Author: Nitish M

Can “Code Red for Humanity” Be the Signal for Using Digital for Good? | Blog

A landmark United Nations report issued an alarming warning on climate change, calling it a “code red for humanity.” While the situation seems dire, recent positive developments in the sustainability arena keep the hopes for a greener future alive. Read on to learn what immediate steps enterprises can take now to move the needle on sustainability goals through digital transformation.

The UN Intergovernmental Panel on Climate Change (IPCC) assessment report released last week continues to make waves across countries, governments, corporations, and non-governmental organizations (NGOs). It touched a nerve even with those segments of the population who are rarely engaged with climate issues, a sign of rising sustainability consciousness in the zeitgeist.

While awareness toward building a sustainable future has been in the spotlight for over a decade now, it is important to understand the following reasons why the IPCC report has managed to create significant noise:

  1. Timing of the report: Coming just a couple of months before the critical UN Climate Change Conference (COP26) this fall in Glasgow, Scotland, the new report will play a key role in the negotiations. IPCC’s previous assessment in 2013 and 2014 paved the way for the Paris climate agreement
  2. The warnings are clearer and direr: The confidence of the assertions made by the authors is the real strength of this new publication. The clearest of these points is humanity’s responsibility for climate change
  3. Visible effects: As countries continue to grapple with the pandemic, the climate impact over the past few months has significantly worsened. The dangers of climate change are no longer something far away in the future, impacting people in distant lands. It’s here and now and affecting every region and population segment across the world
  4. Rapid changes are needed now: Even after 197 countries signed up to the Paris climate agreement in 2015, the IPCC report claims that we won’t be able to keep the rise in global temperatures below 1.5 degrees Celsius or even 2 degrees Celsius this century unless immediate and sustained deep cuts in carbon take place

 

“Hope is a good thing, maybe the best of things, and no good thing ever dies…” 

The situation is a reality check. However, we see positive signs that possibilities still abound for a greener, cleaner future such as:

  1. Concerted, profound, and immediate efforts can avert the catastrophe: Immediate deep cuts in emissions of greenhouse gases could stabilize rising temperatures. Scientists believe if we can cut global emissions in half by 2030 and reach net zero by the middle of this century, we can halt and possibly reverse the rise in temperatures
  2. The rise of the environmentally-conscious Generation Green: Gen Z and millennials are rewriting the rules of conscious investments and consumption, and taking charge of the sustainability agenda by sustainable investing and their willingness to pay more for eco-friendly products and hold institutions accountable for their actions
  3. The report paves the way for directing accountability: By strengthening the scientific evidence between human emissions and extreme weather, the UN report provides a new, powerful means for stakeholders everywhere to hold corporations and governments legally accountable for the climate emergency
  4. Evolution from checkbook philanthropy to building purposedriven enterprises: While at the beginning of the sustainability journey, the focus largely remained on ad hoc initiatives, where now conversations have transformed into a purpose-driven movement. Businesses are not just focused on maximizing return for shareholders, but on overall stakeholder engagement to build purpose-driven enterprises

Four Steps Enterprises Can Take Now   

Now that we have managed to grab the attention of all audiences, the need of the hour is to get the ball rolling. Here are some steps enterprises can take as they embark upon their sustainability journeys:

  1. Turn intentions into actions: Enterprises globally are pro-actively reporting sustainability. Over 90% of all S&P 500 firms do some sort of sustainability reporting, which is significantly higher than a decade ago. Supplier announcements of sustainability-specific investments have risen significantly over the last 12-15 months, highlighting the strong intent by both sides to drive environmental, social, and governance (ESG) messaging in the market (exhibit below).

However, despite having the right intentions, enterprises globally still struggle to envision a comprehensive and actionable ESG strategy that they can adopt. This is where the expanding sustainability vendor ecosystem can play an important role in bringing together the external expertise, tools, and offerings that can help enterprises succeed in their sustainability agendas

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  1. Set more attainable targets based on accurate predictions: As the impact of greenhouse emissions becomes clearer, it paves the way for enterprises to define quantifiable targets and measure, monitor, and report these goals to guide all decisions and truly become purpose driven. Enterprises can get decision-making guidance from the rising number of specialized data providers who are going deep into ESG areas, focusing on specific industries, lines of business, and action items
  2. Leverage the technology ecosystem to build, implement, and scale sustainability agendas: With their massive and expanding footprints, it’s important for enterprises to think about the different layers within the sustainability technology stack from advisory to applications, data, cloud, and infrastructure. How enterprises scale sustainability across their technology landscape can have significant downstream implications. We believe that strategic partners who can assist clients in end-to-end ideation, implementation, and scaling their sustainability programs will play central roles going forward Picture2
  3. Institute an operating model for sustainability: Business operations and workflows need to embed purpose elements within core business strategies and processes as organizations move up the sustainability maturity curve. This requires thinking about the critical components of sustainability through an operating model shift. Our view of this operating model encompasses key elements such as data, technology, and operations, underpinned by a robust foundation of governance and talent as presented below: Picture3

We covered some of our thinking in a recent webinar on Digital for Good: Shape Your Sustainability Journey and will continue to share our insights as we monitor the latest developments in this space. How are you planning your sustainability journey? We’d love to hear from you by emailing us at [email protected] and [email protected].

Europe’s Critical Moment in Digital Transformation – Mission 2030 | Blog

The European market has been slower than other areas of the world in adopting digital transformation, but that’s changing. With new regulations opening up the digital marketplace for fair competition, sizeable strategic partnerships, and providers embracing the latest cloud, automation, and Artificial Intelligence (AI) capabilities, Europe is poised to seize a leadership position in the tech landscape. But the region needs to act quickly and grasp the right opportunities to prevail. Read on to learn more about Europe’s road to digitalization by 2030. 

COVID-19 accelerated the worldwide movement that has been underway for years by businesses to adopt digital initiatives. Amid the pandemic, digitalization was pushed into the spotlight as a means for businesses to survive by finding innovative ways to deliver services through digital media.

The European market, however, felt the impact because it has historically shown a slower rate of digital adoption in some segments and also bore the early onslaught of the global pandemic (starting with the outbreak in Italy).

Coupled with slowing macroeconomic growth and looming Brexit, enterprises in Europe have been facing significant challenges. The changes fueled by the pandemic have now pushed Europe to rethink its business models and talent and embrace accelerated digital transformation.

Gearing up for change

Combined with this market context, Europe’s dependence on global technology companies (versus homegrown firms) has increased. Various reasons exist for Europe’s perceived decline as the home of Big Tech companies, including a stricter tax regime, more active regulatory/legal frameworks, and a smaller homogeneous addressable market. Despite this, Europe outperforms the world in many pockets of innovation, such as financial technology (FinTech), blockchain, payments, creative agencies, and cybersecurity.

Now, new expectations that developed from the pandemic have led European organizations to gear up to fully embrace digital business models. According to an Everest Group key issues survey, customer experience is the most critical priority for enterprises and service providers over the coming few years, followed by operational efficiency, then launching new products and services. The image below illustrates Europe’s priorities in business model changes and areas of innovation.

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To improve the customer experience, European enterprises are offering digital solutions for conducting simple interactions without physically going to a location or speaking directly to a customer service agent and delivering more personalized experiences for language support, channels, and availability.

Europe’s transition to digital by 2030

Against this backdrop, Europe also is ramping up technology sovereignty efforts. Recently, the European Commission set the course towards a digitally empowered Europe by 2030. European governments and regulators are rethinking the enabling frameworks and legal structures to foster innovation and digital leadership.

The goal is to achieve digital sovereignty in an open and interconnected world and to develop digital policies that will enable businesses to adopt and seize a human-centered, sustainable, and more prosperous digital future.

Among the European Commission’s targets are ensuring 80 percent of all adults have basic digital skills, three-quarters of companies use cloud services, all public services are available online, and all households have gigabit connectivity.

To achieve these ambitious expectations, Europe will need to move fast.

The pathway to digitalization

To pave the way towards digital success, Europe has set in motion initiatives such as the Digital Markets Act (DMA), the Digital Services Act (DSA), and GAIA-X, a project to develop common requirements for a European data infrastructure supported by representatives of business, science, and administration.

With data security, privacy, and technology sovereignty becoming key issues for the region, Europe is setting up the following sanctions to protect companies and ensure a competitive market:

  • DMA: Ensures a higher degree of competition in European digital markets by stipulating large online platforms behave reasonably, creating a fairer business environment that encourages new emerging players to enter the market, and gives consumers more choice at competitive pricing
  • DSA: Protects all users, no matter where they live in Europe, by guaranteeing a safe and accountable online environment and opening up new opportunities to provide digital services across borders
  • GAIA-X: Strives to develop common requirements for European data infrastructure and to establish an interoperable data exchange where businesses can share data under the protection of European laws

With these new seminal regulations potentially changing the enabling framework of doing business across Europe, the market is at a juncture where it can take back the reigns of the technology landscape. But its success at capturing the next wave of digital transformation will hinge on how the region, its businesses, and regulators react to the current situation.

A bright future there for the taking

Europe has always had a broad range of innovative companies and countries with strong start-up and entrepreneurial cultures. Large partnerships over the past nine months that point to scaling digital transformation are also on the rise in Europe. These include deals like Wipro joining with Telefonica and METRO AG, Infosys with Daimler, and TCS with Deutsche Bank and Prudential Financial. For more details, please see our webinar, Why Europe is Poised to be a Major Factor in Digital Transformation Strategies, from earlier this year.

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With increased digitalization accelerated by COVID-19, European organizations are moving forward with top digital capability priorities like cloud, cybersecurity, and analytics alongside automation and advanced automation AI.

Europe also provides attractive options to meet the need to shift to digital with different constituent countries offering local language and cultural context, and easier intra-region mobility (Brexit notwithstanding). For instance, vibrant technology ecosystems are developing in different clusters such as Germany for hi-tech and automotive, Eastern Europe for product engineering, and the UK and Ireland for financial services, to name a few.

Poised to be one of the main drivers of digital adoption, Europe will retain its central place in the world’s technology economy. However, spotting the right opportunities and actions to grasp will be crucial over the next few years.

Europe must take advantage of current changes in the market by:

  • Adopting a design-led workforce strategy that enables it to leverage specific digital talent pools and re-skilling or upskilling current employees with needed digital skills
  • Increasing the numbers of global service providers and product vendors focusing on investments in Europe as an attractive location closer to clients or to reduce risks from hyper-competitive markets. This includes the diverse opportunity Europe offers across different regional clusters
  • Accelerating efforts by European governments and regulators to rethink frameworks and legal structures to foster innovation and digital leadership

Our recent research shows that European enterprises plan not just to recover but exceed projected financial goals. With the end of the pandemic in sight and the reopening of business throughout the continent, digital innovation and opportunities to scale will be ripe for Europe’s taking.

How do you view the European digital transformation opportunity? Share your thoughts by emailing [email protected].

Microsoft Goes All in on Industry Cloud and AI with $20 Billion Nuance Deal | Blog

Yesterday’s announcement of Microsoft’s acquisition of Nuance Communications signifies the big tech company’s serious intentions in the US healthcare market.

We’ve been writing about industry cloud and verticalization plays of big technology companies (nicknamed BigTech) for a while now. With the planned acquisition of Nuance Communications for US$19.7 billion, Microsoft has made its most definitive step in the healthcare and verticalization journey.

At a base level, what matters to Microsoft is that Nuance focuses on conversational AI. Over the years, it has become quite the phenomenon among physicians and healthcare providers – 77 percent of US hospitals are Nuance clients. Also, it is not just a healthcare standout – Nuance counts 85 percent of Fortune 100 organizations as customers. Among Nuance’s claims to fame in conversational AI is the fact that it powered the speech recognition engine in Apple’s Siri.

Why Did Microsoft Acquire Nuance?

The acquisition is attractive to Microsoft for the following reasons:

  1. Buy versus build: If Microsoft (under Satya Nadella) can trust itself to build a capability swiftly, it will never buy. Last year, when we wrote about Salesforce’s acquisition of Slack, we highlighted how Microsoft pulled out of its intent to acquire Slack in 2016 and launched Teams within a year. Could Microsoft have built and scaled a speech recognition AI offering?
  2. Conversational AI: Microsoft’s big three competitors – Amazon, Apple, and Google – have a significant head start in speech recognition, the only form of AI that has gone mainstream and is likely to be a US$30 billion market by 2025. Clearly, with mature competition, this was not going to be as easy as “Alexa! Cut slack, build Teams” for Nadella
  3. Healthcare: This is another battleground for which Microsoft has been building up an arsenal. As the US continues to expand on its $3 trillion spend on healthcare, Microsoft wants a share of this sizeable market. That is why it makes sense to peel the healthcare onion a bit more

 

What Role Does Microsoft Want to Play in Healthcare?

While other competitors (read Amazon, Salesforce, and Google) were busy launching healthcare-focused offerings in 2020, Microsoft was already helping healthcare providers use Microsoft Teams for virtual physician visits. Also, Microsoft and Nuance are not strangers, having partnered in 2019, to enable ambient listening capabilities for physician to EHR record keeping. Microsoft sees a clear opportunity in the US healthcare industry.

  • Everest Group estimates that technology services spending in US healthcare will grow at a CAGR of 7.5% for the next five years, adding an incremental US$25 billion to an already whopping $56 billion
  • The focus of Microsoft and its competitors is to disrupt the multi-billion ($40 billion by 2025) healthcare data (Electronic Medical Record) industry
  • Erstwhile EMR has been a major reason for physician burnout, which the likes of Nuance aim to solve
  • Cloud-driven offerings such as Canvas Medical and Amazon Comprehend Medical are already making Epic Systems and Cerner sit up and take notice

It is not without reason that Microsoft launched its cloud for healthcare last year and has followed it up by acquiring Nuance.

What Does it Mean for Healthcare Enterprises?

Under Nadella, Microsoft has developed a sophisticated sales model that takes a portfolio approach to clients. This has helped Microsoft build a strong positioning beyond its Office and Windows offerings even in healthcare. Most clients in healthcare are already exposed to its Power Apps portfolio and Intelligent Cloud (including Azure and cloud for healthcare) in some form. It is only a question of time (if the acquisition closes without issues) until Nuance becomes part of its suite of offerings for healthcare.

What Does it Mean for Service Providers?

As a rejoinder to our earlier point about head starts, this is where Microsoft has a lead over competitors. Our recent research with System Integrators (SI) ecosystem indicates that Microsoft is head and shoulders above its nearest competitors when it comes to leveraging the SI partnership channel to bring its offerings to enterprises. This can act as a significant differentiator when it comes to taking Nuance to healthcare customers as SI partners can expect favorable terms of engagement.

Partners' Perceptions

Lastly, this is not just about healthcare

While augmenting healthcare capabilities and clients is the primary trigger for this purchase, we believe Microsoft aims to go beyond healthcare to achieve the following objectives:

  • Take conversational AI to other industries: Clearly, healthcare is not the only industry warming up to conversational AI. Retail, financial services, and many other industries have scaled usage. Hence, it is not without reason that Mark Benjamin (Nuance’s CEO) will report to Scott Guthrie (Executive Vice President of Cloud & AI at Microsoft) and not Gregory Moore (Microsoft’s Corporate Vice President, Microsoft Health), indicating a broader push
  • Make cloud more intelligent: As mentioned above, Microsoft will pursue full-stack opportunities by combining Nuance’s offerings with its Power Apps and Intelligent Cloud suites. As a matter of fact, it plans to report Nuance’s performance as part of its Intelligent Cloud segment

Microsoft: $2 Trillion and Beyond

This announcement comes against the background of BigTech and platform companies making significant moves to industry-specific use cases, which will drive the next wave of client adoption and competitive differentiation. Microsoft’s turnaround and acceleration since Nadella took over as CEO in 2014 are commendable (see the image below). It is on the verge of becoming only the second company to achieve $2 trillion in market capitalization. This move is a bet on its journey beyond the $2 trillion.

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What do you make of its move? Please feel free to reach out to [email protected] and [email protected] to share your opinion.

Enterprises’ Satisfaction with Their IT Service Providers Jumped 21 Percent in 2020 | Blog

We’ve been publishing our IT Services Enterprise Pulse Report for four years and have never before seen a 21 percent jump in enterprises’ satisfaction with their IT service providers, but that’s exactly what happened in 2020. Despite – or rather because of – the enormous uncertainty and multitude of challenges enterprises faced with the global pandemic, the participants in our IT Services Enterprise Pulse Report 2021 approvingly recognized that their IT services partners understood their pain points and proactively supported them in adopting a digital-first operating model through their investments in cloud, security, and data. These investments have proven to help fill the supply-demand gap for next-generation digital technologies in the IT services industry.

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 What are enterprises’ future priorities?

As we move ahead into the post-pandemic environment, enterprises are mainly aim to fuel their investments in technology to reduce their costs, grow their revenue, and enhance their risk management and regulatory compliance measures.

Just over 80 percent of the enterprises cited cost reduction as their key focus as they start embracing the shift to a digital-first business model, consisting of increased automation initiatives, accelerated cloud adoption, modernization initiatives, and rationalization of their infrastructure, applications, and platforms landscape.

About 46 percent stated they are looking at innovative ways to grow their revenue channels, mainly through improving customer experience, delivering hyper-personalization, pushing newer products into the market, and expanding into new territories.

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What do they expect from their IT service providers?

The pandemic has created a need for service providers to up the ante and adopt a partnership mindset towards their clients. Enterprises want their service providers to stand beside, not behind them. That means IT service providers need to align their technical decision making with their clients’ strategic interests. They also need to be able to sell the business outcomes of their technology investments to their clients’ senior leadership.

With the increasing number of uncertainties created by the pandemic, enterprises stated that they prefer service providers who adopt a proactive, rather than reactive, approach towards monitoring potential challenges and are highly responsive to changes in the status quo. They want them to bring new and innovative ideas to the table and be up-to-date on the latest technologies and what their competitors are doing.

Businesses around the world struggled with managing onshore attrition and offshore productivity during the pandemic. To ease their talent management woes, the participants in this study made it clear they want their IT service providers to invest in local talent and resources so they can have feet on the street with better understanding of the regional regulations of their business.

The shift in value proposition and expectations

In a separate study we conducted – Recalibrating for Resiliency – 2021 Key Issues in Global Sourcing – Enterprise IT Perspective – we found that the top priorities enterprises expect from their IT service providers are productivity and service quality, followed by flexibility, ability to adapt to new business models, and the ability to bring innovative ideas to the engagement. These all map back to what enterprises stated in the various IT Services PEAK Matrix® reports in our IT Services Enterprise Pulse Report 2021.

Interestingly, more than 70 percent of the participants in our Key Issues study stated that they are optimistic about meeting or exceeding their 2020 targets, and about 70 percent of the participants in our 2021 Pulse Report expressed their satisfaction with their IT service providers.

To sum up, the pandemic has pushed the pace for adopting a digital-first and, in some cases, a digital-only working model for global enterprises. Service providers have made the right investments in cloud, security, and data, which helped fill the supply-demand gap for next-generation digital technologies in the IT services industry. This has led to an increase in enterprises’ satisfaction with their service providers who have fared well in fulfilling the sudden upshift in demand but has also set newer expectations going forward.

To take a deep dive into the specifics of enterprises’ priorities, how the demand is shifting, and how IT service providers need to adapt to changing expectations, read our report, IT Services Enterprise Pulse Report 2021, or reach out to us at [email protected] and [email protected].

BioClinica and ERT to Merge: Perspectives on Potential Synergies | Blog

On December 10, 2020, ERT, a clinical end-point data solutions company, announced its merger with BioClinica, a clinical trial management and imaging solutions company. The goal of the resulting enterprise will be to integrate the best of both worlds – ERT’s expertise in electronic Clinical Outcomes Assessment (eCOA), therapeutic expertise in cardiac safety and respiratory, and clinical endpoint measurement through wearables, with BioClinica’s expertise in imaging and clinical trial management solutions. The merger will equip the combined company to deliver data analytics, insights, business intelligence, virtual patient visits, and technology solutions to its clients.

In analyzing this development, we’ve taken a look at the hottest topics in the life sciences industry right now – decentralized and virtual clinical trials.

Virtual clinical trials – a revolution catalyzed by the pandemic

A virtual clinical trial is one in which certain parts of the clinical trial are conducted outside a clinical site, such as patient consent capture, trial data capture, or patient monitoring through sensors or wearables. The benefits to the pharmaceutical company include cost savings, better patient recruitment and retention, and improved data quality.

Earlier this year, we published a blog predicting that the 2020s would be the decade of virtual trials. It seems we were way off the mark – by about nine years. The year 2020 has already seen its fair share of virtual trials, as clinical trials that were put on pause due to lockdown restrictions were rescued by being converted to fully virtual or hybrid trials, such as cases in which clinical experts visited patients at their residences to collect vitals or samples, reducing delays.

#NoGoingBack

The virtual trial momentum isn’t temporary, and there’s increasing focus on virtual trials, even among investors. Not only this, many in the industry have pledged to preserve the progress they’ve made in clinical research due to the pandemic, including virtual trials.

On the same day the news of the merger was announced, the Decentralized Trials & Research Alliance (DTRA) was formed to unite stakeholders with a mission to make clinical trial participation widely accessible by advancing policies, research practices, and new technologies in decentralized patient-focused clinical research. Companies that are part of this alliance include technology vendors such as Medidata Solutions and Oracle Health Sciences, pharma companies such as Pfizer and Roche, CROs such as Parexel and Syneos Health, and others such as Amazon and the US Food and Drug Administration.

M&A and investment activity has increased, too. For example, Medable and Science 37 each received funding during the pandemic to advance their virtual trial offerings. And in November 2020, VirTrial, a telehealth platform for managing decentralized and virtual clinical trials, was acquired by Signant Health, a Clinical Trial Management System (CTMS) vendor, thus augmenting its virtual trial capabilities.

Clearly, virtual trials are a ripe area for M&A and investment activity given their disruptive capabilities and benefits. And we continue to expect more acquisitions, funding, and collaboration in this space in the near future.

What this all means for the merger

Our recently concluded PEAK Matrix assessment on clinical development platforms pointed out that BioClinica’s Cloud platform for clinical development does not have the capability to support virtual trials; we said it needed to invest in remote monitoring and eCOA capabilities to deliver on virtual trials. However, the solution does have a broad set of capabilities in the clinical, regulatory, and safety value chains.

As a result of the merger, however, BioClinica will be able to offer virtual trial capabilities to clients. ERT is one of the leading eCOA providers and through its wearable and sensor data capture capabilities, it is well positioned to conduct virtual trials in certain therapy areas. And it will be able to use the BioClinica Cloud offering to give clients a holistic clinical development experience, a win-win-win for ERT, BioClinica, and their clients.

Exhibit 1 shows the combined solution landscape.

Exhibit 1: The merger synergies

bioclinica

The merged entity will be able to showcase an end-to-end clinical development platform with enabling layers for virtual trial conduct. This move is definitely the right direction, at the most opportune time, and is just another sign of increasing interest in decentralized and virtual trials.

What are your views on this merger? Let us know your thoughts at [email protected] and [email protected].

Reflections on Cloudera Now and the Battle for Data Platform Supremacy | Blog

The enterprise data market is going through a pretty significant category revision, with native technology vendors – like Cloudera, Databricks, and Snowflake – evolving, cloud hyperscalers increasingly driving enterprises’ digital transformation mandates, and incumbent vendors trying to remain relevant (e.g., the 2019 HPE-MapR deal.) This revision has led to leadership changes, acquisitions, and interesting ecosystem partnerships. Is data warehousing the new enterprise data cloud category that will eventually be a part of the cloud-first narrative?

Last month I attended Cloudera Now, Cloudera’s client and analyst event. Read on for my key takeaways from the event and let me know what you think.

  • Diversity and data literacy come to the forefront: Props to Cloudera for addressing key issues up front. In the first session, CEO Rob Bearden and activist and historian Dr. Mary Frances Berry had an honest dialogue about diversity and inclusion in tech. More often than not, tech vendors pay lip service to these issues of the zeitgeist, so it was a refreshing change to see the event kicking off with this important conversation. During the analyst breakout, Rob also took questions on data literacy and how crucial it is going to be as Cloudera aims to become more meaningful to enterprise business users against the backdrop of data democratization.
  • Cloudera seems to be turning around, slowly: After a tumultuous period following its merger with Hortonworks in early 2019, Cloudera has new, yet familiar, leaders in place, with Rob Bearden (previously CEO of Hortonworks) taking over the CEO reins in January 2020. The company reported its FYQ2 2021 results a few weeks before the event, and its revenue increased 9 percent over the previous quarter, its subscription revenue was up 17 percent, and its Annualized Recurring Revenue (ARR) grew 12 percent year-over-year. ARR is going to be really key for Cloudera to showcase stickiness and client retention. While its losses narrowed in FYQ2 2021, it has more ground to cover on profitability.
  • Streaming and ML will be key bets: As the core data warehousing platform market faces more competition, it is important for Cloudera to de-risk its portfolio by expanding revenue from emerging high growth spend areas. It was good to see streaming and Machine Learning (ML) products growing faster than the company. In early October, it also announced its acquisition of Eventador, a provider of cloud-native services for enterprise-grade stream processing, to further augment and accelerate its own streaming platform, named DataFlow. The aim is to bring this all together through Shared Data Experience (SDX), is Cloudera’s integrated offering for security and governance.
  • We are all living in the hyperscaler economy: Not surprisingly, there were a share of discussions around the increasing role of the cloud hyperscalers in the data ecosystem. The hyperscalers’ appetite is voracious; while the likes of Cloudera will partner with these cloud vendors, competition will increase, especially on industry-specific use cases. Will one of the hyperscalers acquire a data warehousing vendor? One can only speculate.
  • Industry-specificity will drive the next wave of the platform growth story: I’ve been saying this for a while – clients don’t buy tools, they buy solutions. Industry-context is becoming increasingly important, especially in more regulated and complex industries. For example, after its recent Vlocity acquisition, Salesforce announced Salesforce Industries to expand its industry product portfolio, providing purpose-built apps with industry-specific data models and pre-built business processes. Similarly, Google Cloud has ramped up its industry solutions team by hiring a slew of senior leaders from SAP and the industry. For the data vendors, focusing on high impact industry-led use cases – on their own and with partners – will be key to unlocking value for clients and driving differentiation. Cloudera showcased some interesting use cases for healthcare and life sciences, financial services, and consumer goods. Building a long-term product roadmap here will be crucial.

By happenstance, the Cloudera event started the same day its primary competitor, cloud-based data warehousing vendor Snowflake made its public market debut and more than doubled on day one, making it the largest ever software IPO. Make of that what you will, but to me it is another sign of the validation of the data and analytics ecosystem. Watch this space for more.

I’d enjoy hearing your thoughts on this space. Please email me at: [email protected].

Full disclosure: Cloudera sent a thoughtful package ahead of the event, which included a few fine specimens from the vineyards in La Rioja. I can confirm I wasn’t sampling them while writing this.

GPT-3 Accelerates AI Progress, but the Path to AGI is Going to Be Bumpy | Blog

OpenAI recently released the third generation of Generative Pretrained Transformer or GPT-3, the largest neuro-linguistic programming (NLP) model ever built. It’s fundamentally a language model, a machine learning model that can look at part of a sentence and predict the next word. It’s been pre-trained on 175 billion parameters in an unsupervised manner and can be further fine-tuned to perform specific tasks. OpenAI is an AI research organization founded in 2015 by Elon Musk, Sam Altman, and other luminaries. It describes its mission as: to discover and enact the path to safe Artificial General Intelligence (AGI).

GPT-3 is breaking the internet

There’s been a lot of talk around the power, capabilities, and potential use cases of GPT-3 in the AI community. As the largest language model developed to date, it has the potential to advance AI as a domain. People have developed all sorts of uses – from mimicking Shakespeare, to writing prose, to designing web pages. It primarily stood out due to:

  1. Foraying into AGI. The language model isn’t trained to perform a specific task such as sentence completion or translation, which is normally the case with ANI, the most prevalent form of AI we have seen. Rather, GPT-3 can perform multiple tasks such as answering trivia questions, translating common languages, and solving anagrams, to name a few, in a manner that is indistinguishable from a human.
  1. Advancing the zero-shot/few-shot learning mechanism in model training. This mechanism is a setup in machine learning wherein the model predicts the answer only from the task description in natural language and/or maybe a few examples, implying that the algorithm can showcase accuracy without being extensively trained for a particular task. This capability opens the possibilities of building lean AI models that aren’t as data-intensive and don’t require humongous task-specific datasets for training.


So, this seems nifty – what next?

In addition to the flurry of standard NLP use cases that have been in existence for a while, which GPT-3 has advanced drastically, GPT-3 also has the potential to intercept the more technical and creative domains, which will lead to the democratization of such skills by making these capabilities available to non-technical people and putting business users in control, primarily by:

  • Furthering no-code/low-code by making code generation possible from natural language input. This is a step toward the eventual democratization of AI, making it accessible to a broader group of business users and has the potential to redefine job roles and the skill sets required to perform them.
  • Generating simple layouts and web templates to full-blown UI designs, using simple natural language input, potentially creating disruption in the design sphere. 
  • Shortening AI timelines to market. Automated Machine Learning (AutoML) creates machine learning architectures with limited human input. The confluence of GPT-3 and AutoML has the potential to drastically reduce the time it takes to bring AI solutions to production. It will take significantly less time and human intervention to train a system and build a solution, thereby reducing the amount of time needed to deploy an AI solution in the market.

GPT-3 is great, but we’re not in Space Odyssey yet

The massive language model is not without pitfalls. Its principal shortcoming is that, while it’s good with natural language tasks, is has no semantic understanding of the text. It is, by virtue of its training, just trying to complete a given sentence, no matter what the sentence means.

The second roadblock to mainstream adoption of the model is the fact that it’s riddled with societal biases in gender, race, and religion. This is because the model is trained on the internet, which brings its own set of challenges given the discourse around fake news and the post-truth world. Even OpenAI admits that its API models exhibit biases, and those can often be seen in the generated text. These biases need to be corrected before the model can be deployed in any real-world scenario.

These challenges certainly must be addressed before it can be deployed for actual, enterprise-grade use. That said, GPT-3 will potentially traverse the same trajectory that computer vision made at the start of the decade to eventually become ubiquitous in our lives.

What are your thoughts about GPT-3? Please share with us at [email protected] and [email protected].

What Is Your Post-COVID-19 M&A Strategy | Blog

The International Monetary Fund has recently confirmed what most of us already know – we have entered a recession. Given the evolving COVID-19 situation, in the short-term, organizations are doing their best just to implement business continuity plans and keep the lights on. At this point, they simply don’t have the bandwidth to take a forward-looking view.

However, now – or at least very soon – maybe the best time to be bold – to consider the opportunity to slingshot through and out of the recession with a strong M&A strategy.

Increasing acquisition activity

As part of our technology research over the past few years, we’ve analyzed innovative firms (which we call Trailblazers) to identify high potential start-ups based on their growth stories, innovation, and the impact they have created in the market.

More recently, we’ve seen an uptick in M&A activity across the IT services market as organizations have sought exponential inorganic growth to expand their geographic footprints and/or fill gaps across their services portfolios. (See the exhibit below.)

timeline of acquisitions of high potential start ups presented by everest group 1

How we expect the recession to impact this activity

Although this has been an acquisition-rich industry in recent years, everything is completely different now – the post COVID-19 market is clearly headed straight into recession, or worse. If previous recessions are any indication, M&A activity is likely to take a hit. While we believe M&A activity in the immediate aftermath of the pandemic will be subdued, we also believe there will be some interesting opportunities for those willing to invest some thinking and strategizing.

Is now the right time for you to consider M&As?

As the world adjusts to the next normal following the pandemic, some specific technologies/tools are likely to see a surge in adoption, including cloud, collaboration and CX, network and security, IoT and edge, to name a few. These technologies will play an important role in ensuring business resiliency and serving a distributed and remote workforce.

Within this context, a well-planned acquisition strategy can enable competitive advantage for those organizations willing – and able – to take a bold approach. We believe this segment-specific activity will be further fueled by:

  • Lower valuations: Most start-ups take a relationship-based selling approach, with about 80% of their revenue coming from a few high-value, large clients or markets. As the recession deepens, start-ups that are highly dependent on a few clients and markets will struggle to survive, lowering their valuation and increasing their propensity to be acquired. The lower cost of capital and the impact of the financial stimulus are also going to provide acquirers an impetus to re-examine their M&A playbooks. One such example is Magic Leap, which is looking at opportunities to be acquired as the hardware sector faces threats from the COVID-19 crisis, the impending recession, and the trade war between the US and China. Cash-rich organizations (PE/VC firms, service providers, and BigTech companies) are already looking at leveraging their balance sheets amidst this downturn
  • An opportunity to fill portfolio gaps: As growth across IT services is expected to soften for the foreseeable future, now may be the time – and the price may be right – for organizations to augment their capabilities, expand their addressable market, and increase their top line

We are already seeing interest from acquiring firms focused on cloud services (AWS, Azure, GCP), enterprise platform adoption (capabilities in ServiceNow and Salesforce), network services, and security, to name a few. As we approach the fallout from the pandemic, a range of investors will be eyeing the technology sector for M&A opportunities, and we believe there will be a lot of activity. Picking the right segment bets and timing these initiatives will be crucial.

What is your post-COVID-19 M&A Strategy? Please write to us at [email protected] and [email protected].

COVID-19 Is Truly a Black Swan Event, and We Can’t Rely on History to Predict the Outcome | Blog

The last thing the world needs is another “hot-take” on COVID-19, but the biggest fallacy I see as people think/talk/write about the post-COVID-19 economic scenario is to compare it to previous economic recessions.

Why is this different?

The 2008-09 crisis couldn’t be more different than what we are seeing today, and the post-COVID-19 world is going to be wildly different across dimensions. The genesis of the 2008-09 crisis was badly crafted financial instruments, which impacted developed markets more than others and necessitated select bailouts to resuscitate consumer demand.

COVID-19 is much more broad-based in impact. Not only will it reshape business, but it will reshape intrinsic human behavior and consumer preferences. At this point, I would disregard any economic projections of this pandemic’s impact. We don’t know enough at this stage, nor how long it will take to play out (is the current stimulus enough? when do we recover, if at all? – you get the drift).

What do we know?

So, what we can say with a degree of certainty at this point? This pandemic will have wide-ranging implications:

  • Asset ownership will need a rethink – nobody wants to “own” risks on their balance sheets
  • CX will be paramount and essential for productivity – consumer expectations will never be the same
  • We will see a fundamental transformation of how and where work gets done – there’s a new recognition that a remote and distributed model works, if done right
  • Enterprises will try to conserve cash and look for self-funded transformation – no, it is not an oxymoron
  • Piecemeal digital transformation doesn’t work – go big or go home
  • Sourcing will not be linear and needs a rethink – organizations will truly need to rethink how and where they derive value

We are continually monitoring the situation to help our clients understand how this situation plays out. Our COVID-19 resource center has our latest and evolving thinking. Short-sighted and clickbaity takes do us no favors in this effort to understand the post-COVID-19 world. Please stay safe and curious.

Let the Cloud Wars Begin: Notes from Oracle OpenWorld Europe 2020

Oracle held the European edition of its flagship event, OpenWorld, in London recently. Against the backdrop of cloud wars, leadership changes in the ecosystem (Mark Hurd’s untimely demise and the change of guard at SAP), and blazing growth by hyperscalers (the two boutique firms in Seattle), the market is keenly watching what Oracle has in store.

Here are my take-aways from the event.

1. Cloud FOMO: Oracle is investing heavily in its datacenter footprint and expects to have 36 regions by the end of the year, with a datacenter opening every 23 days. It claims it will have more regions than AWS by the end of 2020.

1

This is turning out to be a common trend among hyperscalers and cloud vendors, creating an asset bubble. Capital spending is at an all-time high, as the exhibit below shows. Will this create further price wars and overcapacity in the market? Only time will tell.

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2. Doubling down on data: Oracle announced a slew of initiatives aimed at infusing data and, to a lesser extent, AI across its offering stack:

    • Expanded DataFox’s data pool across AI and managed data. Oracle acquired DataFox in 2018 because of its sizable data assets covering ~2.8 million public and private businesses to enable predictive decision making. Now, DataFox natively integrates across the Oracle SaaS stack, sourcing over a billion data points annually to improve the data quality of Eloqua and Sales Cloud as well as third-party applications.
    • Launched a new Oracle Cloud Data Science Platform to build and deploy AI and ML models.
    • Expanded its Autonomous Database offering to support the integration of algorithms within databases and added new ML capabilities, with support for Python and automated ML.

3. Ecosystem bets in a multi-cloud world are crucial: Oracle is now sharpening its focus on partnerships and the ecosystem to compete in the multi-cloud environment – this is on the back of its Azure and VMware partnerships. With Microsoft Azure, it announced a new interconnect facility based in Amsterdam. Because Amsterdam is a crucial European datacenter location and hub for Oracle, this facility will help companies in the region share cross-application data and move on-premise workloads to the cloud, according to Oracle.

4. Cloud interoperability – are we there yet?: With Google Anthos and Azure Arc, interoperability is back. While the partnership with Azure did highlight some degree of interoperability progress, I didn’t see enough. This is likely a prickly concern for enterprises as cloud vendors start erecting their own walled fortresses, hindering true interoperability. We have opined on cloud interoperability before, and it’s going to be a key issue for the ecosystem to solve over the next 18-24 months, especially as the cloud-native conversations gather momentum.

5. The dawn of the new CEO mindset: One of the highlights of the event was a client showcase. The CEO of Italian coffee major, illycaffè, Massimiliano Pogliani, spoke to Oracle CEO Safra Catz about a critical aspect of modern business – the changing role of the new CEO. He described it as being the activator of collective intelligence across the organization’s human capital. He also described his company’s mission around three themes: good (product obsession), goodness (sustainability), and beauty (the experience.) We are seeing greater recognition by some forward-looking CEOs of their purpose and impact, including Novartis CEO Vas’ focus on the journey to unboss and Salesforce chief Marc Benioff’s call for a new type of capitalism.

 The cloud landscape is becoming very interesting as all segments attack the opportunity: hyperscalers continue to invest in expanding their datacenter footprint; enterprise platform providers are focusing on verticalization (e.g., ServiceNow under Bill, Salesforce acquiring Vlocity); and system integrators are trying to keep up with the massive implementation opportunity while battling a talent shortage. We are going to see share shifts as these changes gather steam.

From an enterprise perspective, the cloud conversation is now veering toward journey-in-the-cloud versus journey-to-the-cloud, aka lift-and-shift. This shift is bringing total cost of ownership (TCO) back into the picture. We are in for interesting times ahead.

What’s your take on today’s cloud wars? Please share your thoughts with me at [email protected].

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