Friday, October 31, 2014

The Haiku of Finance for 10/31/14

Wednesday, October 29, 2014

The Haiku of Finance for 10/29/14

Choosing discount rate
Realistic cost of cash
Match to project length

Monday, October 27, 2014

Saturday, October 25, 2014

Thursday, October 23, 2014

Tuesday, October 21, 2014

Monday, October 20, 2014

Sunday, October 19, 2014

The Limerick of Finance for 10/19/14

Ebola explodes with alarm
New outbreaks are causing much harm
Markets are aware
Pricing health threat out there
Health care sector begins to re-arm

Friday, October 17, 2014

Thursday, October 16, 2014

Wednesday, October 15, 2014

Tuesday, October 14, 2014

The Haiku of Finance for 10/14/14

Cloud stack marketing
Acronyms proliferate
All as a service

Listicle As A Service (LaaS) Rounds Out Enterprise Cloud Definitions

Bloggers often employ the listicle device when they have nothing new to say.  That's not how Alfidi Capital rolls.  When a listicle appears on this blog, it will be all about something innovative.  The cloud computing "as-a-service" meme calls for a thematic listicle taking cloudisms to a whole new level . . . the Listicle as a Service (LaaS).

Software as a service (SaaS) is the first part of the cloud stack for those enterprises who prefer a buffet approach to IT purchases.  If you only need to buy a CRM module, then you don't need the whole ERP solution.  Salesforce figured this out first, then Adobe jumped in, and Microsoft eventually figured it out.  Oracle is just now figuring it out.

Platform as a service (PaaS) is the second part of the cloud stack for the operating system, databases, and programming languages that are the exclusive provenance of nerds.  In between configuring PaaS for clients, nerds can be seen running their video games in the background.

Infrastructure as a service (IaaS) is the third and final part of the cloud stack.  The data center's hardware of servers, racks, network connections, and other physical stuff become the rented or shared assets an enterprise no longer needs to own.  IaaS is the nerd version of the sharing economy trend.  Outsourced data centers will see extreme growth as Big Data crowds into the increasingly cramped space of Moore's Law.

Information Technology as a service (ITaaS) turns the IT department from a cost center into a profit center.  That is harder than it sounds.  It doesn't just integrate the three cloud stacks above.  It's supposed to use a bunch of best practices from a proprietary library.  I hope CIOs read about Cloudonomics before they announce an ITaaS strategy.  Lots of IT people aren't natural sales people, so any "products" they create must find a market outside the enterprise.  This requires a huge reorientation in how IT perceives its customers; the buyers aren't all inside the firm anymore.

Desktop as a service (DaaS) is now called virtualization.  It makes your desktop apps look like they run from your local PC, but they really run from the cloud all along.  Desktop PCs are losing market share and they may evolve into very specialized local workstations for a cloud presence at some big piece of physical plant.

Mobile Backend as a service (MBaaS, or just BaaS without the mobile) sounds like it involves a private dance at a gentlemen's club.  It actually leverages the data supply chain of SDKs and APIs to put the cloud's power onto a mobile device.  I'd use an app for purchasing dances in the champagne room if it meant I could see some hot chick's mobile back end.

Data as a service (another DaaS) is just the raw data with no applications to process it.  Big Data and Small Data need someplace to go, and those enterprises still wedded to on-premise software use DaaS just to move the flows to their client desktops.  It's too bad this data DaaS shares the same acronym as the desktop DaaS above.  These things get confusing for anyone who's not a genius like me.

Database as a service (DBaaS) sounds like an interim solution for enterprises that need more than DaaS but aren't ready for a fully mature cloud deployment.  The outsourced database uses management protocols that may or may not include virtual machines.  I suspect DBaaS will evolve into a teaser marketing ploy that cloud providers use to encourage late adopters to gradually enter the cloud stack.

Identity and policy management as a service (IPMaaS) sometimes goes by "access management," according to the results of my Google search.  Enterprises who need to manage policies for both internal users (BYOD) and external users (privacy, regulatory compliance) will need more of this service as their product lines grow in complexity.  Proliferating devices inside the enterprise means the IT folks need to stay on top of single sign-on and universal access.

Network as a service (NaaS) is a model for flexing the three cloud layers as their traffic patterns change.  It sounds great in a marketing pitch.  Making it work means having analytics on the back end to predict demand for nodes in real time.  Accurate predictions need tons of input from domain experts who understand an enterprise's seasonality, geographic presence, and other things unique to its markets.

