Accenture publishes a study pointing to an expanded IT systems decision-making role for CFOs at many enterprise businesses

2-Color-Design-Hi-Res-100px-widthWith a publication date of December 29, 2014, Accenture released its annual High Performance Finance Study for 2014. The findings presented reinforce the notion of a changed decision-making hierarchy for IT systems and solutions within many enterprise businesses.

In my opinion, anyone with an interest in Microsoft should take a look at this report. The two core IT topics:

  • “complex legacy systems and environments”
  • and “[t]he rise of digital on the CFO agenda”

may provide two of the planks of a foundation beneath a joint effort between the two companies, apparently scheduled for 2015: Microsoft, Accenture partner on hybrid cloud offering.

The first of the IT topics presented in the report, “complex legacy systems and environments” make up the on-premises component of a typical hybrid cloud computing scenario. The second, “digital”, “which may include cloud computing or software as a service (SaaS), big data and/or analytics, mobility and social media” (quoted in entirety from an Annual report from Accenture. I have provided a link to the entire report, above), amounts to the other half of the hybrid computing solution.

As I wrote recently, Microsoft provided more of an indication of a shift in the route taken by examples of technology “innovation” as these improvements enter enterprise businesses (and their larger counterparts in the public and not-for-profit sectors) in a global roadshow intended to help these organizations hasten the rate at which they are adopting cloud, SaaS computing offers (with Office 365 as the leading offer from Microsoft in this space). For readers unfamiliar with this global event, the title of this event is “Microsoft Office 365 Summit”, which I attended in New York City in early October. Since the New York City event, Microsoft has held the same event in Sydney, Australia and even in Moscow, in Russia. The Keynote from the New York Show provided Microsoft with an opportunity to present the notion of enterprise IT organizations abdicating the “innovation” leadership role. The report from Accenture argues the Finance Organization has picked it up, although leadership apparently amounts to a lot more accomodation, and a lot less evangelizing new computing methods. Of course, given ubiquitous BYOD across most of these organizations, the changes make sense.

The task facing the CFO as new enterprise tech leader, if the Accenture report is credible (which I think is the case), is much more a matter of building the right container to house “innovation” than actually leading on it. The role is a good one for Finance, which, after all, has to pay the bills, anyways.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


A different perspective on the significance of finance executives assuming CIO duties at major corporations

2-Color-Design-Hi-Res-100px-widthOn December 12, 2014, the CIO Journal feature of the Wall Street Journal included an article written by Rachael King on the appointment of Julie Lagacy to the position of CIO for Caterpillar. The title of King’s article is Caterpillar’s New CIO Has a Finance Background. While I agree with King”s decision to write about this appointment, in my opinion the significance of it is very different, in fact, a direct opposite, from what King portrays in her article.

King quotes Peter High, whom she identifies as “president of strategy and management consulting firm Metis Strategy, LLC”. She includes a quote from an email message High apparently sent out to his subscribers after the announcement of Lagacy’s appointment to the position of CIO for Caterpillar: “[a]s IT grows in complexity and as IT is at the heart of so much innovation in companies, increasingly IT must act like any other business division, and it must speak the language of business: finance” (quoted from Rachael King’s article. I’ve included a link to the article in the first paragraph of this post).

In October of this year I attended a two day seminar in New York City hosted by Microsoft on the topic of Office 365 Adoption. The title for the seminar was Office 365 Summit: New York. The Keynote presentation for this seminar, which was presented by Michael Atalla of Microsoft (Atalla, per his LinkedIn Profile is Director, Product Management, Office) picked up on precisely the same topic of the role enterprise IT organizations (and their management, ie CIOs), in 2014, and going forward, will play with regards to the route innovation takes as it enterprise the enterprise. But Atalla portrayed the route, and enterprise IT’s role quite differently. He went to some length to describe the notion of highly consumerized technology, which, nevertheless, constitutes the “leading edge” of innovation, entering the organization as the result of ubiquitous BYOD policies. Along this route, Atalla characterized enterprise IT as playing much more of a custodial role in this process than anything close to a leadership role.

I agree with what I take to be Atalla’s assessment. In my opinion Caterpillar’s decision to appoint a senior finance manager, Julie Lagacy, is an example of how this custodial role is playing out for very large businesses here in the U.S., and not the kind of decision Peter High (and, presumably, Rachael King) consider it to be. Enterprise IT is no longer “the heart of so much innovation”. Perhaps it never was.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


The Role of Enterprise IT is Changing in 2014

As we wrote recently in this blog, BYOD policies appear to be stimulating an evolution of the role of a central IT function within larger organizations from an effort to control the range of computing opportunities available to personnel, towards an effort to accomodate and support new types of computing (and methods) brought into the organization by users. We put together some of this view last week at a recent conference hosted by a mature ISV (Microsoft), for an audience which included representatives of several larger organizations.

This view is supported by a recently published short post to the CIO feature of the online Wall Street Journal. The post is titled CIOs will need a new mix of skills on their teams. The post reports on a presentation by Peter Sondergaard, “senior vice president and research chief” at Gartner, Inc., during “the company’s Symposium ITxpo 2014.”

The post claims the skills most needed, today, are mobile computing expertise and “user experience” and “data sciences”. So it’s probably safe to assume the Gartner Symposium provided a lot of support for the notion of how important a factor BYOD policies and procedures have become for larger organizations in 2014.

Going forward, the CIO blog report mentions “automated judgement and ethics” as two of the three skills most likely to be in demand. If we can cut through some of the opacity of these two skill descriptions, it looks to us to be safe to assume Gartner is pointing to the growing importance of IT governance as an operational method for larger organizations. But this IT governance will actually be built into computing procedures, themselves.

Surely the notion of “automated judgement and ethics” speaks to a future enterprise IT organization with, arguably, fewer head count. The question of how Line of Business (LoB) silos will obtain the computing resources they will require will be taken care of, if this feature actually materializes, with no debate, or even study, by computing solutions, themselves, which will have the features required to answer any/all questions on the topic. Neat stuff.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


ISVs should operate with realistic assumptions about enterprise consumer appetite for product updates and software assurance

An important plank in the floor boards supporting most product plans for enterprise software is an assumption about enterprise consumer willingness to implement product updates, and, in turn, purchase software assurance. Therefore, early stage ISVs should ensure they are operating with correct assumptions about both of these points. Here are some points to think about:

Product Updates

More likely than not enterprise consumers will implement product updates at a very slow pace. The pace at which they actually consume product updates (both free and paid) depends on just where in the office automation apparatus an ISV’s product plugs in. We argue enterprise organizations consuming software products for very large computing platforms (for example, IBM Notes, Microsoft SharePoint, Oracle, etc) will be especially slow to implement. It is simply very difficult for these organizations to implement a separate upgrade/update policy for software serving as an add-on to a larger solution. Any/all updates are more likely to happen when they are coordinated with plans to implement updates to the host software platform.

Software Assurance

Assuming enterprise consumers, more often than not will decide to purchase software assurance (aka annual maintenance) is a safe assumption. But this assumption can be better fortified when promotion efforts for software assurance emphasize something other than an opportunity to implement new features, which will only be available in future versions of a product. The real emphasis for promotion for assurance should be on the importance of a specific product, within the enterprise computing architecture for a specific organization. This emphasis is legitimately important as one’s product has been assimilated within a core enterprise computing platform. If the customer is committed to maintaining the overall computing platform, then assurance should be provided to one’s product as a now important component of the overall platform, itself.

Opt for Cloud Delivery as a SaaS and Solve Both Problems

Opting for a cloud, SaaS delivery method for one’s product certainly removes most of the obstacles between enterprise consumers and the benefits designed to be delivered via product updates. When an ISV controls the timing of when updates are applied (which is entirely the case for software delivered via cloud subscription), then consumers can be confidently expected to realize the benefits in keeping with one’s product plan.

The question of whether or not software assurance makes sense for one’s enterprise consumers is also completely removed. If enterprise consumers maintain SaaS subscriptions, they are maintaining software assurance.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Microsoft Continues to Service the Majority of Very Large Organizations with SharePoint and/or Office 365

If the group of attendees at this year’s SPTechCon, Boston, can be used as a reliable gauge of the positions of Microsoft SharePoint and Office 365 in the enterprise computing market, market interest in these solutions remains healthy and infectious. This writer has had numerous conversations, at this popular conference, with stakeholders from large organizations spread across a number of industries, including:

  • Government, both State and Federal
  • Healthcare
  • Banking
  • Insurance
  • Consumer Staples

In each case, these contacts have expressed keen interest to do what it takes to improve the computing experience of their users, and, thereby, hasten their adoption of computing methods unique to SharePoint, or SharePoint Online, Office 365.

A number of these contacts let us know their organizations had either decided to migrate from SharePoint on premises, to SharePoint Online, Office 365, or to implement the latter in parallel to SharePoint running on premises. Under normal circumstances this point would not be noteworthy, but when the industries within which their organizations compete — healthcare, banking, insurance — the notion of any of these firms seriously considering public tenancy on a cloud, SaaS has to be seen as some sort of win for Microsoft.

Contrary to a lot of market commentary, these organizations did not exhibit a diminishing interest, neither in SharePoint, nor in SharePoint Online. On the contrary, many of them spoke to a very high level of utilization for SharePoint, which can only elevate the importance of an application like this one to the position of a “mission-critical” set of procedures.

Once an application takes on this importance for an organization, it is not likely to be unseated. Since many of these organizations include thousands of seats, Microsoft should be able to count on a dependable, substantial revenue stream from these products for years to come. The only possible threat is the intensity of Microsoft’s own efforts to convince its customers to migrate to Office 365. Pressing much harder on this petal could turn out to be a bad thing to do.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


What Google At Work Needs to Enhance Its Appeal to Large Organizations with Centralized IT Operations

Large organizations with a centralized IT operation neither have the time, nor the resources to support solutions built from lots of components. Nevertheless, in this writer’s opinion, Google Apps for Business and its parent, Google Enterprise, which has just recently been renamed Google At Work, do not seem to have learned this lesson.

These twin constraints on enterprise IT organizations are determining factors for most purchase decisions. An integrated solution is usually favored over a basket of components. The rationale is simple: with one vendor on the line via a Service Level Agreement (SLA), there is really little need, if any, for enterprise IT to maintain a staff of subject matter experts capable of supporting a very diverse set of solutions.

But of even greater importance is the need enterprise IT organizations exhibit for portability (perhaps scalability would be a better word) as a prominent feature of the platforms they purchase and implement. If management calls for a change in business direction, then the task of migrating computing procedures over to new methods will fall on enterprise IT. Often enough it will be difficult to simply move one computing platform into a new direction. But the prospect of moving 5 solutions over to a new way of processing computing, more often than not, will not be acceptable.

Organizations deciding to implement Google’s revamped Google At Work suite of office automation tools, to fulfill a need for an Enterprise Document Management (EDM) requirement, will have to not only implement the Google Apps platform, but also at least one third party product, if they are going to obtain satisfactory results from their purchase decision. This writer couldn’t find a cohesive presentation of an EDM solution anywhere within the Google Apps website, but a search of the Google Apps Marketplace did surface several solutions purporting to be useful in an EDM solution.

If the Google At Work suite lacks the mandatory features larger organizations have come to expect of the platforms they decide to implement, in this writer’s opinion any conjecture about Google mounting a serious challenge to any of the ISVs already established with enterprise IT, any time soon, should be looked at with skepticism.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Let’s Not Over-Emphasize Cloud When We Talk About Microsoft’s New CEO, Satya Nadella

Many popular writers are reporting on the appointment of Satya Nadella as the new Microsoft® CEO. Most of them have chosen to focus on Mr. Nadella’s expertise as the leader of Microsoft’s cloud products group. But Mr. Nadella’s responsibilities also include the role of head of the enterprise products group. Server sales for this group were some of the most profitable business the company generated in its latest quarter.

Microsoft® has introduced Satya Nadella to the world via a web page titled Satya Nadella. Anyone with an interest in the company should visit the page, and, in particular, take a few moments to watch each of the four videos included on it.

The longest of these videos is an interview with Mr. Nadella. The other three videos provide personal opinions about Mr. Nadella’s appointment as the new CEO of the company from Bill Gates, Steve Ballmer, and John Thompson, the new Chairman of the Board.

When I watched the interview with Mr. Nadella, I was most taken not by the mention of the importance of the cloud and mobile computing as markets Microsoft has somehow overlooked, or failed to address successfully. Rather, I was taken by his focus on the pressing need to renovate the organizational structure of this very large business, soon to employ 160K people across the world (once the acquisition of the Nokia handset business is finally completed).

The point I got clearer than any other was Mr. Nadella’s perception of the near term imperative of liberating the potential for technical products/services innovation. Somehow the organizational structure of this business has stifled innovation. Mr. Nadella seems determined to change the structure. At the same time, he is also clearly interested in making Microsoft a more enjoyable place to work.

So the takeaway for me, about the most pressing needs the business faces, is the need for organizational change. The board of directors has chosen to address these needs through the appointment of Mr. Nadella.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Is Blackberry Firing Up the Enterprise Software Market for Mobile Device Management?

Citron Research thinks Blackberry will capture the dominant position in the enterprise market for Mobile Device Management (MDM) solutions. Enterprise business and comparably sized organizations in the public, and not-for-profit sectors need MDM solutions to successfully, manage secure remote data communications between smart phones and tablets and internal networks and data sources.

In a research report titled BlackBerry: Why the Shorts and Analysts Have it Wrong
Citron looks at a $15 Target – Minimum
Citron Research argues BlackBerry has been misunderstood by investment analysts and the financial news media. They also like the appointment of John Chen as the new CEO, and his stated intention to transform the company.

There can be little doubt of the depth of consumer interest in an effective MDM solution. Demand for tablet computers is strong. More low cost windows tablet computers are coming to market. At the same time, in April, 2014 Microsoft® will stop supporting the Windows XP® operating system. Some portion of today’s market for windows tablets can likely be attributed to enterprise customers replacing laptop Windows XP PCs. This portion looks to grow even further post April. So Enterprise IT organizations have a burning need for an effective MDM solution.

With regards to smartphones, the lower end of the market is broadening, while the capabilities of leading products in the category is increasing. Once again, Enterprise IT will look to leading MDM solutions to help them protect the internal users looking to communicate with internal networks with consumer grade android, windows, and iOS smart phones.

Citron’s presentation is certainly compelling, but conspicuously absent from the list of BlackBerry’s competitors for this business is IBM. One can convincingly argue IBM is more embedded into enterprise software markets than BlackBerry, and possesses the quality sales force required to service customers. On December 18, 2013, just 2 days prior to BlackBerry’s quarterly report, and Mr. Chen’s conference call, which Citron thinks “[a]ny serious investor in BlackBerry should read . . . ” (quoted from Citron Research’s report on BlackBerry. I’ve provided a link to the full report earlier in this blog post), IBM announced its acquisition of Fiberlink Communications and its MaaS360 MDM application.

A careful study of the landscape of the enterprise software market for MDM solutions should certainly include mention of offers from more appropriate competitors to BlackBerry under Mr. Chen — namely IBM, Microsoft, Oracle, SAP, Verizon and AT&T. Each of these businesses possesses the enterprise software sales teams and experience to make Blackberry’s transformation a bit harder to accomplish.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Are IBM’s Watson Product Problems the Result of a Confusing Market Message?

Spencer E. Ante recently wrote an article about IBM and its Watson super computer for the online Wall Street Journal. In an article titled IBM Struggles to Turn Watson Computer Into Big Business, He contends sales for this product have failed to meet up to expectations.

The revenue shortfall appears to be very significant. Mr. Ante recounts how “IBM Chief Executive Virginia “Ginni” Rometty . . . told executives she hopes Watson will generate $10 billion in annual revenue within 10 years, according to an October 2013 conference-call transcript reviewed by The Wall Street Journal.” (quoted from Mr. Ante’s article, a link to which has been provided above). But sales of the product were reported to be only $100Mil earlier in the same month.

But what kind of product is Watson? Are we talking about a super computer challenging the television game show “Jeopardy”, or are we talking about ” . . . a development platform in the Cloud to spur innovation and fuel a new ecosystem of entrepreneurial software app providers who will bring forward a new generation of applications” (this quote is excerpted from the front page of IBM’s online presentation of the Watson product. Or are we talking about ” . . . analytical software [with an] ability to ‘learn.'” (quoted from Mr. Ante’s article)

Markets don’t handle ambiguous products very well, and purchase them on a very slow schedule. Perhaps IBM product managers should take a step back to objectively sample marketplace perception of what Watson, the product, is all about, and redesign promotional messaging to better convey the message markets need to hear.

In 2014 enterprise consumers can select solutions from a variety of sources for any of the services it appears Watson can offer. Perhaps IBM is aware of the urgency and is moving, expeditiously, to clean up the brand for this product. If not, it makes sense for them to do so as quickly as possible.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Dell’s Growth Forecast Pointed to the end of the Desktop PC Computing Era Back in March, 2013, But What About Now?

Michael Dell appeared on CNBC this week. Included in his generally optimistic comments about his business, Dell, which recently became a private company, were some comments about the PC business. Michael Dell spoke about the excellent potential for sales of very high contrast displays to the desktop PC computing market.

But back in March, 2013, in a document mysteriously titled Going private transaction by certain issuers Dell Corporation provided the US Security and Exchange Commission (SEC) with a voluminous (the PDF file is over 40MBs in size) set of information about management’s decision to take the company private. On page 242 of the 758 pages of this document, Evercore Partners, the investment bank and advisory firm, published a financial projection, through 2017, for the legal entity taking Dell private, “Denali”. By 2017 the BEST projection of the four included on the spreadsheet has the private company growing at an annual rate of 2.2 percent. So when I compare the two public statements, I can’t miss a striking contrast between them, and need to look a bit further into what’s causing the gap.

Back in March, when I added IBM’s revenue growth over the last 5 years (1.13%) into the mix, I couldn’t escape a difficult conclusion: Neither consumers, nor businesses using desktop computers appeared to be buying innovation. These markets seemed to be standing still.

But ISVs continue to innovate computing methods. The hot spots, back in March of this year, were the small mobile device hardware market. and the market for automated applications offered on a multi tenant model (cloud and SaaS). These conclusions are hardly news, but until we had a chance to look at the numbers, included in Dell’s explanation to the US SEC, we weren’t getting the message. Dell, IBM, HP, and their peers were just not growing.

In contrast, Apple demonstrated revenue growth of 45% over the last 5 years, Amazon 32.44% over the same period, and Salesforce.com by the same. Almost all of Apple’s growth is attributable to the small mobile device hardware market, while Amazon and Salesforce.com have done very well in the cloud and SaaS application area.

But Dell’s March, 2013 argument appeared to make sense. I couldn’t find much of a rosy upside for the business over the next 4 to 5 years. Evercore’s “Upside” Assessment depended on Dell successfully selling more premium desktop and laptop hardware. Selling more copies of Quest software products, or SonicWall firewall products, or even Wyse VDI technology just wouldn’t fill in the enormous revenue loss attributable to a substantially smaller market for PCs.

It all looked very grim to me back then. But now I find myself confused after Mr. Dell’s “glowing” remarks this week. Of course, the difficulties Salesforce.com, Amazon and Adobe are finding demonstrating profitability from cloud, SaaS products aren’t helping the notion of “go Cloud” as a universal panacea, either.

Finally, with Apple hiring the ex CEO of ultra high end Burberry’s retail operation to run “Apple Stores”, everywhere, there is certainly an increasingly clear image of an end to at least the high end of the smartphone/tablet market on my horizon.

Could it be the future of PC Computing isn’t really bleak at all?

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved