And Vijay Says…

When I was three – I was pretty clear what I wanted to become . I wanted to be a Station master for Indian Railways , wearing a white uniform and controlling the huge big trains with green and red flags . My grandparents bought me a pair of flags and I used to wave them around in cars and trains .

Couple of years later, I wanted to become a trainer of elephants .

Two things sparked it – first the movie Guruvayoor Keshavan , and second the fact that my grand father had couple of elephants at home , one of which practically was my mom’s pet before she got married. And then I saw my first circus and this career ambition of becoming elephant trainer got expanded to the next “rational” thing – I wanted to be a circus ringmaster! Someone who can train not just elephants, but also horses, lions , dogs etc do cool stuff . I never cared for the human artists who did dare devil acts – I thought that was boring 🙂

This fascination for training elephants continued for a while till I saw how elephants are trained by inhumane techniques . And to add to that, I also read about how elephants are hunted in India and Africa . That was it – I becane dead against the idea of domesticating elephants and other wild animals . They are wild animals who should be allowed to live free .

After a brief consideration of being a policeman , I decided that finally what I “really” wanted to be was a doctor. That lasted till tenth grade when my biology teacher pretty clearly let me know that I had no future in that field . The only part of biology I could relate to at that time was genetics – pretty much every other part made no sense , and I gave up the idea of being a doctor .

Meanwhile , I had developed a BIG fascination for dog shows – both obedience and breed shows . And as luck would have it , I also had two amazing dogs in quick succession . A female yellow Labrador and a male german shepherd . With the former, I did some decent winning in breed ring, and with the latter I pretty much became a top contender in obedience . The dog show bug bit me so hard that my parents were seriously worried that I will drop outbid school and become a professional handler or trainer .

Well , that didn’t happen – and I have an uncle to thank . He was a dog show judge who convinced me that if I become an engineer and earn a good pay – I can buy any dog I wanted . And so I became an engineer , and with my first salary I bought a German Shepherd from Germany .

I found in three months flat that I hated the shop floor life . I ran away from that job and did my MBA . And halfway through I was sure that I didn’t like becoming an investment banker either . I wanted to be a programmer . And so I joined TCS, India’s largest tech shop . And few months later , I landed in USA through them .

The first half of my career, I shifted employers frequently .Either I got bored with repetition, or I couldn’t stand by manager . In the second half – I was happy staying with one employer for long. And from being a programmer – I went on to do other things like functional consulting , Business intelligence , CRM , Project management and sales . And finally when I was going through the partnership appointment process at IBM, I left and joined SAP to start afresh as an engineer again.

It is not that I didn’t enjoy sales – I was always making sales way above my quota when I had a sales role in past. I just never could decide if I am a seller or a builder . Hopefully it will become clearer when I grow up . There are only two things that have been consistent in my career – an undying love for enterprise technology , and treating people the best I can . The love for technology is natural – that has remained rather flat without ups and downs . The part of treating people well is something that I learned along the way, and continue to do. Wll there is another “constant” that I enjoy – work takes me to several different countries, and it is nothing short of fascinating to make friends with people of other cultures.

Tonight I found my little daughter playing with our new puppy, Ollie .

I snapped a photo and put it on Facebook and a friend commented that maybe my daughter will take Ollie to junior handling at dog shows . Nothing would please me more if she does .

That is what triggered this post – it reminded me of my own childhood, growing up with my dogs . And how my ideas of what to aim for in life changed every so often .

Who knows what is ahead when I grow up ? May be everything I learned along the way would finally make me qualified to be a circus ringmaster after all – or may be a full time dog trainer ? I certainly don’t want to be a station master at Railways anymore – I hear they don’t wave red and green flags anymore .

And I certainly hope that my daughter grows up chasing (and changing) her own dreams and balance it with realities of life . I can only hope that she will have a dog by her side throughout her adventures .

