CxOs aren't thrilled with their enterprise technology vendors, becoming frustrated with copilots that don't play well together, and spending a good amount of time on procurement and consolidation.
Those were some of the takeaways from Constellation Research's BT150 CXO meetup
Projects from the BT150. We typically start off these calls with a simple question: What are you working on? Here are some of the projects that stood out.
- A virtual customer rep. One of our CxOs worked on a virtual space that combines the website with a physical store and a synthetic employee, which operates in a store and can show products and promotions as well as transact. The virtual employee can leverage the website content, generative AI and multiple language. The pilot is still in the learning stage but looks promising.
- Data centers in Africa. One person in the BT150 is working on data center buildouts in Africa and noted challenges ranging from rain forests, lack of roads and other infrastructure. The upside to these data center challenges is that the jobs involved can form a middle class.
- Mainframe migrations aren't easy. You work through a multi-year transformation and the final step is moving off of the mainframes. The hardest part of moving off mainframes are data migration, risk and cost. Mainframes are stable and can also be the most cost effective. The challenge isn't the compute, but the underlying data.
Security consolidation. Enterprises are looking to consolidate security vendors and platforms and not buying a tool unless it replaces something the company already has. Enterprises have realized more tools don't equate to better results. Vendors are either pitching platforms or forming alliances to work better with the rest of the security stack.
BT150 2024:
- BT150 CXO zeitgeist: Data lakehouses, large models vs. small, genAI hype vs. reality
- BT150 CXO zeitgeist: Low marks for SAP RISE, process automation, change management, AI risk
- BT150 CXO zeitgeist: AI trust, AI pilots to projects, VMware angst, projects ahead
- BT150 nominations | 2023-2024 class
Data breach resiliency and response moves to the forefront. CxOs are tasked with post breach plans and execution. The biggest challenge to responding to a cyberattack is that key parties (security intelligence), analysts and key stakeholders aren't talking.
Copilots aren't working well together even when they're on the same platform. Customers highlighted frustration with copilots breaking and not being well integrated with sibling applications. The problem? Vendors are racing to launch AI and scrimping on product development and integration.
Vendor management, procurement and margin compression. There were multiple takeaways about vendors and some of the comments from our CxOs were less than flattering. Key takeaways include:
- Oracle has a second life as a cloud provider and relevant IT vendor due to its database as well as its Oracle Cloud Infrastructure. The tech stack Oracle has created is strong. What's the problem? Oracle is a pain to deal with. Oracle is great at getting you set up and terrible when you're locked in. Oracle has done a few great things--cutting data egress fees, the Azure partnership and cloud efficiency--but is saddled with a bad reputation due to audits, compliance and sales practices. Oracle's reputation isn't about tech as much as it is the sales approach.
- ServiceNow's platform reduces costs even as customers consolidate on the company. ServiceNow has become a key abstraction layer for enterprise IT. ServiceNow gets the margin compression game and appears to be on the right side to make it work.
- Categorize your vendors based on whether they are trying to preserve margins or enable you to save by compressing them. Salesforce, Microsoft and SAP are playing the margin preservation game, which will require a different negotiation strategy. The bet is that the vendors that become a lever for margin compression will win out over those trying to preserve margins.
- The bench of enterprise disruptors is thin. The CxO dance with massive enterprise software and cloud providers will continue because there aren't enough new vendors to disrupt them. Disruptive challenges are either acquired or stuck due to a dismal IPO market.
Disruption will have to be home grown. Given the state of the enterprise vendor landscape, companies that want competitive advantage will have to build their own automation and best process practices. You can't wait for an enterprise vendor to innovate.