Everything as a service (XaaS) is all of the above combined in one package, as far as I can figure.  It will probably be the preferred solution for noobs who haven't yet figured out their enterprise needs, or naive gladhanders who think going whole hog into the cloud without a total cost of ownership (TCO) analysis will make them cool.  It will also be the preferred fallback marketing ploy for cloud sector providers who target late adopters.

Baloney as a service (BaaS) is my own term for fly-by-night cloud operators pushing vaporware and empty promises.  There will be plenty of these people running around as the less tech-savvy sectors of advanced economies migrate to the cloud.  There's already a lot of baloney thanks to multiple startups promising miraculous cloud integration with social networks and localization services.  Most of that ground is already covered.  First-mover advantage came and went.  The first-movers who won are massively overvalued after their high-profile IPOs.  The stragglers are about to be vaporized as they wildly spend through their cash.

I just explained everything there is to know about the cloud in this listicle.  Okay, you got me, maybe not everything, but enough to impress dumb (but hot) chicks at a bar.  A finance person like yours truly can only scratch the surface of the cloud.  

Monday, October 13, 2014

Sunday, October 12, 2014

The Limerick of Finance for 10/12/14

The market can have a wild week
It thwarts what investors still seek
A volatile swing
Just a random thing
Day traders are still up a creek

Friday, October 10, 2014

Thursday, October 09, 2014

Wednesday, October 08, 2014

Monday, October 06, 2014

Sunday, October 05, 2014

The Limerick of Finance for 10/05/14

Don't fall for a scammer's slick talk
Ask for details and watch as they balk
Catch them in the act
They cannot discuss fact
Have a good laugh and then take a walk

Saturday, October 04, 2014

Friday, October 03, 2014

The Haiku of Finance for 10/03/14

China has tech plan
Steal from Silicon Valley
Don't fall for that trick

Alfidi Capital Debut Visit to SVIEF 2014

I attended the annual SVIEF conclave last week down in Silicon Valley, and it had a big Chinese flavor.  It wasn't quite wonton flavor, but there you go.  I delayed writing about it for a week because I was busy at Oracle OpenWorld this week.  These things run together, you know.  Here comes a blast of my wisdom.  Some of you will not be able to handle the intensity.

The standard introductions from local politicians were notable for the mention of the EB-5 and EB-6 immigration visa programs.  The EB-5 immigrant investor visa is for people who want to invest at least a million bucks here in the States.  The EB-6 startup visa has been languishing in Congress for some time and is not yet a legal reality.  I did not hear anyone mention the E-2 investor visa, which makes sense because China is not on the approved list and this was a China-centric conference.  The US needs rich people to bring their cash here since rich Americans would rather buy yachts than invest.  Plenty of investors from Canada, Australia, New Zealand, and Switzerland should know those programs exist for them to bring their hard currency here in the event of US hyperinflation.

I only have one thing to say about the Chinese Consul General's appearance at SVIEF.  The People's Republic of China has declared a strategic goal of encouraging Chinese intellectuals and entrepreneurs to return to China.  Every policy the Chinese government crafts to send Chinese academics here leads directly to technology transfer from our country to theirs, by any means necessary.  This is clearly a matter of national security.  Washington must pay attention.

Cleantech investment guru Ira Ehrenpreis gave a keynote on energy innovation.  I liked the dude's graph showing how low-risk project finance and high-risk VC money still can't bridge a "valley of death" for unfunded energy concepts.  I know a startup that is working on a solution to bridge that valley right now, but that's all I'm going to say for now.  Crowdfunding can probably bridge some of that gap in small amounts.  Ira's lurid descriptions of extreme weather were good fear generators for a cleantech sales pitch even though they were out of any data context.  All of his stats assuming continued growth in energy set up his main point about China as a renewable energy growth market, but it sure took him a long time to get there.  He loves grid storage but I think most VCs know little about material science in batteries.

Ira's speech was full of anecdotes, name-dropping, brand-name logos, and pedigreed universities.  It was like a tech tent revival with little hard data.  Give him credit for helping build Tesla Motors, but be prepared to take credit away if that company can't find a market larger than rich people who want green subsidies.  Tesla's upper limit on gross revenue is defined by its market size (the number of urban, high-income drivers who can pay a higher price point for a car with limited range), the continuance of green rebates, and a very specialized supply chain (lithium, graphite, and cobalt).  Good luck scaling up to produce for the middle class if even one of those three pillars is challenged.

