Lead story - AWS and Google Cloud earnings provide gut check on the economy - and AI
Cloud infrastructure earnings give a contrasting view: will the enthusiasm/spending on AI compensate for the cautious view of macro-headwinds? In AWS revenue growth stabilizes as generative AI opportunities offer "tens of billions of dollars" of new business, Stuart quotes Amazon CEO Andrew Jassy:
Companies have moved more slowly in an uncertain economy in 2023 to complete deals. But we're seeing the pace and volume of closed deals pick up and we're encouraged by the strong last couple of months of new deals signed.
Jassy also referred to the generative AI buyer interest - bringing LLMs to bear on their AWS-hosted data. But here's what I found compelling: the potential to fuse that AI interest with revived transformation projects that were shelved. Stuart quotes Jassy again:
There was a significant number of new customer transformations where companies were going to largely move from being on-premises to being in the cloud. That got stalled in 2023 because companies were being more conservative with their spend and wary of an uncertain economy. I think that what you'll see increasingly is that companies will both go back to those transformations they were planning on making, working with a lot of systems integrator partners, as well as ourselves, [and] start to see the production in large scale of the generative AI applications that they're all working on and prototyping and starting to deploy into production.
The plot thickens when you take into account other cloud players, as per Stuart's Google cloud growth slows as Microsoft's rises, but it's all eyes on AI for 2024. Stuart summarizes the complicated mix:
Growth rates may have slowed - temporarily - at Google, but those are still impressive numbers, as are those reported by Microsoft. That said, it’s a sign of the times that on the analyst call, most attention for both companies fell on their AI strategies. It’s clear what the main battleground talking point will be in 2024.
Can AI-related workloads keep the half-full glass from trickling into half-empty, or worse? Time will tell. Yes, AWS, Google, Microsoft and Oracle will spar - often in over-the-top fashion - about who is best suited to handle AI-related cloud infrastructure. I'm more interested in the overall spend, regardless of where it goes. Will aggressive investments in AI lead to tangible results for customers - enough to motivate a deeper push? Will that tech-happy outlook balance the hits we are sure to take from geopolitical problems of all flavors? That's the big story heading into 2024.
Diginomica picks - my top stories on diginomica this week
- HR Technology Conference hits and misses – part two - Brian continues to boil down his flurry of HR meetings. This time around: upstart vendors to watch.
- Identity management requires a joined-up approach to data risks and opportunities - three real world exemplars - Mark Samuels reports on a notable customer panel: "Digital leaders who want to create an effective approach to identity management must ensure their IT specialists work with key business stakeholders to build an enterprise-wide strategy."
- Why electric grid bottlenecks present new opportunities and costs - We're not getting to sustainable business strategies without electric grid transformation. George provides an unsparing progress report.
Vendor analysis, diginomica style. Here's my top choices from our vendor coverage:
- ServiceNow CEO Bill McDermott on generative AI progress - ‘Others issued press releases, we released product’ - Derek on ServiceNow's earnings - and AI - momentum.
- Is SAP's CX for industries move ready for prime time? SAP customers share their challenges - and wins - timed with last week's SAP CX Live event, I looked at how SAP's CX positioning stacks up against customer use case reviews.
- SuiteWorld 23 - pushing the boundaries of 'suiteness' after 25 years of NetSuite - Phil rounds out our SuiteWorld coverage, with important questions on the impact of "suiteness" versus composable plug-and-play. Also see: Brian's SuiteWorld 23 - who co-pilots the co-pilot?
A few more vendor picks, without the quotables:
- How Moore’s Law helps Pure Storage offer users a 'Pure Pays' option - Martin
- SugarCRM - letting the platform do the work in manufacturing - Rebecca
- Observability is a hot topic, but Dynatrace shows it can be much more than seeing - Martin
Jon's grab bag - Gary shares a worthy AI use case in How AI is helping disadvantaged UK young people get into top universities. Mark Chillingworth looks at the state of German tech startups in Deeptech innovation may be the path for future German success. Speaking of deep, Neil wraps an important deep dive series on causality in How causal analysis and AI intersect - methods of causal inference.
