Clicky

The Future of the High Tech Industry – The SAP Industry Cloud Series – Futurum Tech Podcast Interview Series
by Daniel Newman | July 28, 2021

On this special episode of the Futurum Tech Podcast – Interview Series I am joined by Patrick Maroney, High Tech Industry Executive Advisor for SAP Industries and Rick Willardson, Director of US Sales at Intel. This is the final episode in a new series — done in partnership with SAP and Intel — where I will be speaking with advisors and executives across seven different industries on the state of their industry and how SAP Industry Cloud powered by Intel technology plays a vital role in the future.

The Future of the High Tech Industry

In our conversation we discussed the following:

  • A recap of that last year in the High Tech Industry
  • How better planning and technology will improve data usage
  • An overview of the SAP and Intel partnership
  • Why organizations need to shift to industry cloud

The High Tech Industry, like many other industries, had to rapidly accelerate digital transformation last year. My conversation with Patrick and Rick explores these changes and a little bit more. It’s definitely one you don’t want to miss.

If you’d like to learn more about the industry cloud and the Intelligent Enterprise strategy, be sure to check out our research brief: Embracing the Intelligent Enterprise for the High Tech Industry.

You can also listen to my interview with Patrick and Rick below or on your favorite streaming platform — and if you’ve not yet subscribed, let’s fix that!

Don’t Miss An Episode – Subscribe Below:

 

Disclaimer: The Futurum Tech Webcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Daniel Newman: Welcome everybody to the Futurum Tech Podcast. I’m Daniel Newman, principal analyst and founding partner at Futurum Research and your host for this show. This is part of the Futurum Tech Podcast Interview Series that we are doing in partnership with SAP and Intel where we’re going to be focusing on industry clouds. There’s going to be a series of these, seven at least, that we will be bringing out. We’re going to talk to different experts from SAP, from Intel, really about what’s going on in specific industries, how the cloud and specific applications, cloud capabilities, hardware technologies are being built to deliver better performance and better outcomes for businesses and companies in those particular industries. Today, I have Patrick Maloney from SAP joining me along with Rick Willardson from Intel and I’ll be bringing them on in just a moment.

Now, quick disclaimer before I get started. Just know everything we talk about on this show is for information and entertainment purposes only. While we will be talking about publicly traded companies in no way is anything we are saying, be considered in any way financial advice. Just got to get that out of the way.

Excited to have Patrick and Rick joined me. So without further ado, I’m going to welcome these gentlemen to the stream. How you guys doing?

Rick Willardson: Hey, doing well. Thanks for having us.

Patrick Maroney: Thanks for having us, Dan.

Daniel Newman: Yeah, it’s good to have you guys here. Had a lot of fun talking to you backstage in the green room about kind of what’s going on in the tech industry. So, thrilled to have you here for this episode of The Futurum Tech Podcast.

First of all, before I do jump in I always do like to do quick introductions. I think everybody that listened in so far was able to hear from me sort of what we’re going to be talking about today. Of course, I told them who you are and what company you worked for, but they don’t know anything about you. So, without further ado, Rick, I’ll just let you start, but just a quick intro and tell everybody about the work you do over at Intel.

Rick Willardson: Okay. Yeah, sure. Thanks Daniel. Been at Intel about 16 years and I have a focus on driving the partnership with Intel and SAP and kind of growing our business together. Anywhere from our CPU business, growing SAP HANA, S/4HANA and driving and growing that partnership. I focus on the North America region and we have a worldwide team. My manager is sitting in Germany out near Waldorf. So we have a very tight relationship with SAP that we’ve had for multiple years now. So, very excited to be here.

Daniel Newman: Yeah, welcome to the show Rick. Patrick?

Patrick Maroney: Yeah. My name is Patrick Maloney. I’ve been at SAP for 13 years now. My role is as a Principal on our Industry Advisory Group. Essentially what that means is I help both our customers and occasionally our prospective customers understand what SAP’s doing to drive business outcomes to the high tech sector.