The other keynote from Dr. Steven Chu was somewhat interesting.  I did not expect him to mention his failed tenure as US Secretary of Energy.  He was probably the smartest guy to ever lead the DOE but his lack of focus showed in the department's failure to identify the most promising areas for research.  The unfortunate scandals over DOE-backed loans to failed cleantech companies showed the policy limits of picking winning companies instead of picking winning tech.

Dr. Chu mentioned some early mentoring relationships that inspired him to build ARPA-E on the concepts he learned at Bell Labs.  He inspired me to construct an equation for greatness as a function of proteges who become better than their mentors.  Here it is . . . the Alfidi greatness function . . .

f(G) = (P x P)(M)

where . . .
G = greatness
P x P = square of protege's value
M = mentor's value

Do you see how easy this genius stuff is?  Well, it's easy for me because I'm a genius.  I hope Dr. Chu would agree.  Dr. Chu also said solar's cheapness below some "power law" bankrupted many companies.  He may have meant Swanson's Law for the solar learning curve but he didn't say it, nor did he give any indication that US manufacturers can learn from it to make their PV panels cheaper.  He couldn't just come out and say that China's dumping of cheap subsidized solar components on the market helped bankrupt US companies, or that failed companies like Solyndra were incompetent, or that DOE officials were too dumb to get their funding priorities straight.

Dr. Chu loves "systems integration" but ignores its Big Data component.  I can totally understand how a policymaker can miss that given the tendency toward data-free analysis in Washington, DC.  Here's something else we can't afford to miss.  The on-board computer in a modern car constantly draws power from its battery.  Battery life may now become dramatically shorter, requiring serious innovation.  I want cleantech fans to discuss their plan of action for that problem besides praising Tesla's Gigafactory.

Steve Wozniak had a conversation with Steve Westly and got a free drone as a gift.  I wouldn't give free stuff to a billionaire but that's just me.  The Woz is a big thinker who excels at pushing divergent concepts.  Entrepreneurs who are serious about growing a huge enterprise are just different that way.  Woz's big lesson was to pilot lots of little money-making concepts.  Scale up the one you like the best.

Woz's enthusiasm for small, powerful tech is at odds with how most humans use tech.  Most people will keep taking selfies and listening to music no matter how powerful their smartphones become.  Real innovations will still come from high-IQ people, not ordinary schmucks playing with their phones.  I am convinced that people with IQs below the population's median should not try to innovate.  Big Data can tell us which combinations of IQ and MBTI produce the most and best innovators.  Let's collect the data on innovators' intellects and personalities before we make more malinvestments in small-scale tech.

I'm not getting off my soapbox about how Woz inspired me at SVIEF.  He is a lifelong hacker, tinkerer, and maker.  He likes 3D printing's potential to make new things, but he underestimates the human predilection for normalcy.  I'm certain most humans will use 3D printing the way they use smartphones, not to do new things but to make the same things they always use.

My final observation about Woz is that no matter what questions the moderators asks him, he takes off and builds three or four related concepts into that question.  That's how he succeeded in business, folks.  Entrepreneurs set an agenda and drive it with a powerful personality.

Tim Draper spoke before the startup pitches kicked off.  The organizers were disorganized and made him wait.  He did not get impatient at all; instead he maintained his bearing and chatted up some folks in the audience while the show got its act together.  I've seen Tim in action before and he remains humble and personable.  Every VC should act that way.

Tim disappointed me by sharing his fondness for Bitcoin.  I'll give him credit for paying attention to the fin-tech space but he's looking at the wrong tech if he thinks a blockchain is a currency.  He bought Silk Road's Bitcoin from the government to help capitalize his own Bitcoin startup ecosystem.  The dude lost me when he said Bitcoin transactions are secure, and have no fees or friction.  I just LOL at people who predict this thing is going to be some supervalued supercurrency.

Tim also wants to disrupt education with Draper University.  One urban survival tactic on his curriculum is for candidates to go from Silicon Valley to San Francisco and get any job offer at all in hand within a few hours.  I object to the ethics of deceiving a potential employer just to secure a paper job offer, because turning it down the next day throws that employer's enterprise into further short-term turmoil.  Yeah, Tim, that's disruptive alright.  I guess it's okay for rich people to teach rich kids to prank small businesses hiring short-term manual labor, because those will be the targets of Draper University's time-sensitive job seekers.

I finally got fed up with Tim Draper when he went off on his Six Californias initiative, which has thankfully failed to qualify for the ballot.  His analogies with pro-growth liberalization in Asian economies made no sense.  If California is so anti-business, why not push for liberalization in Sacramento instead of breaking up the state into six enclaves that must then liberalize on their own?  Some new proto-states may not go for Singapore-style reforms without prompts from Sacramento.  Come on, dude.

I wasn't done with the Bitcoin stuff at SVIEF.  I attended a panel discussion of Internet finance and Bitcoin.  Let's just say that the former has been working fine for twenty years, and the latter will never work.  The panelist dudes (yes, they were all male) were totally confusing currency with investment securities, claiming Bitcoin is both.  They were just plain ignorant.  Do these pro-China people even know that the Chinese government hates Bitcoin?  Aside from its questionable legal status, even the panelists admit that Chinese vendors use Bitcoin as nothing more than a marketing gimmick.  More gimmicks called "appcoins" are the next evolution of this stupidity.  Even dumber is the virtual listing of appcoin startups that will go public without an IPO, or something like that.  It's hard to describe the thought process behind such inanity without sinking to a child's level of ideation.  Tim Draper said something similar in his talk about such listings allowing early investors to cash out their stakes in secondary markets without paying IPO-related fees.  Yeah, right.  The portals that make that work now don't accept Bitcoin but do accept SEC and FINRA regulation.  The rule of law protects investors; Bitcoin protects no one.

I spent very little time with the panels on cloud and Big Data.  They had nothing new to say.  No one on those panels mentioned Cloudonomics or the data supply chain.  I will listen to experts but I have enough expertise myself to know when to cut my losses.  I was getting pretty disappointed at the inanity substituting for critical thinking from quite a few of these people.  I did learn that "online to offline commerce," or O2O, is a cute buzzword.

I always sit through the VC panels at conferences and this one had a VC investment forum specifically addressing capital for the mobile Internet.  I could find no evidence on the Web of their quoted "Zuckerberg rule" that human data doubles every year.  One dude thought Chinese companies would keep investing in Silicon Valley.  Wanna know why?  I'll bet it's because their state-owned enterprises (SOEs) use that cover to acquire our tech.  Someone finally admitted that the US and China have radically different competitive landscapes.  Well, duh!  The US has the rule of law and China has the rule of Party oligarchs.

The VC panel said something that made my head spin:  "The Series A raise should reflect 18 months of cash needed in a worst-case scenario.  Especially in this obvious bubble."  I was disappointed that they think the purpose of an A-round is to survive until the B-round rather than immediately scale up the company to profitability.  Maybe it's VC greed to keep participating in future rounds, dilute away founders, and raise their exit multiples with subsequent valuations going higher in each inflated funding.  I'm very cynical.  They did offer some helpful tips to audience members, like seeking out VCs who invest specifically in the sector, location, and stage of one's startup so time isn't wasted chasing the wrong investors.  I would offer that crowdfunding portals can narrow the search to those VCs that will consider an investment.

The conference was primarily focused on Chinese-American entrepreneurs but they welcomed me anyway.  I welcomed the chance to see some hot Chinese-American women, who invariably have really nice legs and hips.  One hot woman manning an expo booth had the hottest idea I saw that day.  Her company would 3D print a custom bra insert from a tablet scan of a woman's chest.  Wow.  I sure wanted to see her demonstrate the tech but she assured me it worked.  I don't know if I'll return to SVIEF next year but I do hope more women, both Chinese and American, scan their goods into a tablet and share them with the world.  Sharing is caring.  

Thursday, October 02, 2014

The Haiku of Finance for 10/02/14

Cloud sector leaders
Fight for software market share
End of on-premise

Identifying Cloud Vendor Pain Points at Oracle OpenWorld 2014

What a busy week!  I took Oracle OpenWorld 2014 very seriously, unlike a lot of sales managers and product engineers who just went to goof off for five days.  I studied Larry Ellison's welcome keynote, Didier Bonnet's Capgemini digital transformation keynote, and Larry's cloud keynote closely for real solutions.  Workable solutions must fix real problems.  I went back to the expo floor to find those problems in enterprise computing.

I have picked up a new habit at the largest technology conferences.  I take a CustDev approach to identifying the biggest pain points among as many exhibitors as possible.  I canvassed exactly 28 vendors, mostly ISVs and system integrators.  I tried wherever possible to speak to the most senior people present but I most often ended up talking to their sales team leader.  The sales people in any organization are the front line fighters in the marketplace but they don't always have the C-suite's holistic perspective.

I identified three major pain points for small and medium sized businesses (SMBs) in the enterprise IT sector:  human capital management (HCM), go-to-market tactics, and Oracle's flagship product weaknesses.  I had to sort through tons of griping about market conditions and tech specifics to find those three themes.

First, HCM poses several problems for vendors.  They have trouble finding the right employees with the right skills for their product life cycles.  They also have trouble keeping their senior people (including top executives) focused on tasks where KPI dashboards would help.  This is not a problem for Oracle to solve unless the vendors themselves suddenly start using Oracle's HCM apps.  The apps looked pretty good during keynote demos, so the vendors should at least try using them to manage on-boarding and retention.

Second, vendors have difficulty finding enough customers within their identified verticals.  Target marketing doesn't work without the right channels to get the word out about products.  Some of the vendors have difficulty explaining their value proposition.  Once again, these aren't areas where Oracle can be helpful.  The exhibitors who said these things often came across as incompetent; perhaps they are evidence of the HCM problem above where quality people are hard to find.

Finally, vendors had many gripes about weaknesses in Oracle's product strategy.  The most common gripe was "lack of innovation" in Oracle's apps.  I suspect this is partially a function of Oracle's acquisition strategy, as if vendors are confused about how some newly purchased company fits into Oracle's product universe.  The support the vendors get uses many non-standard protocols, and there's confusion about Oracle's licensing agreements and outsourcing requirements.

The single most articulate description of Oracle's problem was a perceived mismatch between form factors.  Here's the best way I can summarize this perception.  Hadoop's form factor doesn't match the typical data center's hardware configuration.  It works better on small Linux systems, which are the opposite of virtualization.  Hadoop makes a bunch of small systems look like one big system.  Virtualization makes a big system look like an app small enough to fit on a single device.  The Oracle keynotes I attended did not make nuanced distinctions between Hadoop architectures and virtualization.  Indeed, I came away with the impression that Oracle treats the two phenomena as interchangeable within the same architecture!  If a non-IT person like me comes away with that impression of Oracle's product architecture, imagine the heartburn in the partner ecosystem as systems integration consultants have to explain to clients which cloud configuration optimizes a specific hardware configuration.

The long form factor problem I just described leads into my general conclusion that Oracle will have significant difficulty in the coming cloud price war.  I identified the four primary combatants in my article on Larry's welcome keynote:  Oracle, Apple, Amazon, and Google.  I'll throw in Salesforce because they obviously have a role to play in which company dominates each layer of the cloud stack (SaaS, IaaS, PaaS).  I will now make three major predictions for the near-term evolution of the enterprise cloud sector.  Please note that this is all speculation; I have no idea what the leaders of these companies are actually going to do.  Prepare yourselves for my genius!

First, Apple will win the price war in cloud services.  I make this prediction primarily on the basis of Apple's cash position.  Apple has limited enterprise cloud offerings now but their new partnership with IBM means they can add familiar capabilities to their mobile ecosystem.  IBM's Watson Analytics brings an unbelievably powerful computational engine to anything Apple builds in its cloud.  I expect Google to be a solid second-place challenger to Apple in the cloud, based on its profitability and strong ecosystem for developers.  These two companies will dominate at least the IaaS and PaaS stacks of the cloud.  SaaS is another story, which I will address below.

Second, I expect Amazon to encounter serious problems in a cloud price war.  They cannot avoid fighting Apple and Google on prices, and now Oracle can squeeze them on a third front.  Amazon's inconsistent history of profitability places it at a severe disadvantage in any price war.  Once it realizes it has lost this price war in the next year or two, it will face a very hard choice about what kind of company it wants to remain.  Amazon's long history of problems is so well-known that it warrants a Wikipedia page.  I believe that Amazon Web Services (AWS) would be a suitable candidate for spinoff if it remains at least somewhat healthy.  Some data center REIT looking to grow its capacity cheaply would salivate at the chance to grab AWS.  The remainder of Amazon would then return to the core of its origins as an e-commerce portal.  Maybe rump Amazon would make sense in a tie-up with another e-commerce portal.  It makes even more sense now that eBay and PayPal are splitting up.  History records how the Ottoman Empire was once called the "sick man of Europe."  I believe Amazon will go down in history as the "sick man of the Internet."  Feel free to quote me on that score.  I want to be the first analyst to go on record with that phrase.

Finally, I expect Oracle and Salesforce to fight it out for SaaS dominance once they realize they will not dominate the other two cloud stacks.  These two companies increasingly resemble the Big 3 Detroit automakers before the 2008 financial meltdown.  They favor acquisitions of other SaaS platforms over internal product innovation.  I expect Salesforce to eventually move ahead in SaaS market share because Oracle still has the extra hurdle to cross in moving its legacy on-premise apps into the cloud.  Salesforce is already in the cloud.  I may be making too much of Oracle's difficulty, and it will certainly remain a major vendor even if Salesforce moves ahead in CRM and ERP sales.

I did find one guy who could probably solve all of the problems in the enterprise cloud sector.  That's me with Albert Einstein above.  Okay, it's not really him, but it was cool of one vendor to dress up one of its team members as the famous scientist.  The real Albert Einstein supposedly said he would spend far more time describing a problem than solving it.  Good for him.  I spent far more time looking at hot booth babes than I did solving any cloud sector problems.  One hot booth babe was so enthralled with me that she offered to take off with me right there and then to go jump my bones on the beach.  I declined the opportunity to nail her because I'm very selective with babes.  I must be getting more handsome by the day because attractive women are making me those offers with increasing regularity.

I also enjoyed the multiple beer stations and after-hours receptions that are part of the OpenWorld experience.  I ate for free several nights in a row thanks to the largesse of major sponsors.  I did not witness any executives making drunken fools of themselves.  The big shots who host rich executives in their hotel penthouse suites declined to invite me up for champagne and caviar.  I wonder what could have caused that oversight.  Maybe I should nominate myself for Oracle's Markie Award just to make sure they don't repeat this unfortunate error next year.

I had to kick back at Oracle's branded "Duke's Cafe," really an open-air lounge that closed off a block of Taylor Street near the Hotel Nikko.  That gourmet root beer you see in my hand was outta sight.  Alfidi Capital has now completed a tour-de-force at Oracle OpenWorld.  The conference was enjoyable but Dreamforce is more fun.  I look forward to being a marquee speaker at any of these big tech conferences, provided they give me a free full-conference analyst pass, access to root beer, and the attention of the hottest babes in their partner networks.  Larry Ellison did a cameo in Iron Man 2 and asked Tony Stark to give him a call.  Hey Larry, you can call me instead.  I'm also named Tony and I'm just as entertaining.

Full disclosure:  No positions in any of the companies mentioned above at this time.

Infosys and Larry Ellison's Cloud Keynotes at Oracle OpenWorld 2014

I liked Larry Ellison's opening keynote enough to seek him out for his main Oracle OpenWorld 2014 keynote later in the week.  He drops mentions of Oracle's first big project for the CIA into his public talks, but there's nothing secret about Oracle's success under his leadership.  Larry stepped down as CEO just before OpenWorld and is now free to play with tech all day.

Mark Hurd replaced Larry as CEO, and introduced the Infosys guy who would be Larry's warm-up act for this keynote.  If the name Mark Hurd rings a bell, it's because he was forced out at HP after actress Jodie Fisher stirred up some controversy.  I've seen Ms. Fisher's body of work online as a soft-core star, and she's welcome to stir me up any time she likes.  She is not the least bit shy about showing off her natural gifts and displaying bold enthusiasm for her work.  There's a lesson there for tech CEOs, somewhere.

Anyway, back to the Infosys dude's opening act.  I heard a lot of boilerplate talk about culture, tech evolution, and renewal of something or other but anything specifically actionable must have been lost in translation.  I thought government officials and senior military officers excelled at spouting bland platitudes until I started studying the tech sector.  My understanding of "asset efficiencies" from finance does not match the tech use of the term in scheduling, downtime, and other stresses on hardware.  Frustration with shelfware has finally convinced enterprise vendors that they must sell their clients something they can actually use.  This is the genius behind cloud SaaS, where you only buy the capacity you need and can lease more later for surge periods.