As Stuart notes, Meta is almost all-in on AI: Non-AI projects are being "de-prioritized" at Meta (but that probably doesn't include the Metaverse division...). I say "almost" because Meta isn't willing to scale back its Metaverse bets yet, so that futuristic
sinkhole wondervision continues to gobble up investor funds. George reports on an important letter from AI luminaries, AI pioneers call for guardrails on ‘autonomous AI’.
It's important to note that the "guardrails" mentioned in the story title are not the typical use of the word of late, e.g. the effort to impose technical guardrails inside gen AI models. This article's potential guardrails are of the regulatory variety: "urgent governance measures."
The letter's authors argue that national institutions need strong technical expertise - and the authority to respond quickly. We can expect these topics to be front-and-center in diginomica's upcoming coverage of the UK's AI Safety Summit. Chris provides an early look at this moving target in UK AI Safety Summit – the diginomica preview.
Best of the enterprise web
My top eight
- Musk, Dimon, Dalio, Grantham, Fink, Rosenberg on US Recession Danger - I shared a glass half-full view of the economy in the cloud earnings summary. This would be the corrective: a collection of somewhat dire views. As I see it, it's not about huddling in a bunker but developing a winning business response to the circumstances that we face now, with recessionary cycles still looming.
- Surviving a ransomware attack begins by acknowledging it’s inevitable - Louis Columbus gives us a ransomware cold shower, but it's a cold shower we need: "With a business’s continuity and financial health on the line, ransomware is not just a cybersecurity decision. It’s a business decision. VentureBeat has learned of manufacturers paying ransoms to get back up and running — only to be hit again." Also see, from The Conversation: The 23andMe data breach reveals the vulnerabilities of our interconnected data.
- Downtown Tech Office Shuts Down Its Free Cocktail Bar For Employees, CEO Says 'The Office Is Dead' - Hybrid work conundrums are nowhere close to being resolved: "They're nixing the lounge thing and just hoping people will still drop by the office to interact where they can. The focus, when it comes to team building, will be on trips that the company takes and encourages."
- Right skills, right person, right role - A podcast transcript from McKinsey brings out the possibilities in shifting from limited/flawed credentials-based screening, to skills-based hiring. I believe in this approach, but: I'll concede that soft skills assessments are one of the trickiest areas.
- Constellation Research's Connected Enterprise 2023: What we learned - Constellation's Larry Dignan with an illustrated review of CCE 2023. Dignan also wrote a panel summary, Software development becomes generative AI's flagship use case - though I would mitigate some of the panel's upbeat views with the kinds of reality checks on code quality controls Joe McKendrick has been covering off so effectively.
- Four Lessons From the Carta Communications Train Wreck - Dave Kellogg takes a breather from his SaaS metrics/success posts to thoroughly deconstruct Carta's problematic PR approach: "Anyone who says 'all PR is good PR,' never worked in public relations."
If you've never won buzzword bingo before, I like your chances after reading this LinkedIn post:
This is why you have to tread carefully while using LinkedIn, those synergies can be tougher to escape than an ocean riptide
— Jon Reed (@jonerp) October 28, 2023
I'm not calling this a whiff exactly, but: Cruise slamming the brakes on its self-driving urban trials shows that AI innovation is not an inevitable march forward: US probes GM's Cruise robocars over pedestrian close calls. There will be peaks, valleys, and PR overhype bog pits. Solving self-driving will solve many AI dilemmas involving adaptation, generalization, and reducing costly outliers, but despite all the hand-waving, we're not close. That's good, we have enough AI already in production - some of it in need of much more adult supervision - to keep us busy for quite some time.
Oh, and Josh Bernoff reminds us: crap writing is crap writing, whether it's AI or not. Oh, and please don't play the Celine Dion any louder:
Stereo Speaker Battles Blare Celine Dion Tunes and Torment a New Zealand City https://t.co/JmzMT9g4ks
-> one person's culture is another person's late night musical purgatory....
— Jon Reed (@jonerp) October 28, 2023
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.