Daniel Newman: Yeah, no, absolutely. Great to have you here, I really appreciate you taking the time to tune in and join us. So much going on in this space and a lot to talk about today. I’m going to bounce between both of you. I’m going to provide a little color commentary. As an industry analyst, I’ve always got a perspective and as those working on the inside with the customers I love hearing from you guys as to what is going on.

So, setting the stage. High tech, by the way, has had quite an interesting couple of months, and year for that matter. 2020, everybody knows the global pandemic was a massive impact on every industry, every business. Every industry and business was impacted a little bit differently, but I think it’s safe to say that we all were a little uncertain of what our world was going to look like starting kind of in that February period and through about April, May it was unsure. Tech, fortunately, was very resilient, the cloud in particular. Things that could be consumed on demand, both for consumers and businesses tended to do very well, while some of the restructure was hard.

I said in an early article I wrote on market watch before the pandemic I said, “Semiconductors would eat the world in 2020.” Everyone had said software, but I was already a little bit ahead of that saying, “Semiconductors, boy, are they eating the world.” We’ve seen this massive chip shortage discussion that’s been going on. We’re seeing supply chains somewhat ravaged by the demand.

At the beginning of the year last year, nobody was going to need PCs anymore. Then the pandemic happened and then everybody needed PCs, and then families realized they didn’t just need one they needed two, they needed three, they needed four. Oh, by the way, we were going to sell more smart TVs, more tablets, which by the way is great for Intel, Rick. Not even to talk about the automotive space, which everybody said there’d be no demand. Companies started cutting demand and then everybody wanted to buy a vehicle.

So, we had a crazy year and it really did create a lot of chaos. This really is a sort of interesting underpinning because the high tech industry with all this software, all this AI, all this data and extensibility sort of collapsed under its own weight a little bit and it’ll figure this out. So, this is kind of just an interesting talking point I thought I get started on it. Patrick, you had some great behind the scenes commentary, but it is a very strange situation and data insights, processing, power tech, and the partnership you guys have is really a part of the solution.

Patrick Maroney: Agreed, right? I mean, I heard a great person say once that you do not cost cut your way to growth. I think when the going gets tough, you batten the hatches and I think we saw that last year. Especially in the March to April timeframe. You saw cell phone sales, for example, drop 17% from March to April when all that was made back up in June. But at the same time you saw companies like Apple closed all their stores in North America, retail stores, and not lay off a single person and retrain them to take online orders.

So, I think you mentioned resilience. I’d just say that Charles Darwin once said that when the going gets tough, it’s not the strongest that survive. It’s the ones that are the most adaptable to change and who can change the fastest. And resilience is really being driven by that. I think that’s where companies like SAP and Intel come into bear because we make technologies that collapse the latency that it takes to access data and make informed decisions on that data, and then take outcomes with that, that drive business outcomes.

Daniel Newman: Yeah. No question about it. The company as a whole is well positioned, the partnership is very well positioned. I’m going to talk about that more in a minute, but Rick, just talking about what’s going on in the world. I just want to give you a chance to weigh in.

Rick Willardson: Looking at 2020, I mean, we had to make massive changes within our IT organization. Intel’s got about 110,000 employees and we had to move pretty much everybody except for certain critical roles within our factories to online. We had to make massive change, deploy in the cloud and get remote tools working in collaboration and pull all of that together and we saw other companies do that, investments in cloud technologies and CPU performance and compute, to help drive that transition. In addition to that we’re seeing things follow from that where companies like Twitter, or Facebook, or Spotify are going to move more to a remote type of workforce or hybrid. We’re going to see more of that in the collaboration tool. So, it’s been really exciting to see all that play out and where it’s taking us post pandemic once we get to that point.

Daniel Newman: Absolutely. I want to take a moment too, and step back. Some of our listeners are super technical, some are probably users of SAP in their businesses. Some, if not all, probably use an Intel chip, whether it was a 486P, a Pentium chip back in the day, or hopefully they’re using is today for themselves or something, an Adam processor in a tablet. But, interestingly enough, I don’t know if everybody fully appreciates how a company like Intel might partner with a company like SAP. So, Rick, I was just kind of hoping maybe you mentioned in your introduction, just talk a little bit about where … Because we’re really talking about this data center focus and the data center group at Intel. Then the HANA on the database team at SAP and that there is really this important interdependence that exists in these companies. But I don’t know that everybody understands. So do you mind just taking a minute to kind of introducing that?