Mister Infosys brought out several other executives from Hitachi, Diebold, and Level 3 Communications but what they said added little value.  They bored me to death with generic statements on improving efficiencies and serving customers.  None of them mentioned hard metrics on ROI, revenue growth, costs saved, legal penalties avoided, or reaction times compressed as a result of better IT use.  If any of these executives have read about Cloudonomics, I'd like to see evidence they understand its implementation.  I really wish Jodie Fisher had come out in her birthday suit instead of hearing all these tech suits.

Larry Ellison finally took the stage.  He can think on his feet, explain complicated concepts, and navigate a live database in true polyphasic style.  Comfort with thinking and acting this fast lends itself to designing software with the multitenancy needed for cloud leadership.  I learned new terms from Larry . . . schema, instance, data, and databases can now all jump into the "as-a-Service" model.

The in-memory queries in Larry's demonstration ran much faster in one format (depending on the nature of the query, whether it is transactional or analytical), so dual-format databases have value.  He unplugged an on-premise database and easily plugged it into a cloud-based container, showing how quickly an Oracle client can move to the cloud.  I still think they'll be challenged in moving some of their SaaS to the cloud but I'm willing to let them surprise me.  His whole point in demonstrating human capital management (HCM) app extensions is that they build out in SaaS to maintain a consistent aesthetic.

Larry is in his element as a programmer when he does product demos.  Future tech titans need to note the expansive style of leaders like Larry that goes way beyond engineering technical competence.  Oh BTW, Larry noted that database administrator (DBA) job tasks are now mostly automated with cloud apps.  This means tech experts now have competition in IT careers from non-tech business domain experts.

I grok his desire to make Oracle a leader in all three cloud stacks:  SaaS, IaaS, and PaaS.  I think the company's strongest offerings are in SaaS, and competing in the other two layers leaves Oracle vulnerable to Apple and Google.  SaaS players can win in someone else's ecosystem if their end-user functions are easy to use and affordable.

I got in line for this keynote early enough to get a seat closer to the analyst and blogger section, although I elected not to sit there.  I wanted to watch them in action.  Maybe half of the analysts took serious notes or typed furiously at the OpenWorld keynotes I attended.  I know these things can get boring, but important information does get out to the public this way.  I know what will hold analysts' attention during conference keynotes.  Someday when I give a keynote at a major tech conference I'll have a hot babe like Jodie Fisher come out starkers and introduce me.  That would really liven things up.  Until then, Larry Ellison gives me enough thought leadership to be productive.

Didier Bonnet's Capgemini Keynote at Oracle OpenWorld 2014

I had enough time at Oracle OpenWorld 2014 to attend Dr. Didier Bonnet's keynote on leading digital transformation.  His book Leading Digital is destined for every tech executive's shelf because it has enough concepts from the Capgemini pedigree to impress their office visitors.  The Oracle executive who introduced him looked really stiff, with his fingers locked in front of himself.  I watch a lot of top executives present at big conferences and they are impressive sometimes.  My own impressions follow.

Dr. Bonnet believes we can codify the DNA of successful companies in a 2x2 matrix.  Consultants from Capgemini and other global shops have certainly codified the 2x2 matrix formula for successfully presenting concepts.  Get ready for the ultimate 2x2 matrix comparing digital capability to leadership capability, with "Digital Masters" excelling at both.  Companies achieving digital mastery don't cluelessly experiment with tech like "Fashionistas" or transform in narrow ways like "Conservatives."  No sir-ee, bub.  If you want your company to be a Digital Master, you can take the expensive route of hiring consultants to show you a 2x2 matrix.  Alternatively, you can wait until Leading Digital comes to your local public library and see this 2x2 matrix yourself for free.

I want to explore the metrics consultants use to evaluate revenue generation efficiency.  It sometimes appears connected to headcount (i.e., revenue per employee) but that can't be the only KPI.  Executives executing a digital transformation need a balanced scorecard of revenue efficiency measures per employee, product line, market segment, asset count (trucks, railcar, store, hotel, whatever).  They also need traditional financial metrics from Cloudonomics.

The customer experience (CX) attracts customer data that becomes Big Data when amalgamated with credit history, geolocation, seasonality, and other things external to one purchase decision.  Big Data is the foundation of every automated and optimized process that's about to transform every sector.  The cloud services price war between Oracle and its biggest competitors will attract every enterprise into the cloud and force them to find paths to digital mastery.

