As the global pandemic has accelerated cloud adoption, Microsoft Azure and AWS have emerged as the clear winners.
Flexera has released its 2021 State of Tech Spend Report. As expected, digital transformation and cloud adoption are on the rise. Some 56% of respondents said digital transformation was a top initiative for 2021, as opposed to 54% in 2020. Cloud adoption saw even greater jump, with 48% of respondents making it a top priority in 2021, vs 40% in 2020. Not surprisingly, work from home was the single biggest driver for change, with 74% citing it as the leading factor.
Of the cloud providers, Microsoft Azure and AWS were the clear winners. Some 61% of respondents said they were going to increase spending on Microsoft Azure in 2021. Similarly, 57% plan on increasing their spending on Microsoft SaaS, while 54% plan on spending more on AWS. Google appears set for more modest gains, with only 31% planning on increased spending on Google Cloud.
The forecast looks even worse for IBM and Oracle. Respondents plan on increasing their spending on IBM Cloud a mere 16%, with 14% planning to decrease spending. While 20% said they planned on increasing spending on Oracle Infrastructure Cloud, 13% plan on decreased spending. The outlook is even worse for Oracle Licensed Software, with 22% planning to increase spending, as opposed to 25% planning to decrease expenditures.
Flexera’s report is an important look into the cloud industry and the ongoing digital transformation, and is even better news for Microsoft and AWS.
Facebook’s growth may have slowed in recent years, but the pandemic is driving it to new heights in Latin America.
As Facebook has achieved market saturation in many parts of the world, its growth has naturally slowed. As Business Insider points out, however, the pandemic has been a significant growth factor for Facebook, especially in Latin America.
“In Latin America specifically, we now expect the number of Facebook users to grow by 8.8% in 2020 to 339.5 million, up from 7.3% in 2019 and more than triple the growth we originally expected for this year (2.8%),” writesBI’s Daniel Carnahan. “And for the first time, Facebook’s penetration in Latin America will reach over half of the population, at 53%.”
It remains to be seen if Facebook can sustain its growth rate, and seems likely it will not once things return to normal. Nonetheless, its growth rate in Latin America is good news at a time when the company is under siege from multiple angles.
IAC has announced it will spin Vimeo off as a fully independent, publicly traded company.
Vimeo is a video hosting platform that serves as a major competitor to YouTube, with some 200 million users. Like many streaming platforms, Vimeo has experienced major growth as a result of the pandemic.
IAC is now planning on capitalizing on that success, spinning off Vimeo as an independent company.
“The combination of Vimeo’s remarkable growth, solid leadership position, and enormous market opportunity have made clear its future,” said Joey Levin, CEO, IAC. “It’s time for Vimeo to spread its wings and become a great independent public company.”
“We have long believed in the power of video to advance human expression and transform businesses,” said Anjali Sud, CEO of Vimeo. “Today we have a rare opportunity to help every team and organization in the world integrate video throughout their operations, across all the ways they communicate and collaborate. Our all-in-one solution radically lowers the barriers of time, cost, and complexity that previously made professional-quality video unattainable. We’re ready for this next chapter and focused on making video far easier and more effective than ever before.”
IAC expects the spinoff to be completed in the second quarter of 2021.
AT&T is reportedly fielding offers to sell its DirecTV satellite service, as the service shrinks due to the rise of streaming options.
AT&T bought DirecTV in 2015 for $66 billion, including debt. Since that time, however, the service has lost millions of subscribers — far more than rival Dish Network — and has increasingly become a lead weight around AT&T’s neck.
According to the Wall Street Journal, AT&T is fielding bids in excess of $15 billion, including debt, a far cry from what the company paid five years ago. Among the potential buyers are Churchill Capital Corp. IV and private-equity firm TPG. The WSJ says the auction is already in the late stages, with a completed deal possible in early 2021.
The TV industry has become one of the most hated industries in America in recent years, in terms of customer satisfaction. Many companies charge equipment rental fees, hidden fees and regularly hike prices after brief “introductory prices.”
While satellite TV often scores higher in customer satisfaction than cable options, it has still been heavily impacted by streaming services. Hulu with Live TV, YouTube TV, fuboTV, Sling and, most recently, T-Mobile’s TVision are often seen as cheaper alternatives that give customers more options and control. When TVision was released, T-Mobile CEO Mike Sievert specifically emphasized no annual contracts, no exploding plans and half the cost of cable.
AT&T’s divesture of DirecTV is just the latest example of this widespread digital transformation that is occurring.
“I know everyone wants to focus on the Travis Scott Meal and Spicy Chicken McNuggets which definitely contributed to the fantastic September that we had,” says McDonald’s USA President Joe Erlinger. “But the setup for this great quarter actually started much earlier in the year. Our drive-throughs have been getting faster at McDonald’s. We’ve made a lot of investments in digital and drive-through and delivery as well.”
Digital, Drive-Through and Delivery Powering McDonald’s
I know everyone wants to focus on the Travis Scott Meal and Spicy Chicken McNuggets which definitely contributed to the fantastic September that we had. But the setup for this great quarter actually started much earlier in the year. Our drive-throughs have been getting faster at McDonald’s. We’ve made a lot of investments in digital and drive-through and delivery as well.