Rick Willardson: Yeah. No, no problem. No problem. So that was what excited me about this role is SAP and Intel’s partnership, which has been going for multiple, multiple years. What we do is we sell. We’re the deployment partner, whether it be on-prem or SAP is clear pivot to cloud first, is that we can be the deployment partner with our CPU’s. And without getting too technical, bringing in very high core to memory performance for S/4HANA. To bring those really rapid insights and have these large, massive databases that our customers will use, our joint customers, when they make the decision to go with SAP and then deploy. And pull in the CPU processing power to get really fast actions, fast insights for financial decisions, supply chain, improving efficiencies or whatever they can do to take that improvement within that in-memory database. So we’ve had a really great partnership and we pull in other technologies to really give customers the best in class experience.

Daniel Newman: Yeah, there’s no question that this partnership runs deep. I’ve been at many of the various rollout and launches in Intel’s a data centric events where there’s always a nice component of that event that focuses on this partnership and how the company’s building process technologies that really do enable more utilization of data. That is this big inflection point we’ve reached right now. So you heard me frame this whole thing around our supply chain shortage that happened to exist in the industry high-tech itself. Really what’s going on in this world is businesses are under this great pressure to transform how they go to market, how they drive revenue, how quickly they’re able to deliver customer experiences. This is where data plays a role.

So we like talking about data for the sake of data industry. I’m a pundit. I love talking about the buzz words, transformation, big data, agility, adaptability. I think they’ve all actually been said already in this meeting. But, Patrick, I’d like to get your take on this. This really comes down to being able to do more of what customers need to be done. This partnership, the whole idea of the industry cloud sort of introduced that. Introduced what you guys as SAP are thinking about the industry cloud. Then really how you’re thinking that deeper partnerships with Intel, but also greater capabilities are really enabling companies to do more with data that could potentially reduce issues like the ones we have. Maybe not fix them entirely, but could we do improved planning and of course deliver better outcomes?

Patrick Maroney: There are companies that actually control where they write the financial data to their discs in their data centers if we talk about the old world. Why do they want it? Because there’s a fractional difference in the timing if you access data on a disc if it’s at the edge versus if it’s buried somewhere short of that edge. So, there’s really been a revolution to stop writing to disc, and to bring that data into memory where it can be accessed in real time.

The partnership with Intel and SAP began as the development of a high availability analytical appliance that took some of the data processing, built it and brought it right into the ASIC. This solution we market with called HANA. In the first instance it was a very fast in memory database, but it was written to run underneath an enterprise resource planning solutions. So we’ve got all the security features that a Fortune 500 Company that has to be Sarbanes-Oxley compliant. CFO’s signing their name to the financials can’t put that at risk. So, it’s got all the security built into that. That’s the nature of the relationship with Intel.

Now, if we move this into the 2020s and we’d start talking about the fact that the entire business model has moved to an outcome-based economy, where everything is being offered as a service. License based software has moved to the cloud. Data centers have also moved to the cloud. Processing power is in the cloud. It’s about accessing that data with minimal amount of ETL as you can, with this minimal amount of duplication of data, as you can. You have to have these big capabilities of running huge of data very, very quickly. It allows us to build smarter applications, to drive better business outcomes from the access of data. So we move away from being a gut driven business to a data-driven business and therein lies this wonderful, wonderful partnership that SAP and Intel have.