Digital adoption no longer requires either/or choices between fully automated routine processes and human empowerment that allows daily decisions.  I do not understand why Dr. Bonnet limited his discussion of archetypes to five discrete choices.  There's no reason why a company can't be flexible enough to adapt them all to a business model.

I agree with Dr. Bonnet that true transformation demands strong top-down vision and leadership.  The C-suites should remember what I said above about KPIs.  The KPIs determine whether product lines are meeting the right milestones.  The CKO can help by reviewing the DIKW pyramid and evaluating whether the transformation project makes the upward flow of data more efficient.  The traditional waterfall transformation process may be less successful than an iterative process with beta experiments and A/B tests.

The other senior Oracle executive who spoke after Dr. Bonnet related some product updates.  Oracle is making big commitments to unstructured data, visualization, and in-memory tech.  The Hadoop "data lake" is some sort of unstructured source where Big Data flows out.  The BI systems increasingly use visual analytics for our post-literate culture.  I suppose the next step is gamifying the results to incentivize non-IT managers to use the full range of analytic suite tools in their workflows.

I was impressed with the demonstrated visualization tools available at Oracle Cloud.  Machine learning helps pick the appropriate format for each data set, and visualization tools enable APIs that enable drag n' drop mobile apps.  Any domain user can create "data mashups" from mixes of in-house Excel models and Big Data feeds with no coding needed.

Enterprise BI systems can even track external social media feeds for a contact.  I presume this works for contacts loaded into both CRM prospect pipelines and HR recruiting pipelines.  Oh BTW, Oracle and other leading enterprises insist that HR is now human capital management (HCM).  This is the ultimate in know-your-customer behavior.  I've told people that any skilled professional who does not have a social media footprint will soon be invisible in the workforce because they will have difficulty quantifying their economic value.  Individuals need as much digital transformation as enterprises.  

Wednesday, October 01, 2014

The Haiku of Finance for 10/01/14

Tax and bond district
Pay for local improvement
Merchants have a voice

Simple Tweaks to San Francisco Chamber of Commerce Policy Outreach

I attended a recent San Francisco Chamber of Commerce event after an absence of many years.  I no longer prioritize networking because I don't have a business model requiring contact in person.  I went for a glimpse into the distilled thinking of the local business community.  The Chamber gets most of its policy approaches correct.

The San Francisco Transbay Transit Center under construction would be a lot more expensive and take longer to complete without Mello-Roos financing.  The Chamber correctly stands behind the terminal and its financing.  I once knew an investor who complained that he stayed away from Mello-Roos bonds because of some tax hit he took one time.  If the dude had been properly diversified he wouldn't have felt so much pain.  I can't wait to see how awesome this mixed-use facility looks once the dust clears.  The biggest downside is the time it takes to get the thing built.  I can't believe the total timeline from initial planning to full operations takes over two decades.  The environmental studies took nine years, which IMHO is at least eight years too long.  The Chamber needs to throw its weight behind reforming The City's planning process.

The Chamber's SMB members made their voices heard opposing minimum wage hikes and health care taxes.  They should get vocal every time some City Supervisor with no private sector experience demands further controls on business hours and employee scheduling.  Not a week goes by without some dumb Supervisor pushing another boulder onto the business community's back.  The trouble with San Francisco politics is the power of the progressive Left's hold on the labor unions and non-profit activists who double as campaign staffers.  The Chamber's members have those fools financially outgunned and need to fight back.

The private sector can solve San Francisco's shortages of skilled labor and housing is left to its own devices.  Politicians won't leave success alone.  Rent control and minimum wage laws are enough of a burden but their political popularity makes them untouchable in the absence of a deflationary economic crisis.  The business community can gain a foothold for experimentation with more special-purpose business districts.  The effort that allowed the UCSF Mission Bay campus to flourish should be replicated under the auspices of districts that remove urban blight.  Businesses will take pride in their neighborhoods if they have a say in how neighborhoods are managed and funded.  The City's OEWD has a process for forming new Community Benefit Districts.  I think the Candlestick Park neighborhood would be perfect for a new district.  Get one started, Chamber people, so the big development planned there has a local governance mechanism in place.

I may return to a Chamber event if I have time, or if the local mandarins want to hear my genius.  I don't need to exchange business cards with any store owners or unemployed consultants.  I do need to lend my voice to a pro-business constituency.