from a Chinese high of up to ten percent per annum) in this century but that capital growth will maintain an average between 4 and 5 percent resulting in continued and exacerbated inequality. According to Piketty, the top percentiles in Europe own the equivalent of 6 to 7 times GDP as wealth while in the US the number is more like 5 to 6 times. Piketty’s point is that this kind of wealth accumulation could go on for a long time.
But Rifkin already sees a zero marginal cost society reaction to Piketty in which capital might become irrelevant. The two books should be read together as they form a big picture story. But all of this means that…
We will need to deal with the IoT soon
The Internet of Things (IoT) is growing out of the above-mentioned trends. Subscriptions and platforms including an Energy Internet and a Logistics Internet that together with the Communications Internet are pushing hard on the zero marginal cost accelerator, drive this. It makes sense to me that in a free market where the individual is free to pursue enlightened self-interest, that zero marginal cost models will become a norm. IoT will be the near zero cost approach to understanding customers in an attempt to eek out profit when capital becomes mostly irrelevant. If that all happens, it will be the first time the 99 percent had a revolution that didn’t involve blood shed a la French Revolution or the American one for that matter. All of this suggests that sales is no longer the effective end of the CRM stick and that…
Marketing is leading CRM
Zero marginal costs imply no margin to be dedicated to sales activities or people so it is very interesting to see the leaps that marketing automation is making. From Eloqua to Marketo to the Marketing Cloud and more, marketing, with its superior analytics (compared to sales) is sitting in the catbird seat. Sales and SFA aren’t about to go away but all of the above puts more pressure on sales people to come in from the cold and accept modern techniques without the complaints about SFA or CRM that it’s hard to use or that it detracts from selling time. Those arguments simply don’t hold water any more. I pity vendors using them to sell their favorite sales automation strategies. Interestingly, this affects how we engage because I think…
Customer engagement is wide of the mark
As customers we may not want an interrupt driven, broadcast advertising model for relating to vendors but neither do we want a neurotic relationship with any vendor that is always asking “How do you like me now?” Who are these guys, Ed Koch? In a country that highly prizes independence and a go-it-alone mentality (not saying it’s healthy, BTW) the neurotics won’t prevail. What we’ve been iterating towards all these years, and I suspect what vendors develop a rash to whenever they think about it, is an interrupt model driven by the customer. I really think that’s it. The vendors best positioned in this economy that seems to be determined to re-invent itself yet again, are the ones that can best prepare to be interrupted and not be surprised when it comes. All this suggests greater reliance on platform supported IoT and sensing customer relationships, so here’s a simple question…
Can we please be done trying to accelerate the sales process?
Enough. Done. Finito. Havlicek stole the ball. It’s all over. Railroads accelerated the sales process. So did telegraphs, telephones, automobiles, and maybe fax machines. Everything else is anti-climax. Why? If you follow the train (no pun) of the last few sentences, over the last couple of centuries we’ve been reducing the lag time between sales touches, which has arguably reduced the sales process time. Trouble is we’re now down to nearly instant communication so where do we go from here? If you’re a high-speed trader like in Michael Lewis’ new book Flash Boys you need to work in nanoseconds to affect outcomes. My bet? Not gonna happen in everyday selling in a zero marginal cost world. The key point is that people playing the customer role still make decisions the way they did before railroads. They think about the decision, weigh the pros and cons, sleep on it, or ask a trusted friend. All of this takes time. If your business really, really needs to accelerate selling then refer to the point about marketing above. The way to make it appear that selling is accelerating is to stuff more quality leads and deals into the pipeline and to use good metrics to verify that you aren’t back-sliding.
The end game (for now)
All this adds up to increased emphasis on the customer buying process but we also now have to add in the sharing, networking, community oriented processes too. I still see plenty of daylight for CRM to prosper but the relative mix is definitely skewing towards service and marketing as customers continue to pursue their idiosyncratic needs based on logic they alone fully comprehend. Meanwhile he who has the best platform, one that supports incredibly agile business processes and their constant reformation might not win but certainly will survive. That’s my view from seat 16B.
