Enterprise hits and misses - Coronavirus takes its supply chain toll, and the AI business gets an unlikely wake-up call

Profile picture for user jreed By Jon Reed February 24, 2020
This week - Coronavirus infects tech supply chains as the economic impact gets real. The AI business gets deconstructed, via an unlikely source. Ultimate Software and Kronos join HCM forces, and get scrutinized. Your whiffs include Marriott, and more Marriott.


Lead story - Coronavirus takes its toll on Apple and Alibaba - and they won't be the last - by Stuart Lauchlan

MyPOV: I've held off on giving the coronavirus story top billing in hits and misses - but I can hold off no longer. I don't want to ramp up the sensationalism or stoke the mounting fears.

But: this certainly shows why the annual tech predictions pajama party dartboard is a useless exercise. How many anticipated what's shaping up at THE macro-economic event of the year? Even if the better case scenarios for containment play out, the economic impact must be reckoned with. Stuart:

iPhone supplies are “temporarily constrained” which will have a knock-on detrimental effect on global sales.

Most of what I can say here would simply fuel rampant speculation. But Stuart is right; we know this much:

The question for now is how badly certain tech and digital players, both in China and abroad, will be impacted rather than whether they will.

Stuart raises some interesting silver lining via Alibaba - that this virus will spur digital commerce over the longer haul as behaviors change. But it's too soon to derive such comfort. For now, we'll have to settle for this:

It's worth noting the efforts made by the likes of Apple and Alibaba and others to protect their employees and to assist the health authorities on the frontline to combat Coronavirus and contain the crisis.

Diginomica picks - my top stories on diginomica this week

Vendor analysis, diginomica style. Here's my three top choices from our vendor coverage:

A couple more vendor picks, without the quotables:

Jon's grab bag - It was a big tech week for Brexit, though perhaps not in a flattering way. Derek's in his wheelhouse: And so it begins...despite reassurances, Brexit brings ambiguity to UK’s data protection priorities. Though the EU didn't fare much better on diginomica, this time from Stuart's pen: The EU pitches ethical AI regulation and "a single European data space". (Try not to be too underwhelmed...)

I managed to ruffle some unexpected feathers with my latest, If soft skills truly matter, you better have an ROI result. Here's how Dellbrook JKS pulled it off (Turns out soft skills can spark hard debates). Neil calls out some data science ostriches in The data science conundrum - why do commercial businesses eschew causal analysis?

Best of the rest

Waiter suggesting a bottle of wine to a customer

Lead story - Why the AI business isn't as lucrative as the hype machine implied

MyPOV: I don't usually lead with a piece from a VC firm, but The New Business of AI (and How It's Different From Traditional Software), by Martin Casado and Matt Bornstein of Andreessen Horowitz, is a different matter. Their premise: for fundamental reasons, the AI business doesn't have the gross margins of the SaaS business. So how should founders "build, scale, and defend" great AI companies? The authors caution against the AI business challenge:

  • Lower gross margins due to heavy cloud infrastructure usage and ongoing human support;
  • Scaling challenges due to the thorny problem of edge cases;
  • Weaker defensive moats due to the commoditization of AI models and challenges with data network effects.

It might be tempting to improve margins by pulling humans out of the loop, but that's (largely) not going to work. Even when it does work, cloud infrastructure costs may go up accordingly:

The need for human intervention will likely decline as the performance of AI models improves. It's unlikely, though, that humans will be cut out of the loop entirely. Many problems – like self-driving cars – are too complex to be fully automated with current-generation AI techniques. Issues of safety, fairness, and trust also demand meaningful human oversight – a fact likely to be enshrined in AI regulations currently under development in the US, EU, and elsewhere.

Of particular interest to software buyers, and all of us who are the potential victims of this mad scramble for AI profitability delighted recipients of the AI hype machine: your AI tech isn't necessarily better than my AI tech.

In the AI world, technical differentiation is harder to achieve. New model architectures are being developed mostly in open, academic settings. Reference implementations (pre-trained models) are available from open-source libraries, and model parameters can be optimized automatically. Data is the core of an AI system, but it's often owned by customers, in the public domain, or over time becomes a commodity.

Naturally, Andreessen Horowitz, being AI optimists and advocates of the AI transformation, believe founders can still overcome these roadblocks and build "defensible" AI businesses. But it's refreshing to see a precise argument for why the AI business is difficult. It also gives us useful clues on what AI marketers might be trying to obscure or overcome.

Honorable mention

Overworked businessman


I have no idea of the story's veracity, but headline of the week surely goes to "Woman walking to Northcliff with naked 'black Jesus' reported missing by family." Hopefully all get back unscathed. Still no word from sportscaster Trey Wingo on why he would pass off a stolen bear photo as lifestreaming: Trey Wingo posts pic of a bear on his back porch, even though the pic is from 2017. My fave Twitter comment: "You have to be a massive weirdo to lie about things like this. Like, MASSIVE."

I realize you didn't expect (or need) me to weigh in on the overflogged "Friends" reunion, but hey, I like to go against my own better judgement typecasting: 

Six aging "celebrities" sitting around talking on an old couch = creative copout. Trying to do an updated one-off episode would have been the proper/gutsy move.

Sneaking closer to the enterprise, Microsoft ran away with buzzword bingo this week, via a plentitude of technical platitudes on all that is wundermuss about Office 365:

AI-driven insights, a holistic 360-degree view of a customer, personalized customer experiences across every touchpoint, and real-time actionable insights.

Not bad, but their marketing team will never top their "to the cloud!" goodness, which appears to have been scrubbed from YouTube. Finally, Marriott's not out of the woods yet. Thomas, Jung, Global Head of SAP's Developer Advocacy team, got botified:

Thomas Jung Marriott fail

To which I helpfully replied:

Which conjures up a keeper from a childhood classic:

Some kind of help, is the kind of help, that helping's all about. And some kind of help, is the kind of help, we all can do without.

See you next time... If you find an #ensw piece that qualifies for hits and misses - in a good or bad way - let me know in the comments as Clive (almost) always does. Most Enterprise hits and misses articles are selected from my curated @jonerpnewsfeed. 'myPOV' is borrowed with reluctant permission from the ubiquitous Ray Wang. 

Image credit - Waiter Suggesting Bottle © Minerva Studiom, Overworked Businessman © Bloomua, Businessman Choosing Success or Failure Road © Creativa - all from Fotolia.com.

Disclosure - Oracle, Workday and Salesforce are diginomica premier partners as of this writing.

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