Enterprise hits and misses - Salesforce, Workday and Box set the earnings tone, but the pandemic's impact on IT budgets is just as real

Profile picture for user jreed By Jon Reed August 31, 2020
Summary:
This week - big earnings news from Salesforce, Workday and Box show the enterprise software upside. But the pandemic's continued impact on IT budgets and services must also be reckoned with. We've got contrasting news on the future of the physical office. As always, your whiffs.

success-failure-road-for-businessman

Lead story - The pandemic impact on IT clouds and budgets

MyPOV: Time to step back, evaluate the pandemic's IT impact, and plot the implications. Kurt got the ball rolling with Pandemic consequences - the big get bigger, the IT cloud dependency gets greater.

Companies big and small have been tested by the downturn, but as Kurt writes, big tech got bigger:

The winners in this disruptive environment were mega-cap corporations that had already built the requisite online infrastructure and could exploit online channels to supply customers with goods, business services, entertainment and social interaction.

And no, not just Apple and Amazon. The top six retailers: Walmart, Amazon, Target, Home Depot, Lowe's and Costco, comprised 29.1% of all U.S. retail sales in the second quarter. That's up 3.5 points over 2019. AWS, Microsoft Azure and Google Cloud services are also booming.

I refuse to use the word "silver lining" in conjunction with the COVID economy. But: these circumstances have done more to motivate "radical digital transformation" than a celebrity keynote huckster selling digital hot cakes slick marketing campaign ever could. As Kurt concludes, pandemic fortunes are unfairly divided:

While the pain of every crisis is unequally distributed, this one is most unusual in its great largess toward a few industries, cloud computing and online services being standout examples in the IT world.

I came to a similar conclusion in Not all IT spending is created equal - behind the numbers of the Computer Economics IT spending survey. As I wrote:

Not all IT spending is created equal. The impact of COVID-19 can be brutally different, even within the same sector. If we think digital acceleration and mission-critical projects, that's probably the state of IT as best I can tell. That puts legacy migrations without business imperatives on the back burner. But it also sidelines the "sexy technology" sell - pitching AI or blockchain for its own sake.

The Computer Economics team is now updating its May survey with fresh data from IT leaders, to see if the relatively optimistic data on "How long will the budget cuts last?" has held up. From what I was told, early results indicate a longer-haul view setting in. That may come as a surprise to stock watchers eyeing the big earnings reports this week from tech bellwethers. How to reconcile? Start with this: rising tech giants don't raise all boats.

The unequal distribution of adversity should not prevent us from seizing the opportunities at hand. For enterprises, it's clearly about applying digital - in a savvier and more creative/deep way than competitors.

Diginomica picks - my top stories on diginomica this week

Did COVID kill entire categories of the retail industry? Omni-channel shifts at play at Nordstrom and Urban Outfitters tell the tale - speaking of unequal distribution of adversity, welcome to the retail industry. Stuart argues that those comparing Norstrom to shopping-essentials-providers like Walmart or Target isn't fair:

A fairer comparison would be with the likes of Neiman Marcus, Lord & Taylor and Brooks Brothers, in which case the comfort blanket comment for Nordstrom becomes - at least we've not filed for bankruptcy!

Damning with faint praise indeed. As Stuart notes, The Gap has been aggressive in its digital playbook. Yet the omni-results aren't there yet: Face masks are all the rage at Gap, but can't cover up a decidedly mixed omni-channel picture.

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

A couple more vendor picks, without the quips:

Jon's grab bag - I took a hard look at B2B selling amidst the fray in B2B selling in a COVID-19 economy - digital acceleration changed the status quo. Can ROI selling help? Uncle Den got zapped by Zapier turned crummy tech tail-chasing into lessons learned in Weekend rant: when a flashy UI and lo-code don't cut it.

Finally, Chris directed his intellectual wrath to the UK's algo-grading meltdown in Friday Rant - academia still drinking the algo-pop despite the A-Levels fiasco. I'm giving Chris the diginomica quote of the week:

The real lesson from last week's cock-up is this: the first thing that gets automated in any organization is not some repetitive task or a human job – they both come later; it's the organization's assumptions about the world. If those assumptions are wrong, then there are consequences.

Best of the rest

Waiter suggesting a bottle of wine to a customer

Lead story - Accenture layoffs - an indicator of slowed DT service demand?

MyPOV: For some years now, Accenture has led the charge of digital transformation services (and pretentious ads about their incredible transformation). So when I saw UpperEdge's piece, How 25,000 Accenture Layoffs Will Impact Customers, I wanted to know: is this an indicator of slowed project demand? Seems like a yes, but let's dig in.

Keep in mind: Accenture's CEO noted that they typically do lay off their 5 percent lowest performers each year. So to some extent, this is business as usual. But as UpperEdge's Greg Hall notes, there is a difference this year: those five percent won't be replaced. As Accenture says, "we're not in a demand scenario."

There are two issues here: a broader market signal and a heads-up for Accenture's customers. On the first point, Hall notes:

This statement, combined with Accenture's decision to halt standard hiring practices, does seem to indicate Accenture's bear market view for its services in the near term.  It also suggests Accenture is preparing for even further staffing reductions.

For Accenture's customers, Hall advises to expect more turnover in resources. He adds:

In particular, high-performing senior resources are at risk of being transitioned out of projects as Accenture looks to put their stars in front of new prospects to win new business.  If Accenture is unable to draw down on these resources from existing accounts, don't be surprised if they underwhelm you when presenting their team and capabilities.

On the broader note, what I take from this is: we shouldn't be waiting for the economic recovery to happen. This is one more example of why we are in the long game. We get closer to recovery when we take steps to impact projects in bold and fresh ways. We get further from recovery when we huddle over our dwindling resources and sit the next rounds out. Running leaner doesn't mean passive.

UpperEdge had a particularly strong week... also check 8 IT Maintenance Cost Reduction Strategies.

On cybersecurity

Honorable mention

Overworked businessman

Whiffs

So CenturyLink had a rough Sunday: CenturyLink outage: Dozens of websites and apps were down. "CenturyLink, an internet service provider that is supposed to keep websites up and running, was down itself for much of Sunday morning."

Re: the AI hype machine, I got a kick out of this Reddit commenter pushing back on 5 Ways AI is Disrupting Human Resources Management, which had doubtless been posted in the AI subreddit more than once: "Not this bullshit again." Lolz redditor - welcome to the asspirational enterprise.

I forgot to include this cheap-but-deserving shot at Forbes last week:

Our "smart" future careens towards us:

Finally, I'm not sure if this is a sign I am doing well in the pandemic or losing it completely, but my video playlist now includes footage of a cockatiel singing "The Imperial March" from Star Wars to a pet rabbit:

I'll let you be the judge... see you next time. (p.s. he sings a sparkling rendition of Another One Bites the Dust also.)

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, Zendesk and Salesforce are diginomica premier partners as of this writing.

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