Daniel Newman: Where, Rick, does the processing. I hear a lot of what Patrick’s saying. I just kind of want you to elaborate on this because I’m going to come back next to sort of the outcome and back to sort of what customers can expect. But the technical stuff is not just devil in the details. There is a little bit of hay. Building this ecosystem, and this is something Intel is very focused on, is its select solutions. It’s partnerships, it’s having things that are pre-built because it’s kind of like having a car with 1,000 horsepower but doesn’t have the right gear ratios, doesn’t have a great suspension. It’s like you got all this power, but the thing can’t even stay on the ground. When you have a lot of processing power and compute, you need really software written and designed to enable companies to maximize this. So, is this really where Intel shines in the partnership with SAP?

Rick Willardson: Yes. Yes. So in addition to, obviously, our CPUs, our Eon platform of products we’ll bring in other technology. We have this Optane persistent memory and the idea behind that is to have really fast access to data, as Patrick was pointing out, and drive the insight. But we also take it up a level and look at the platform level, where can we optimize with our ISB partners? We have a really solid long-term relationship with SAP that we can then, and other ISVs, where we can continue to partnership and bring at that platform level how we can optimize the performance. We do the same thing as they’re migrating to the cloud. How could we deliver a solution, not just beyond a number of components, but a full solution to enable a platform for getting the optimization. Whether it be SAP or other ISVs to drive the optimal solution on Intel as your deployment partner.

Patrick Maroney: And if I could, Dan, I’d just add to that there’s huge pressure, especially in the high-tech market sector, to change and evolve the business models. Everybody’s moving to some form of an annual recurring revenue model. Innovation has always been the pinnacle of the high tech sector. How fast can we get to market, and how fast can we get to market at volume. Now you have all kinds of changes in technology like 5g and IOT, which allow for new developments of applications. The net of all this is no other time in history for business models across all industries, but especially high tech under pressure to evolve faster. So, how do you know if you’re going to completely change the way that you go to market to a new way? How do you know that it’s going to be profitable? How do you tie your sales and e-commerce and CPQ to the vary into manufacturing? How do you tie it to understanding what your true costs are?

So, when you price something, you’re pricing it, not by throwing a dart, but by knowing what’s really happening. How do you make all of that consistent with what’s happening in your finance department so you know that you’re not going to violate any revenue recognition.

Especially you’re moving this ARR model where you’re combining hardware, software and services, and this goes across all industries like I said. I mean, I’ve read recently that the cost of goods sold on an automobile can actually exceed Silicon OSC and exceed the amount of steel in a car. Right?

If that’s true, you think about the dynamic changes that happen. Now you think about all the pressures on that supply chain. If you see a downturn coming ahead of time and you cancel your orders in semiconductor, and some other sector sees a surge in demand and they booked that capacity, it could be a long time before you’re able to deliver interactive 5g IOT enabled dashboards. You see what I’m saying? It’s all interconnected these days, and it all depends on moving your business through an interconnected platform that underneath it all is driven by massive compute.

Daniel Newman: Which you jumped right ahead, Patrick, you were reading my mind. We’re going to take this question in the direction of sort of the value. So a high tech company, and again, high tech, you mentioned it can be service, it can be hardware, it could be an OEM that’s sort of an implementer of technology. It can be someone building process, it could be a company that builds and licenses its technologies. These are all tech companies. They’re all doing different things.

I actually think everybody’s a tech company now, but that’s a little bit of a different story. That works better for me than for SAP trying to segment its businesses. But in all serious, as you guys roll out this industry cloud, in a few words, what does that mean to a buyer? Like why is it important? You kind of just touched on it, but different than what it’s always been, you’ve always been industry focused. So now what are they getting as you made the shift to industry cloud?

Patrick Maroney: I think primarily some people think that a platform restricts you into doing things a certain and specific way. So some companies, instead of going down this route of having all their data on one place in one platform, have thought a hodgepodge of multiple solutions. What they’ve found instead of being constrained by this imaginary constraint of the platform, they’re actually constrained by the fact that none of these systems are integrated. I mean, imagine if you wanted a nice car, maybe you put a Ferrari car with a Ford engine and a BMW transmission, and you’re going to rely on your IT department to make sure all those things work together. They’re injecting latency into it.