Wearable computing hove into view in a big way yesterday when Salesforce.com announced Salesforce Wear, a capability that enables developers to build new apps for teeny tiny screens and devices that you, well, wear. Wearables is a market poised for takeoff. Last year, for instance, Apple cornered the world markets capturing all the copyrights to “iWatch,” which I think was not a coincident. And let’s not forget the things that are not worn but which simply exist through sensors on the Internet of Things (IoT).
But what does wearables as a class of devices mean? It’s time we began asking hard questions because if Say’s Law (supply creates demand) ever had any applicability it will show itself in this still emerging market and we really want to get demand right. There either are, or there will shortly be, wearables for your wrist, your neck, and pocket. Each does something different and each will need software so the question about the killer app, not seen for real since early laptop days, seems to be relevant again.
More importantly, though, you can’t answer that question until you also ask and answer questions about what we’ll be doing with wearables. The long evolution of technology beginning with the mainframe is a story of ever more personal and relevant information. Mainframes automated back office functions, PC’s, laptops, and networks automated rank and file workers and ignited a productivity explosion. Handhelds made us social and computing personal in ways that had never been done.
Wearables is a different kettle of fish. You’ll notice right off that at least this generation of wearables is not intended to do every compute function. Wearables seem to be context specific so a device might monitor your vital signs, but not your golf swing and vice versa. Or something like Google Glass will deliver needed content to your cornea but it won’t help you get into a secure zone.
So very quickly you can see that wearable computing as a class has a great deal more complexity to it than any of the preceding generations of computing. That makes developing for individual platforms challenging and building development tools that can address all of the form factors and their uses, even more so.
Heck, just imagining the potential uses for wearables is a challenge so I was glad to see that Salesforce didn’t just say, come and get it with some half baked developer tool designed to enable you to recreate your GL on your wrist because that would be a complete non-starter.
Instead, Salesforce did some smart things. First, they made available some reference applications based on their developer pack. The apps showcase a number of innovative business use cases that won’t exactly be second nature to you unless you are an oil rig worker needing to fix some complex bit of technology (yes, there’s a reference app for that). Second, they made these reference apps available as code for anyone to see, evaluate and modify in an open source way. This will help speed the adoption of Salesforce Wear and identify missing components and new opportunities.
Finally, Salesforce is not limiting their deployment to a small number of devices, they’re casting a broad net in an attempt to support the fledgling market. Imagine if Microsoft had done the same thing with Office when the iPad was first announced.
There are other things in the announcement that I think are not only cool but needed to make the product take off — like security in the form of 2-way identity flow to keep you from having to constantly re-log-in — what a hassle that would be on a small device. Also it goes without saying that these things all need to connect with one or more mother ships across the wireless web before the internet providers try to chop up this last bit of the public commons.
So that’s that. Now, what does this mean? Are wearables just another kind of hardware that we can use for checking email? I definitely hope not. Wearables represent a new approach to being in the world and as such their applications and the business processes that they support have not been fully figured out yet — and we’ll be saying that five years hence too.
Wearable computing is a new, new thing, a paradigm being born and because it is, its success will be as dependent on a killer app or three, as the laptop depended on Harvard Graphics and later on PowerPoint. Understanding this drives the next question. What kind of world will we inhabit that drives the development of these apps?
Without getting all Kurzweillian on you the permutations can be very interesting. Wearables can deliver content, take your vital signs, prove your identity, and follow your motion just for starters. The implications for me are that wearables will support more independent yet thoroughly connected life styles. If handhelds enable us to be connected from anywhere to anywhere at any time, then I think wearables will enable us to optimize that existence with presence.
So, application development for wearables is a big deal if you ever expect to do more with that fancy watch than tell time and check basic Office functions. But it also marks another turning point in which technology will become a part of your extended life.
Sometime in the not too distant future we will all wonder aloud not only at how we ever got along without wearables, we will also wonder why it took so long for us to fully realize the vision of the 1960’s era Star Trek show.