Then really we made a lot of changes to our business model as the pandemic set upon us including over 50 changes in operations. We limited our menu and we’ve made our restaurants easier to run. At the same time, we conserved some of our marketing funds. We began to unleash those marketing funds in the third quarter. That’s what set up this great result of 4.6% double-digit comps in September.
Breakfast Is BACK At McDonalds
When we entered the pandemic we had reversed what was a long-term trend of negative guest counts. It’s been lost in the results of what happened in the epidemic. But in January and February, we actually had positive comps at breakfast and positive guest counts. It goes without saying that we don’t sell the Spicy McNuggets or the Travis Scott orders at breakfast and we’ve obviously seen positive comps across all dayparts.
So we are actually very optimistic about the daypart. We’re excited about the bakery launch that’ll take place later this month. We’ve got a real built-in advantage on this because of our drive-throughs and just because of our overall convenience factor. I like the characterization that yes, breakfast is back at McDonald’s.
Mood Amongst Franchisees Is Strong
Franchisees did come into this in a position of absolute strength. In fact, 2019 was the highest cash flow year ever for our franchisees. Some of the steps that we took through the pandemic both to support them in terms of their liquidity but also to make the operations of the restaurant easier (helped significantly). We actually improved margins at the restaurant level as well.
They’re actually coming out of the worst of the pandemic in a very good position and in a very strong financial position. The mood amongst our franchisees is strong. I was in restaurants uh in Washington state a few weeks ago. Last week I was actually in Washington DC. There’s a lot of optimism confidence as we enter the fourth quarter.
“Digital transformation was the opportunity for our generation before COVID,” says ServiceNow CEO Bill McDermott. “Now with COVID, it has accelerated and exacerbated all the issues of broken systems and siloed operations. Before COVID they didn’t want to be told to go into a cubicle. Do you think after COVID once this thing clears up at some point in the future they are going to be told to go into a cubicle? No, they’re going to be digital.”
Digital transformation was the opportunity for our generation before COVID. Now with COVID, it has accelerated and exacerbated all the issues of broken systems and siloed operations. People are not realizing that 75% of the workforce by 2025 will be millennial generation people. Before COVID they didn’t want to be told to go into a cubicle. Do you think after COVID once this thing clears up at some point in the future they are going to be told to go into a cubicle? No, they’re going to be digital.
They’re also going to absolutely expect their employer to give them the best tools. The big idea if you want to give the customer a Michelin 3 experience is you have to fuse the employee experience and the customer experience on a common platform. This way most things can be automated for the customer on a self-service basis. The things that can’t be automated can immediately be workflow ordered to get the right person in the right place with the right skill set at the right time. That’s what we do and that’s why this is a thrilling moment.
Now Platform Is the Standard For Digital Transformation
The Now platform has become the standard for digital transformation in business today. If you think about most of these companies they’re grappling with the future of work. They have to accommodate their employees. They have very distributed workforces. How are they going to get them the tools that they need and onboard them properly? In some cases, they never even meet the people they hire. Then obviously, how are they going to manage the experience they have digitally?
This also goes direct to the customer. How do you go direct to the consumer? How do you make sure you give them a great service so they stay loyal to you? The ServiceNow Platform is at the epicenter of all of that. More and more, developers are building new innovation on the fly on the Now Platform. The Now platform has become a standard for large enterprises around the world. The ecosystem and the network effect building on that are truly sensational. We’re extremely fired up because we want to make work… work better for people all over the world. What we’re trying to do is get to the essence of everything.
ServiceNow CEO Bill McDermott: COVID Has Accelerated Digital Transformation
A huge survey by Alibaba of 5,015 US B2B SMBs and SMB manufacturers indicates a significant pivot to digital. Small and medium manufactures have traditionally been slower to integrate digital into their businesses. However, according to the survey, SMB manufacturers have been digitizing at twice the rate of other industries during the pandemic – to support other manufacturers as they accelerate their digitization.
Key findings from the full U.S. B2B SMB survey:
SMBs accelerated their pivot to digital: 93% of B2B companies are now conducting some portion of their business online, up from 90% in December, and 43% are utilizing ecommerce, an 8% increase over the same time period.
SMBs are finding opportunities internationally: even with supply chain disruptions during the pandemic, 63% of B2B companies report conducting some amount of cross border B2B trade, up from 59% in December.
SMB manufacturers surpassed other industries in digitization: amid the pandemic, manufacturers’ online B2B trade increased 8% – twice the rate of the overall 4% increase in all industries for the same period and tied with retail as the industries with the most digital growth. In December, U.S. manufacturers’ online B2B trade volume lagged all other industries except construction but have now passed multiple industries in their pivot to digital.
“We were happy to see the increasing digitization of US B2B companies and that many are increasing trade despite the pandemic, showing the resilience and grit of American business owners and entrepreneurs,” said John Caplan, President of North America and Europe of Alibaba.com. “Our research finds that digitization is no longer a nice-to-have, but a must-have for companies in every industry to bridge from surviving to thriving in the next era of business.”
A Dell Technologies commissioned an independent survey of 4,300 worldwide business leaders indicates a massive shift toward digital transformation in 2020 accelerated by the pandemic. The survey indicates that 80% of organizations globally have fast-tracked some digital transformation programs this year. But just 41% accelerated all or most of their programs. Dell says that this is the third installment of their Digital Transformation Index (DT Index), designed to show how businesses are adapting to unprecedented uncertainty during a global pandemic.
Incredibly, 79% are reinventing their business model as a result of the disruption caused by the pandemic and 50% of international business leaders worry they didn’t transition fast enough. The study notes that digital transformation is not easy, 94% of businesses surveyed say they are facing entrenched barriers spanning across technology, people, and policy.
According to the 2020 DT Index, the following are the top-3 barriers to digital transformation success:
Data privacy and cybersecurity concerns (up from 5th place in 2016)
Lack of budget and resources (#1 in 2016, #2 in 2018)
Unable to extract insights from data and/or information overload (a jump of eight places since 2016)
“We’ve been given a glimpse of the future, and the organizations that are accelerating their digital transformation now will be poised for success in the Data Era that is unfolding before our eyes”, says Michael Dell, Chairman, and CEO, Dell Technologies.
Additionally, the survey reveals a huge shift toward remote work. About 25% of employees worked remotely before the pandemic and today it is more than 50% of all employees are remote. According to the survey, remote work has become the new normal.
Top IT Investments Are For Emerging Technologies
Prior to the pandemic, business investments were strongly focused on foundational technologies, rather than emerging technologies. The vast majority, 89 percent recognizethat as a result of disruption this year, they need a more agile/scalable IT infrastructure to allow of contingencies. The DT Index shows the top technology investments for the next one to three years:
Cybersecurity
Data management tools
5G infrastructure
Privacy software
Multi-Cloud environment
And recognizing the importance of emerging technologies, 82 percent of respondents envision increased usage of Augmented Reality to learn how to do or fix things in an instant; 85 percent foresee organizations using Artificial Intelligence and data models to predict potential disruptions, and 78 percent predict distributed ledgers – such as Blockchain – will make the gig economy fairer (by cutting out the intermediary).
Despite these findings, only 16 percent are planning to invest in Virtual/Augmented Reality, just 32 percent intend to invest in Artificial Intelligence, and a mere 15 percent plan to invest in distributed ledgers in the next one to three years.
SAP announced that a new IDC economic impact model predicts the revenue SAP partners generate will nearly double over the next four years.
“The pandemic has driven digital transformation into every corner of the enterprise to allow businesses to adapt and continue operating as usual,” said Steve White, program vice president, channels and alliances, IDC. “As the economic situation continues to unfold and businesses move their focus from resiliency to recovery, those that leverage digital and cloud-based solutions will be more agile and future-proof, and we’re seeing that acknowledgment drive significant adoption.”
SAP commissioned the research to explore the impact of the current economic landscape on the partner ecosystem. The data shows that due to the pandemic-driven increase in remote work, digital transformation efforts are advancing, and companies are expected to spend more on cloud-based solutions. This translates into a $204.4 billion cloud market opportunity for SAP partners from now until the end of 2024. This cloud revenue figure represents 68% of the total net-new opportunity for our partners over that period of time.
“This research confirms the vast and continually growing market opportunity for SAP partners,” said Karl Fahrbach, chief partner officer, SAP. “SAP’s next-generation partnering movement drives partners’ sustained growth by establishing partner-centric sales and service and connecting with customers in new ways across their life cycle. This higher level of ecosystem engagement can increase customer satisfaction, lead to faster time to value and enhance customer lifetime value.”
“The next decade looking ahead is going to be the Software Decade,” says Snowflake board member and Altimeter Capital partner Kevin Wang. “Trends of moving more software to the cloud are just persisting. Cloud has completely changed the way that software is built and run. Software itself is being completely transformed. If what you saw over the past decade was exciting I’m even more excited about the next decade.”
The past decade has been a prolific time for technology companies. When you look at what we are set up for in the next decade it’s good to pause right now to see what has happened during the pandemic. We’ve seen that software is an integral part of the global economy. During the pandemic, we’ve found that we couldn’t go through the pandemic without the tools that we have.
Stanford research shows that just during the month of May over two-thirds of US GDP was created in our homes alone. That’s just incredible. These trends of moving more software to the cloud are just persisting. The next decade looking ahead is going to be the Software Decade.
Software Itself Is Being Completely Transformed
When we take a step back we look at how these companies are set up for the next ten years. It’s easy to get focused on what might happen in the short run. These trends are so powerful that they are going to power these companies and adoption for several years. It’s true that the pandemic has accelerated and pulled forward a lot of that demand. But a lot of the trends and behaviors we see are going to persist. For example, people are talking over Zoom and that’s just changed the way we are going to work. We can give a lot of examples of how that’s going to persist over the long run.
Software itself is being completely transformed. If what you saw over the past decade was exciting I’m even more excited about the next decade. What you have to understand is that cloud has completely changed the way that software is built and run. As we know, as business are digitally transforming they themselves are building and running more software. When you think about how to do that cloud has changed that.
Historically, you always had to decide better, faster, cheaper. You could only pick one or two of them. Now you can do all three. When you look at Snowflake, for example, you used to have to manage a cloud data warehouse, and that was a lot of work for your database experts. You don’t have to do any of that anymore. Snowflake will manage all of that for you.
The Software Decade Is Now – Altimeter Capital partner Kevin Wang
“Even ahead of COVID, the market for companies who are undergoing digital transformation and who need to use digital technologies to compete and win in the modern economy was enormous,” says Twilio CEO Jeff Lawson. “COVID has been a tailwind to Twilio business but really is an acceleration of the trends that have gone on for the last 10 to 20 years as a result of digital transformation in nearly every kind of company.”
Even ahead of COVID, the market for companies who are undergoing digital transformation and who need to use digital technologies to compete and win in the modern economy was enormous. What COVID did is it accelerated many of the initiatives, many of the use cases, the things that companies needed to build to be competitive in this digital era were accelerated.
They were accelerated because of COVID, because of social distancing, work from home, and migrating a lot of these business processes to software and into the cloud and modernizing all of this. COVID has been a tailwind to Twilio business but really is an acceleration of the trends that have gone on for the last 10 to 20 years as a result of digital transformation in nearly every kind of company.
I’m Not Very Concerned About Microsoft
I’m not very concerned (about new competitors like Microsoft). It’s the same reason that (I wasn’t concerned) when Amazon started building products in the communication space or Facebook or Google or even Blackberry once announced that they were going to compete with Twilio. First of all, we’re no stranger to competition. This is a huge market. It’s no surprise that a wide variety of companies have products in the communications domain.
We compete by focusing on our customers, listening to what they need, and building differentiated APIs, a differentiated platform, and a differentiated super network. We’ve got a 12-year head start on anybody entering the space. The last thing I’ll add is that we are not a company that is very focused on competition. We’re focused on our customers. That focus has driven us for the last 12 years and has served us very well. We will continue to focus on the things our customers need in this enormous market and be able to take a lot of market share.
Digital-Native Companies Want APIs That Work
Strangely, I don’t think Microsoft CEO Satya Nadella wakes up every day thinking about Twilio. But we are also no stranger to pricing competition. In fact, that is how most companies have tried to compete with us through our 12-year history. They come in with an inferior product and they say we’re going to be cheaper. But it turns out that the biggest enterprises on the planet or digital-native companies, what they want are APIs that work, mature, scalable, and that work everywhere around the world.
We’ve invested a tremendous amount of time and money to build the leading platform out there and what we found is that customers value that. So we’re no stranger to people trying to undercut us on price. What we think and what we hear from our customers is that they want quality, they want reliability, and they want HIPAA compliance. They want all sorts of capabilities that let them power their business and that’s what we offer.
Low-Code, No-Code, and Yo-Code
Low-code is a really exciting area. There are three buckets. There’s low-code, no-code, and then yo-code for the people who love to write code, developers. We’ve got products really for that whole spectrum. The typical way a developer might build on top of Twilio is to write code and host it themselves. We have a Twilio Functions product that allows us to host the software for our customers. Then we have Twilio Studio which is a drag and drop designer for the non-developer to be able to build out sophisticated workflows like interactive voice response systems on top of Twilio.
We have embraced really all three of those categories of builders. We do believe that at every enterprise there is a large number of builders with different skill sets who are building the future of how those companies engage with their customers. We want to enable all those people to succeed on Twilio.
Twilio CEO Jeff Lawson: COVID Accelerated Digital Transformation
“The barriers have broken down now in digital transformation because of people working from home and the need to adopt faster,” says Brenda Harvey, General Manager at IBM Asia Pacific. “We see continued growth of hybrid cloud and of cloud services after the pandemic. It’s touching every element of a company’s business processes from the inside out and the outside in.”
The benefits coming from new personalized services, workflow automation, infusing AI to help drive this more personal experience, are actually driving better business impact. When we think about hybrid cloud which enables you to leverage all of your investments across your infrastructure we’re actually seeing two and a half times value than traditional models. We’re also seeing the benefits from regulatory cloud and capabilities that we’re putting into our platforms. We just announced a financial services cloud and we’ll do the same with insurance and healthcare.
We’ll take the costs out of the regulatory risk and compliance while providing more value from a business perspective. We’ve had a number of relationships across multiple industries including BNP Paribas, MUFG Bank, Adobe, across telecom with Vodafone Idea, Bharti Airtel, Verizon, and even Schlumberger and Ernst & Young. Companies are seeing the value of these platforms. In fact, in the study, 94% of the respondents said that by 2022 they would have a new business platform model that would continue to power their business.
Barriers To Digital Transformation Have Broken Down
We see continued growth of hybrid cloud and of cloud services after the pandemic. It’s touching every element of a company’s business processes from the inside out and the outside in. The inside out includes HR, finance, risk compliance, procurement, supply chain. Then the outside in, marketing, sales, customer engagement, and customer service. With marketing at marketing events, we saw a 3X response into our Think Digital than previous years because we could have more reach. So now marketing is taking into account a digital transformation of the clients’ needs.
Customer service and engagement are the number one priority of our clients. They are building and investing in the contact center to improve the experience and drive more value. This cloud platform will bring in new capabilities with 5G such as IoT (internet of things), blockchain, and of course quantum capabilities. We’ll see the technology advance while the cultural change is advancing too. The barriers have broken down now in digital transformation because of people working from home and the need to adopt faster.
IBM: Barrier To Digital Transformation Have Broken Down
“We want to make sure that 70 to 80 percent of the volume for pizzerias is digital., says Slice CEO Ilir Sela. “This is very comparable to Domino’s and Papa John’s and other big chains. We’ve got to lead the digital transformation of these small businesses. We bring technology and marketing and we enable the existing operation of the pizzeria. We make them more efficient and we make these Pizzerias really powerful and valuable.”
Ilir Sela, CEO of Slice, discusses how the Slice app is driving the digital transformation of small pizzerias so that they can compete effectively with the national pizza chains:
Leading Digital Transformation Of Pizzerias
We take a merchant friendly approach because we really believe in the power of small business and the American dream. I am third generation in the pizza industry. My family consists of a ton of entrepreneurs who mostly opened up small business pizzerias. The goal for us was to make sure that as digital becomes an important component of their business that it doesn’t cannibalize the physical location.
So we take a digital-first approach in a way that means we want to make sure that 70 to 80 percent of the volume for these pizzerias is digital. This is very comparable to Domino’s and Papa John’s and other big chains. In order to do that you have to take a long-term view and you’ve got to take a merchant friendly view around loyalty and online ordering. Obviously, in order to do that we’ve got to run the playbook. We’ve got to lead the digital transformation of these small businesses.
All Pizzerias Need To Digitize Their Platforms
We are actually an all-in-one platform where we partner with a small business in order to digitize their operation. We are not a logistics company ourselves. We empower small businesses to have what we call first-party delivery. In a way, that’s been done forever. Small business pizzerias have delivered across the entire country for decades and they’ve made it work incredibly well.
The reality is that in the world of COVID and as we go further into the 2020s, all these pizzerias really need to digitize their platforms in order to become more efficient. What we do is we bring technology and marketing and we enable the existing operation of the pizzeria. We make it more efficient and we make it really powerful and valuable.
Slice CEO Ilir Sela Leading Digital Transformation Of Pizzerias
“There’s a real recognition that digitization and transformation are not doing what you used to do in the physical world,” says Publicis Sapient CEO Nigel Vaz. “Digitizing that and translating that is essentially the journey of going from being a caterpillar to a butterfly. Real transformation. How do you reimagine yourself in the context of a world that now is entirely digital? Customers are thinking very actively about how they actually create products and services that essentially create value for customers entirely digitally.”
Nigel Vaz, CEO of Publicis Sapient, discusses how the current pandemic has forced organizations to reimagine their businesses digitally. Nigel works closely with clients such as McDonald’s, Nationwide, and Unilever to deliver transformative experiences and business models:
https://youtu.be/VOKcTLcxHXw
Businesses Being Reimagined In A World That Is Now Entirely Digital
Digitization Has Become Existential For Business
I think Digital has always been important for business. Now more than ever what’s becoming very clear is this has gone from being something that’s important to something that’s existential. How do you support customers to make orders entirely online when your stores are closed? How do you create mashups with other partners to be able to facilitate deliveries when your own deliveries don’t suffice? How do you try to create experiences online through self-service that minimize the impact of people calling your call centers?
All of these things are things clients are facing on a regular basis. Most CEOs I’m in conversation with are acknowledging the fact that this has now got to be a priority, that they have to be ready more so than they’ve ever thought before.
3 Key Things Happening With the Transformation
There are three things happening here in terms of transformation. The first is the change in human behavior where I think there’s a recognizable shift now. We’re seeing significant accounts of over-70s, for example, ordering from retail and ramping that up. We’re seeing a big shift in institutions like schools and educational institutions, which historically had not thought about transformation as particularly applicable to them.
We’re also seeing a shift in industries like leisure looking at creating virtual experiences since physical experiences are essentially restricted and people can’t use them. The human behavior shift is translating to big investments in technology and technology platforms that enable this.
Businesses Being Reimagined In A World That Is Now Entirely Digital
Then lastly, new business models. There’s a real recognition that digitization and transformation are not doing what you used to do in the physical world. Digitizing that and translating that is essentially the journey of going from being a caterpillar to a butterfly. Real transformation. How do you reimagine yourself in the context of a world that now is entirely digital?
Customers are thinking very actively about how they actually create products and services that essentially create value for customers entirely digitally. There are plenty of examples in this from telemedicine and from the educational space with new courses coming online which can scale faster than traditional courses limited by a classroom and a professor.
Accenture announced the formation of Accenture Cloud First with a $3 billion investment over three years. Accenture’s $3 billion investment will be used to continue advancing — often together with its cloud and broader technology ecosystem partners — industry roadmaps, data models, and solutions; cloud AI data and AI architectures; integrated full-stack infrastructure and applications capabilities; cloud tools, assets, and automation to drive lower unit cost and innovation; and research and development in edge computing and related cloud technologies.
Accenture Cloud First is a new multi-service group of 70,000 cloud professionals that brings together the full power and breadth of Accenture’s industry and technology capabilities, ecosystem partnerships, and deep commitment to learning and upskilling clients’ employees and to responsible business, with the singular focus of enabling organizations to move to the cloud with greater speed and achieve greater value for all their stakeholders at this critical time.
“COVID-19 has created a new inflection point that requires every company to dramatically accelerate the move to the cloud as a foundation for digital transformation to build the resilience, new experiences and products, trust, speed, and structural cost reduction that the ongoing health, economic and societal crisis demands — and that a better future for all requires,” said Accenture CEO Julie Sweet. “Accenture Cloud First and our substantial investment demonstrate our commitment to delivering greater value to our clients when they need it most. Digital transformation requires cloud at scale, and post-COVID leadership requires that every business become a ‘cloud-first’ business.”
The idea is to help clients across all industries rapidly become “cloud-first” businesses and accelerate their digital transformation to realize greater value at speed and scale. Karthik Narain will lead Accenture Cloud First and join the Global Management Committee, effective October 1.
Julie Sweet, CEO of Accenture, discusses how the company is investing in helping businesses “replatform” in the cloud:
Once In An Era Replatforming Of Global Business
There has been this massive acceleration in the cloud. Really what’s happening is a once in an era replatforming of global business. We are 20 percent in the cloud today. We believe we will move to around 80 percent in just five years. What Accenture Cloud First is about is helping companies get there faster by bringing together all of the capabilities with a singular focus of how are we going to replatform at speed.
Pre-COVID we worked with a ton of the digital leaders who have been out front. What we see is that there are three important components. First of all, with our cloud partners across the spectrum it’s really critical to not just move companies but to move entire industries. That takes the road map, the learning, and the data integration about what problems are specific to the industry. We are going to be investing in those solutions often along with our partners.
The second area is the speed, investing in better automation and technology that is going to help not just move these companies faster but actually also be able to operate in the cloud with increasingly more productivity. Think about the cloud becoming a platform for their productivity.
Investing In Making Replatforming Sustainable
The third place is around talent and sustainability. If you are replatforming entire global businesses in the cloud we have to do so in a sustainable way. This means getting out of the datacenter to the cloud and what it does for climate change. It’s around things like supply chain and making sure that you are building in the ability to have the integrity of the supply chain and that you are reskilling.
We will be investing in making this replatforming sustainable. This is core as we think about post-COVID our belief as companies across the globe and government that we need to make a better future for all by building in this view of all stakeholders from the planet to our people.
Accenture CEO Julie Sweet: Once In An Era Replatforming Of Global Business
“We are firing on all cylinders right now even though it’s a very dynamic environment,” says Box CEO Aaron Levie. “One of the great ironies probably that we’ll look back on is that the industry that is focused on selling digital technology spent so much time in the physical world trying to sell that technology. You can do remote selling over a video conference, over Webex, or Zoom in many cases just as easily as you could in person.”
Aaron Levie, CEO of Box, discusses how tech companies during the pandemic have discovered that it’s more effective for them to sell remotely using all of the technologies they have developed rather than relying so much on physical meetings:
We Are Firing On All Cylinders Right Now
We were super happy about the Q2 that we just announced a couple of weeks ago. We were able to beat on revenue estimates and the guidance we gave on revenue, on EPS, on operating margin, and we also delivered strong billings and cash flow performance. We also raised our guidance for the full year on revenue as well as our operating margin targets for the full year.
We are firing on all cylinders right now even though it’s a very dynamic environment. Obviously, the broader macroeconomic environment still remains a challenge in many sectors. We are seeing growth at this time and we’re seeing a lot of our enterprise customers continue to expand with us as they go and drive broader digital transformation initiatives.
Great Irony: Tech Industry Learns To Sell Digitally
One of the great ironies probably that we’ll look back on is that the industry that is focused on selling digital technology spent so much time in the physical world trying to sell that technology. We’re seeing is that customers want really great products. They want those products to be delivered efficiently to them. You can do remote selling over a video conference, over Webex, or Zoom in many cases just as easily as you could in person. The other benefit is you can now reach more customers in a single day or in a single week.
As an example, we have our customer conference happening tomorrow. We’ll have about 25 000 registered attendees to that event which is three or four times larger than what we would have in the physical world. We’re able to reach more customers and we’re able to have more conversations. We’re ultimately able to support our customers right now with our technology which is helping them move to the cloud and helping them secure their corporate data. It is also easier to collaborate securely across enterprises and then ultimately integrate with all of their applications.
Box CEO Aaron Levie: Digital Selling Helping Tech Firms Prosper
“We saw very strong enterprise growth in the last quarter,” says Box CEO Aaron Levie. “We grew our number of big deals, which we measure as deals above $100,000 in transaction value, by 60 from Q1 to Q2 of this year. We’re happy about the momentum that we’re seeing in the business. Right now we are all hands on deck on supporting our customers and their digital transformation strategies and hopefully really enabling them to have a more secure and more seamless way to work in this environment.”
Aaron Levie, CEO of Box, discusses the company’s continued growth and progress in supporting customers with their push toward digital transformation:
Driving Better Balance Between Growth And Profitability
We’re very happy about the quarter that we just put up. We are stabilizing the growth rate with 11 percent revenue growth. We had nearly a 16 percent operating margin for the quarter. That’s been a trend that we’ve obviously been driving for the past year or so around really driving a better balance between growth and profitability. We improved our guidance on both revenue growth and profitability for the rest of the year. We guided to about 12 to 13 percent operating margin for the full year (FY21) and so we do think these results are sustainable.
Obviously, we want to be able to continue to drive them going into next year and beyond. We’re very happy about the efficiency of the business right now as well as our ability to go out and serve customers and help them power a new way to work in this very very you know dynamic landscape.
All Hands On Deck With Digital Transformation
The first couple quarters of the year we had to step back and figure out in this economy and in this market what could we do to best serve our customer base. In some segments, we had to lean in to make sure that we were better supporting our customers. In other segments, we saw more growth because in spaces like financial services, healthcare, life sciences, and the tech sector there’s still a tremendous amount of economic growth occurring. So we had to do a little bit of a reset in some of our segments, especially the SMB segment. and we’re seeing really healthy pipeline for the second half of the year.
At the same time, we saw very strong enterprise growth among these customers. We grew our number of big deals, which we measure as deals above $100,000 in transaction value, by 60 from Q1 to Q2 of this year. We’re happy about the momentum that we’re seeing in the business. We do expect that we’re going to continue to drive growth coming into the second half of the year. Right now we are all hands on deck on supporting our customers and their digital transformation strategies and hopefully really enabling them to have a more secure and more seamless way to work in this environment.
Need Better Interoperability Between Technologies
In the enterprise segment, you deal with similar questions (as consumer-facing companies do with anti-trust). How do we ensure long-term that you have interoperability between our technologies? If I put my data into one cloud platform will I have the ability to make that data work with other applications from other cloud technologies? Whether or not there needs to be oversight that’s obviously going to be a big question for the government.
What I do think across the industry we do need to continue to work on better standards. We need to drive better interoperability between our technologies. I can say confidently that companies like Microsoft and Google and others are working on making sure that we have greater interoperability between our technology stack. We work with companies like Slack, Zoom, Salesforce, and others to make sure that we have that interoperability as well. But there’s still a long way to go to really create a seamless experience for the broader customer base out there.
No Precedent For The Type of TikTok Deals Playing Out
Aaron Levie: I don’t understand business anymore, but this is very fun to watch.
This is obviously a very strange environment (in reference to TikTok deal rumors). I don’t think there’s been a precedent for this type of acquisition playing out ever. Especially in the back of the antitrust element, you don’t have the logical acquirers of this type of social media technology at play. All you really have are these interesting configurations of maybe not the most classic acquirers of a social tool. This is causing a lot of questions on what is the long-term strategic nature of these deals.
This is especially true for companies that don’t have a strong advertising business model or might not have some of the same demographic within their customer base. That being said, all of the players, whether it’s Larry Ellison or Satya or Doug at Walmart, these are all incredibly smart and savvy business people. I’m sure that behind the scenes there’s quite a deal of strategy going on but it’s certainly fun to watch play out.
Box CEO Aaron Levie: All Hands On Deck With Digital Transformation
“It was a strong quarter for us certainly across almost every metric,” says PayPal CEO Dan Schulman. “What’s happened is the world has accelerated from physical to digital across almost every industry. If you look at health care it’s all about telemedicine right now. If you look at education it’s about remote learning. If you look at the retail industry it is now about online almost over offline or physical locations in store. If you look at the restaurant business you really can’t be in business.”
Schulman says that it is imperative for businesses to move toward a digital-first strategy. “If all you’re doing is trying to serve customers at your location given social distancing and the number of people coming out (you won’t survive),” he said. “You have to be about takeout and delivery. Across every industry, we’re seeing this surge towards a digital-first strategy. All of the tools and products and services that we offer are probably more relevant and important across multiple industries than they’ve ever been before.”
PayPal CEO: Across Every Industry, We’re Seeing a Surge Towards a Digital-First Strategy
“The CIO now has become front and center and central to the business strategy,” says Aongus Hegarty, President of International Markets at Dell Technologies. “From the c-suite perspective, they are now seen as a key individual around investment in technology to enable the business from a growth and transformation point of view. There has been a fundamental change in the role of the CIO.”
Aongus Hegarty, President of International Markets at Dell Technologies, says that the CIO role is now core to the business strategy in the enterprise. Hegarty was interviewed by Tim Crawford, ranked as one of the most influential CIOs and is the CIO Strategic Advisor at AVOA:
The CIO Is Now Central To The Business Strategy
If you stand back and look at the CIO role I think it’s gone from being a role traditionally which was very much in the back office. The CIO was focused on keeping the systems working and maybe often only out in the c-suite discussions when there was a challenge or an issue with systems or email, etc. The CIO now has become front and center and central to the business strategy. From the c-suite perspective, they are now seen as a key individual around investment in technology to enable the business from a growth and transformation point of view. There has been fundamental change.
What’s driving the change is the recognition by CEOs, c-suite, and companies that technology is disrupting industries and disrupting businesses. It’s driving significant efficiency and operational enhancement and/or a brand new set of business models, products, and services enabled by technology. Companies need to quickly move forward around their digital transformation or they will be left behind or significantly disadvantaged quite quickly. There’s an urgency in the c-suite to bring the technology strategy front and center underpinning the business strategy.
The CIO: A Critical Role Now And Into The Future
The CIO within that c-suite is in an absolutely critical role now and into the future. The breadth of skills and competencies required has broadened significantly. Now the CIO role very much encompasses an individual who has vision and collaborates across the organization. The CIO has strong communication skills and ability and can work and navigate between obviously the tactical and executional elements of the role but also the strategic elements of the IT strategy. They they must match that and understand how it fits into the business strategy.
To all the CIOs out there I think it’s absolutely an exciting time and a great opportunity. You can be sure that Dell Technologies will be there every step of the way with you.
“Digital transformation is the opportunity of this generation,” says ServiceNow CEO Bill McDermott. “If you look at the Zoom partnership as one example, all companies want simple, easy, seamless experiences for their people and their customers. This is how you transform companies. This is how you grow and this is how you navigate a digital experience to win. We’re at the forefront of the digital transformation rage in the cloud.”
We’re At The Forefront Of The Digital Transformation Rage
Digital transformation is the opportunity of this generation. If you look at the Zoom partnership as one example, all companies want simple, easy, seamless experiences for their people and their customers. This is how you transform companies. This is how you grow and this is how you navigate a digital experience to win. We’re at the forefront of the digital transformation rage in the cloud. We’re super excited.
If you look at Zoom, they had 300 million users utilizing their system in the heart of this COVID crisis. I expect that will continue to grow. The question was how do you handle 300 to 400 million users, most of them concurrently on a global scale? They turn to ServiceNow to solve that problem. Our customer service management solution is like no other in the marketplace. We can not only use self-help tools for customers, but we can also use virtual agents. Best of all, most of the service that will be required when Zoom does have to remediate an issue will be done predictively on the Now platform.
ServiceNow At The Epicenter Of Helping Zoom Innovate
Furthermore, they also want to have a hardware as a service business model that they’ll bring to offices all over the world. The idea here is simple, touch it once–instant collaboration, instant linkage to the ServiceNow workflow, and then the users get a great experience. That hardware as a service business model will be very large for them because they want to displace existing legacy vendors with their modern solution. ServiceNow is in the epicenter of helping Zoom utilizing our great innovation and ultimately taking both of these solutions to market to help many many customers around the world.
If you look at the tech sector for cloud, companies that are at the forefront of creating great digital experiences, these companies are going to continue to scale, continue to hit new highs and continue to grow. Nine out of ten CEOs have a digital-first strategy before COVID. Now I suspect that 10 out of 10 would have a digital-first strategy. It’s the only way to navigate these choppy waters.
We Get Things Done In Days and Weeks, Not Years
The companies that will do less well, and I’m just basing this on research and current results, are the ones that have heavy time-consuming elongated project cycles or potentially commodity hardware where customers are just not going to invest in that. Whatever they invest in they want a return and they want that return to come quite quickly. In the case of ServiceNow, our business cases show 5, 6, 7 times return on investment and we get things done in days and weeks, not years. That’s what makes the big difference. Speed, value creation, and truly illuminating great employee and customer experiences are what this market is all about.
One of the things that we covered in our last earnings call is that 20 percent of our business is in one-way shape or form tied to industries that would be highly impacted by COVID. What was amazing is we didn’t have one down-sell or one cancellation in that total customer group. What you’re seeing is when you have a platform company that truly can innovate, make work actually work better for people, take cost out, and improve business productivity, that’s the last place even challenged industries are going to cut.
We’ve been very fortunate because the partnerships that we have built with this hungry and humble culture and our near 100 percent retention rate are paying off even in the most challenging industries like the airlines, hospitality, and retail.
ServiceNow CEO Bill McDermott: At The Forefront Of The Digital Transformation Rage
“In this environment, digital transformation is more important than ever,” says VMware CEO Pat Gelsinger. “If you think of it only a few percentages of employees worked from home before this (pandemic). Now it’s 97 percent. Given the length and challenges that people faced this doesn’t go away.”
Pat Gelsinger, CEO of VMware, discusses how the pandemic has accelerated digital transformation and dramatically increased the work from home trend for enterprise companies:
Digital Transformation Is More Important Than Ever
In this environment, digital transformation is more important than ever. If you think of it only a few percentages of employees worked from home before this (pandemic). Now it’s 97 percent. Given the length and challenges that people faced this doesn’t go away. We are going to be here for the next two years where the majority of workforces, a substantial portion, are going to be work from home distributed workforce.
In the face of that IT and technology are more important not less. Sometimes it takes a decade to make a week of progress and sometimes a week gives you a decade of progress. All of a sudden, education, healthcare, and work from home are making huge steps forward. That’s what gives us the view that long-term tech is going to be stronger and software and cloud will be stronger yet than the overall economic environment.
Work From Home Is The New Normal
For VMWare, we were 20 percent work from home. I expect as we continue in this environment we will end up in at 50 to 60 percent over time. I don’t think we are atypical. We’re doubling and tripling the amount of work from home. When you think about that distributed workforce, essentially you go from 100 or 200 sites depending on the size of your company to 10,000 or 20,000 sites.
When you think about every home becoming a new worksite they need to be managed, connected, and productive. They need to be secure. They need good quality and bandwidth. Then they need capacity. That’s where VMWare cloud comes in. That’s our business continuity focus for the future.
We don’t see ourselves as atypical here. This is the new normal. We’re excited to see these transformations happening across the industry and we’re making good progress with customers around the globe.
Every CIO Is Adjusting Their Priorities
We used to generate new projects with POC’s and being face to face with customers. The salesmen always liked to shoulder up with the potential customer. We have to make adjustments. Every CIO is also adjusting their priorities due to this radical shift of a distributed workforce and the new demands that are being placed on them.
Digital Transformation Is More Important Than Ever, Says VMWare CEO Pat Gelsinger