So how do you build a large platform solution that can still remain flexible and agile to all the needs of changes for … Like I explained a minute ago, the business model impact. That’s where industry cloud comes in and allows you to bring in different partners as you need to. They can plug and play into the platform, and you can move innovation at the speed of business versus at the speed of old development cycles, like when things were on-premise and you got to release every couple of years. Now you can move at the speed the business requirits.

Rick Willardson: Right, and we’ve been very excited about SAP’s big move to a cloud first focus. We’ve been focused on cloud for many years at Intel, and we see a big hybrid cloud and driving efficiencies with our technologies, and other technologies to get that latency that Patrick speaks about. Get that additional insights from what can I now do with this data versus having silos of data that I don’t know what to do with. How can I put artificial intelligence into this to drive insights? We’ve done it to improve yield on our manufacturing side, or to look at sales leads and how can we optimize sales, which would apply to multiple different industries. So that cloud first model does allow us to take more and do more with that data, and that’s been our focus as well.

Daniel Newman: So if I hear it right it basically kind of comes down to looking at what an industry needs, looking at across the span to develop a series of practices that uses a platform approach that’s scalable and extensible that is able to be updated almost on the fly. So a real continuous improvement development pipeline, having the right tools and technologies to deliver that. By the way, that is a change from the SAP that people know. I mean, that is the big transition that SAP as a company is going through. Been a largely prem based business now becoming a much more cloud enabled business. By the way, I think that’s what the market has been waiting to see and waiting to hear.

Patrick Maroney: You said it earlier cloud first, right? And where the cloud gives you the advantages is the compute power that you get on the cloud is dramatically different than having to scale up your own data center. You can scale up and scale out, there’s no constraints. The way that you have to finance that model is different as well. So, when you’re buying things on premise you have to finance everything separately.

Now the platform play means that when one end your business sneezes, the other end of your business can say gesundheit without any delay.

The challenge is how do you build out that platform and still allow other people to come in and play on that. Maybe you want to deploy SAP on AWS. Maybe you want to deploy it on Azure. Maybe you want to deploy it on Google. But you still want to have all the business process connectivity and power and legacy that you get from 40 years of SAP driving best practices. Marry that with the innovations and ASIC designs from Intel and it’s really a match made in heaven. We can help companies rapidly adjust and change to the business environment using the platform effect. Doing it easily and quickly by leveraging the power of the cloud. That’s what it all means, Dan.

Daniel Newman: Absolutely, and I think that’s a really nice way to sort of sum up and bring this all together. Rick and Patrick, it’s amazing how fast these types of shows can go. You guys have been really great guests. To sort of wrap it up for everybody there really is a very important relationship that exists between the hardware, the software, the service, and the delivery. We have reached a world where data is exponential and that just having data isn’t enough, and just having workloads and compute isn’t enough. The two really do have to be brought together and be optimized. Speaking of optimize, thank you for a wonderful conversation. Both of you.

Rick Willardson: Thank you very much, Dan.

Patrick Maroney: Thanks a lot, Dan. Pleasure to be here.

Daniel Newman: So there you have it, everyone. There’s so much to take away from that and I could have spoken to those gentlemen for, oh gosh, another hour easily just to kind of talk about everything that’s going on. But what I really did take away there is that we are getting into a world where being more vertically focused is going to become critical for businesses. Thinking about solutions that have been optimized and designed for the business that you’re in. Data is exponential and so solutions, and that’s going to be your compute, your storage, your networking platforms, and frameworks, the way you accelerate workloads all the way to the software that you choose to be able to get the best outcomes in your business.

So, a lot in that episode. Hey, go ahead and check out the show notes. There’s a lot in there. I’m going to have links to SAP, links to Intel where you can learn more about the SAP industry cloud for high tech, and also learn more about what Intel is doing. For this episode of The Futurum Tech Podcast Interview Series, Industry Cloud focused with SAP and Intel. I’ve got to say goodbye, but I want to thank you again for tuning in. We hope you’ll check out the other shows as they come. Hit that subscribe button, join us for all of Futurum Tech Podcasts and all the shows that you can see here. But we’re out of here for now. Bye bye.

About the Author

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio