This is the second in a three-part ASUG Guest Perspective series from contributor Bob Evans, Acceleration Economy Co-Founder, Cloud Wars Founder, and digital business expert. Evans is a keynote speaker for the upcoming ASUG Best Practices: SAP for Cloud conference. Find more information about the conference here.
Quick, name the enterprise software company capitalizing on the industry-cloud boom by offering these solutions: “Industry Software helps manufacturers become Digital Enterprises by enabling them to digitalize and integrate their entire industrial value chain through PLM solutions, Manufacturing Operations Management (MOM) solutions, and TIA equipment.”
SAP? Oracle? Salesforce? Google Cloud?
No, that description of purpose-built, manufacturing-industry solutions comes from Siemens, a rising force in the world of software. Its customers want not only the physical goods Siemens has made for 175 years, but also its market know-how, its digital expertise, and its data-driven process mastery.
This type of industry crossover is happening with striking frequency as a variety of powerful forces converge.
- The old saw about how “every company is becoming a software company” is proving to be an accurate, perhaps an even understated description of the business world today.
- The demands of the digital economy require purpose-built applications and solutions that traditional applications never intended to address.
- Many non-tech businesses see potential in turning their hard-earned internal IP into externally facing revenue streams.
- As customers become more sophisticated software developers, and as software companies surge into the market for industry-specific solutions, the combination of deep market and process expertise from customers, plus superb application-development skills from software vendors, make such collaboration appealing for both parties.
That appeal extends in significant ways to customers—whether consumers or businesses—seeking digital technology optimization to stay abreast of the wild twists our modern world seems to love.
For example, anyone who flies on a regular business has no doubt been baffled by the uncertainty and confusion that are typically tied to the arrival or departure of a flight. Are we ready to board yet? Is the crew here? The gate’s changing; the flight has landed but the gate’s occupied; the plane’s pulled up to the jetway, but no one’s there to open the door, etcetera. With today’s primacy of customer experiences, airlines have realized that droning out yet another announcement saying, “We apologize for the inconvenience and thank you for your patience” is not exactly a viable strategy.
The American Airlines–Microsoft Partnership
American Airlines and Microsoft, as part of a sweeping enterprise-technology deal—or, to use the new term that seems increasingly more appropriate, “partnership”—have co-created a mobile application designed to make many or even most of those nightmares go away.
Called ConnectMe, the mobile app is used by gate agents, ramp personnel, maintenance workers, pilots, and flight attendants. They can see and act on real-time data that describes what’s actually going on in the wildly complex world of airline operations. The breakthrough with ConnectMe—and, as you’ll see, that name is spot-on perfect—is that it delivers crucial data to those under-the-gun workers wherever they happen to be. Under the old system, this data was only accessible via desktop machines located far from where the actual work was being done.
As a result, passenger frustration levels will go way down. Airline employees can now take more initiative in making great customer experiences possible. Airplanes can consume less fuel and expel less pollution. And, importantly, airline costs can decrease.
But for all of Microsoft’s software-development prowess, that’s not an app that Microsoft could have created on its own. American Airlines’ app developers brought great domain expertise to the project while leveraging the massive capabilities of Microsoft’s development teams. (You can read more about this at How Microsoft’s Airline Megadeal Showcases the Co-Creation Trend Boom.
Walmart, Goldman Sachs, and More
A couple of other notable examples of customers morphing into cloud vendors are Walmart and Goldman Sachs. To demonstrate how widespread this trend is becoming, can you imagine two more wildly different companies on the entire planet?
Walmart is taking the lone-wolf approach. It’s aggressively converting its vast, deep experience and expertise in retail, e-commerce, and related logistics into software-as-a-service solutions that will be sold to big retailers across the globe. For me, that raises a pretty obvious question: Why would any retailer that competes with Walmart—most retailers compete at least to some extent—willingly buy such products, thereby putting more money into the pockets of its competitor?
After all, with the industry-cloud phenomenon noted above in full swing, those retailers can buy purpose-built, retail-industry applications from Salesforce, SAP, Oracle, Workday, and others. Again, why buy from a competitor?
This is where the customer-becomes-vendor game gets very interesting. Is it possible for market leaders such as Walmart to parlay their billions of dollars in IT and related-technology investments into solutions that even competitors feel are the best products on the market?
Meanwhile, Goldman Sachs—the ultimate white-shoe Wall St. investment bank icon, is now a cloud vendor! Yes indeed, Goldman Sachs Cloud for Data is powered by AWS. It’s an ideal example of this new generation of cloud services, which unites the best of both worlds—the industry-specific knowledge and future aspirations of customers, as well as the technological capabilities of world-class cloud vendors eager to move to higher ground as “every company becomes a software company.”
SAP in the Mix
Within SAP, the work the company’s doing in the auto industry, including with Catena-X, is another showcase of this powerful trend. SAP is pulling together essential data from all layers of the value chain, both upstream and downstream, from automakers themselves. Becoming the source of gravity for that data is a huge boon for SAP. It’s perfectly positioned to do more of the same in chemicals, pharmaceuticals, manufacturing, and other industries.
Specific to manufacturing, SAP is taking advantage of the booming demand for enhanced digital solutions, ranging from procurement to the factory floor, to data-powered warehouse management and distribution. On top of that, SAP is also pushing more deeply into this new world of co-creation with customers—and in this instance, with perhaps the world’s best-known company: Apple.
For use in the dazzling new world of digital supply chains, SAP, in close concert with longtime strategic partner Apple, recently introduced two new iPhone apps, both of which are available on the Apple App Store:
- Warehouse Operator allows easy access to vital information and functions wherever the warehouse professional happens to be, freeing teams from being locked to desks.
- Direct Distribution helps delivery drivers by offering “blazingly fast, paperless execution of the so-called last mile,” says SAP. The app is designed to boost efficiency and data accuracy while also lowering costs.
Over at Oracle, no less than Larry Ellison, Executive Chairman and CTO, has vowed that the company will work with “partners” (developers, ecosystem players, and also customers) to create what he’s called “a new generation of B2B cloud services” across financial services, health care, telecommunications, and other industries.
Finally, consider this macro-level perspective from Microsoft CEO Satya Nadella, who’s been saying for the past year or more that while IT spending currently comprises 5% of GDP, that figure will double to 10% within the next several years.
Now, it’s possible—quite unlikely, but possible—that the stupendous increase foreseen by Nadella will all center on traditional line-of-business apps such as ERP, CRM, and HCM. But while possible, that scenario is about as likely as businesses once again becoming builders and operators of in-house data centers.
A much more plausible explanation is that IT will become increasingly pervasive and essential across every department, function, and process in large, midsize, and small businesses. The knowledge to create the new software that will make up an astounding five more percent of GDP will require those businesses to continue becoming not just consumers of software made by the software industry, but also to become creators of software themselves.
As that happens, customers becoming cloud vendors won’t be considered a bug—rather, it’ll be a powerful, pervasive feature.