I “grew up” in IBM – and one thing IBM does really well is how to transition responsibilities from one leader to another . Although not at very close quarters , I watched how smoothly Sam Palmisano transitioned over to Ginnie Rommety . And what I still remember the most from that time is Sam saying Ginnie got the job because she earned it fair and square , not because she was a woman . I had watched Ginnie with a lot of admiration as she moved from running global services to global sales and then on to CEO .

No one that I know – employees , customers or partners of IBM – ever mentioned to me that they were worried with the transition . There was no chaos or confusion .

Ginnie was well groomed for the job – and inherited an awesome team. She made several leadership changes too at all levels of IBM. Proof of the pudding is in the eating – and here Ginnie has had a mixed year with some bad quarters , unlike her predecessor who went from strength to strength (from a financial point of view that is ). Yet, I never heard someone asking – “what would Sam have done ?” .

As Sanjay Poonen recently wrote in his SCN blog – there is no success without successors . I have a faint memory of a teacher mentioning this in my high school class in the context of sports -so I am guessing this is a biblical phrase . I can’t agree more – the hallmark of a great leader is how little he will be missed when he walks away from his current role . Any one who knows the guy taking over from Sanjay – Steve Lucas – would get what I am saying here .

My managers in IBM groomed me well too ( and I am eternally grateful) for my next steps up, and I was always encouraged to watch out for my team . It was extremely gratifying to see my pal Gagan Reen take over the innovation team after I left and never missing a beat . And I know he is grooming others too . Words cannot express how cool it is to watch the cycle propel itself by paying forward .

This is not to say all transitions are smooth . I worked in a small company before that got acquired . It was anything but smooth . I went from a position where my boss and I could talk on any topic at any point in time , to me needing an appointment with his EA to get an audience . Long story short neither me nor my boss stayed there for long . I later figured almost all of the acquired team dispersed because the transition wasn’t well managed . This was before I joined IBM . I also heard the big company that bought us did not get much repeat business from old customers we had .

And then I joined SAP about seven months ago. When I was considering the offer , I happened to run into Sanjay Poonen . Sanjay invited me to sit in his leadership class for a day in Palo Alto, at the co-innovation lab area. In my entire career – there are only two classes that I found useful for me . Sanjay’s was one . The other was done by Bill Smilie at IBM ( a program called Cornerstone). It was clear to me that Sanjay and Bill were both very good with mentoring the next generation of leaders by practical examples . Neither one preaches – it is learning by open discussion . If anyone who reads this has an opportunity to learn from these two guys – don’t think two times about it , Just DO IT !

A big reason I decided to join SAP was the faith I have in the leadership team . I had known Bill, Jim, Vishal, Sanjay,Rob Enslin, Steve Lucas and many other leaders from before – either via IBM or via the blogger program at SAP. So I had no doubts that I will be joining a company that had tremendous executive bench . Of course, I had no clue that people like Sanjay and Jim will be leaving the company so soon to begin their next adventures .

But having seen how smooth transitions can happen – I figured quickly that SAP won’t miss a beat either . Sanjay and Jim are leaving SAP in great hands .

And there is plenty of continuity – development is under the best possible guy – Vishal . And Hasso is deeply involved in technology direction. These are no ordinary people – and combine vision and execution very well . Bill has been Co-CEO for a while now – and is more than capable of running the show solo . And the strategy that SAP executes to now was formed by the leadership team that included Bill . That should ensure stability of plans .Look at the transition plan – Jim will continue for almost a year. The CFO transition also has a long time line . In short – this is as well planned as it could be .

So as a relatively new employee – I am as comfortable about this as I was when Ginnie took over from Sam when I worked at IBM . In fact, I am even a little more comfortable – given I know these SAP leaders a lot better than I knew the IBM leaders . And it is not just the very top levels – SAP has solid leadership talent right below these folks as well.

And just as no customer expressed any concern about IBM leadership changes – I am confident no one will ask me about SAP leadership changes either .

Last but not least – Sanjay and Jim, I wish you the very best .

My pal Dennis Howlett wrote this piece on diginomica http://diginomica.com/2013/07/20/weekend-speculation-sap-ibm-accenture-2015/ where he speculates about the future of these three companies . Having worked many years at IBM , having competed with ACN all my life as a consultant and now working at SAP – my view is (surprisingly eh?) slightly different to Den’s . I am not saying Den is wrong , just that I have some different opinions. And in some cases, I agree with Den. As always – this strictly my personal opinion, and not my employer’s opinion .

Let me start with IBM . It is a company I admire a lot as most of you know. When other companies think of long term as 5 to 10 years , IBM invests billions every year in research that may not pay for 20 to 50 years . And that doesn’t change even when a given quarter is not doing well .

IBM is 100% ruthlessly capitalist – maximizing share holder value is key and there is little tolerance for not keeping a promise made to shareholders . They are also a highly ethical company – not even a remote case of unethical behavior gets tolerated there . If you think of IBM as an American company , there is some cause of concern on shrinking local workforce etc . However , if you think of IBM as a global company – it is not all that bad .

IBM misses its bets like every one else – but wins more than competitors on long term bets . They systematically got out of HW business before any one else realized what lay ahead. I have heard stories that they also passed on buying intel and Cisco when they were small companies . So yes – good and bad decisions . But there is no denying their ability to see farther than most . I do expect IBM to get rid of more HW business in near term . Not many people know that IBM does R&D for lots of semiconductor companies even if they are not a big semi player themselves . Smart bets I say .

What about services ? Lou G saw services as the next frontier and invested in it . Sam P and Ginnie R grew the services business into a powerhouse . I know there are public references of bad implementations etc – but having worked there for long , I can assure you there are many more successful projects than failed ones .

Services business is heavily competitive – and margins get thinner all the time . IBM has a partner model (like ACN ) which they inherited from PWC acquisition – although partners are just regular VPs , not real partners . This means there is a partner (or several ) at each customer holding and developing that relationships and selling and delivering work there . And then there is an over lay of service lines for each area like SAP, custom development etc . And then there are checkers and double checkers to make sure finance and legal and HR and so on are taken care of. So the over head is significant for maintaining that big organization . Even with periodic restructuring , it is a big cost . And since IBM is all about EPS growth financially – this will be a constant headache .

So I do expect IBM to make a lot of structural changes in services business to make it leaner , especially at higher levels . And since they already have shown that they are not averse to selling off businesses that have limited upside in future – on a stretch, I can imagine IBM even selling off a part of that business to an Indian consulting company who has cash, but does not have the ability to accelerate up the value chain organically . Of course that is an extreme stretch – but not impossible in my opinion . But hey, everything is ok when we speculate, right ?

Even while I was working there , IBM was getting into SaaS consulting . I do expect that to pickup – but in over all scheme, without structural changes it won’t align with their EPS targets .

Will they get out of SAP business ? Just like all good sales leaders , IBM leaders also play the opportunistic game well . Believe it or not – even with steady decline , SAP Business suite based work is still highly lucrative – and IBM has the ability to go after a global customer base . There is a bull market somewhere at any point. IBM has a definite opportunity they will capture to promote blue software via consulting . But it is a tricky game – the doomsday of consulting company is when customers suspect bias . When I was an account partner at IBM – I would do what is best for my client , even though I was paid a salary by the SAP practice . So if the SAP market is lucrative , there is no reason for IBM to get out of it any time soon. The only exception of course is if they sell off the non blue consulting practice as a whole . So generally low odds in my opinion.

IBM software is the one to watch . Steve Mills is a one of a kind leader – I have the utmost respect for him and his leadership team . Apart from waking up late to modern in memory computing, that team made very few wrong steps. They try to control the lower levels of the stack effectively – DB, middleware , security, App servers, ETL, Portal etc . Apps is not something they have a strength in . And they are an acquisition machine – probably the best at M&A in the industry . IBM has a big war chest in liquid assets – they can acquire a lot more companies , and I am sure they will do that .

Whichever way I look at it , IBM as a whole ain’t gonna fall flat on its face . It will suffer some transition pains to restructure , and I do expect them to suffer some pain to meet 2015 roadmap for EPS . Maybe one year after 2015 is going to be painful , but that is about all I think is worst case. What also makes me say this is the depth of executive talent on bench .

About Accenture – I know a lot about them too thanks to them being a major player in SAP consulting . At IBM, many of my managers and peers benchmarked only against ACN . They were the ones to beat . They are very similar to IBM services . excellent customer focus , ethics and skills .

They don’t have software and hardware businesses like IBM. They are also a bit top heavy due to the matrix partner model . But they sell services better than almost anyone else – and have good investment in people . Their relationships at C level will see them through any hardship in long term . They invest in cloud consulting and together with some structural changes , they should be ok . Just like with IBM services , it is possible that another company might buy a part (or all) of Accenture . Not being diversified outside services is a risk for them . And they have no reason in my opinion to ever get out of SAP business .

Finally SAP . Den says SAP can reshape SI business . I doubt that seriously. SI’s – other than really small ones – do not depend on SAP for most of their business . And SAP’s culture is collaborative , not dictatorial . Every time SAP comes up with something new , a lot of time , effort and money is spent making sure ecosystem partners are on board quickly . SAP is a software company first – so services are strictly done on a need basis .

Economics and elasticity of software and services are very different – and SAP has been generally better off letting ecosystem deal with most of its services business .

However , there are couple of important points in the post ERP world . Speed required to get value is in weeks now – not in months and years . And SAP technology projects like Hana do not cater well to packaged implementation approaches that worked for ERP.

This is not a waterfall vs Agile problem although that is how popular opinion is formed . Waterfall won’t go away till customers change buying behavior and Agile becomes more predictable in services business. There is also an analyst push on outcome based projects – pay for result and not effort . This is easier said than done – I have first hand seen how many customers show resistance to gain share contracts . And “measure of outcomes” is usually hard to agree up on at contracting time.

The method of sales – especially direct sales – for services is a big eater of margins . For large ERP or maintenance projects , direct sales is unavoidable . But for a Hana project or a SFSF implementation , I doubt the big SIs can make it work inmost cases via direct sales . I expect them to start using a web store for some types of services one day soon . Maybe they use SAP Hana market place , maybe their own . But I do expect sales model of newer solutions to change in very near future – like within 2 years or so. It’s not just web stores – talent sourcing , billing etc all will change for a part of the services business.

Just like cloud vendors make every effort to discredit larger on premises vendors , some smaller SIs and independent consultants also tend to discredit larger SIs . All sizes of SIs have a segment of market they can serve better than others . I am all for a fair mix of independents and big SIs – but it is rather hypocritical to point fingers at each other . For deep tech expertise – a freelancer might be a good bet . But that alone doesn’t make a project successful . So – I expect no big disruption from small SIs and freelancers for majority of Services business . Pie is big enough to share for everyone .

However I do not expect even a third of the global services businesses to move to cloud by 2015 . Real customers are orders of magnitude more conservative than what is reported on social media . Enterprise software consulting business is a marathon or maybe a steeple chase occasionally – I don’t expect it to change to a sprint by 2015.

As world moves to SaaS more and more – the demand for integration will open up a very lucrative SI model . And to add to that will be the big data movement . So this disruption is just a shift of business from one service line to another for SIs . As my ex manager used to tell me – it is all green dollars whether it is ERP or Hana or SFSF or integration .

Ok that was a LOT of typing on a small phone screen . All I wanted to say was that I don’t see any of the SI companies – certainly not IBM and ACN – take a big hit long term , except a few bumps along the way . And for SAP – I have full faith in Vishal , Bill and Jim to match execution with the strategy they have laid out .

Phew …my thumbs hurt with typing – now I need a beer 🙂