Reflections & analysis about innovation, technology, startups, investing, healthcare, and more .... with a focus on Minnesota, Land of 10,000 Lakes. Blogging continuously since 2005.

Category: Cloud Computing/SaaS (Page 1 of 15)

A Fascinating Saga Continues: AI Disrupting Enterprise Software

This past week was another brutal one for software companies, as evidenced by the big stock declines you see here (as of market close on Feb 7). This week may have been better for some than the week before, but not by much. Some observers are starting to refer to what’s happening as the “SaaS apocalypse.” Fox Business called it a “$1 trillion rout in U.S. software giants” and labeled it “the software Armageddon.”

Just what exactly happened this first week of February to cause the latest shock to the industry? A single move by an AI company juggernaut. As Fast Company put it, one Anthropic update wiped billions off software stocks. It begins: “Investors fear Claude Cowork’s new agentic features threaten entire categories of SaaS tools.” The article continues:

“Tech workers have been worried for years about the AI tidal wave coming for their jobs, but their bosses are starting to worry now, too.

“Stocks plunged this week as fears escalated that AI advancements will take a bite out of business for many software, data, and professional services companies. The market losses are tied to updates to Anthropic’s AI-powered workplace productivity suite, Claude Cowork, which threatens to replace some software tools ubiquitous in the professional world.”

But despite many in the tech world piling on to the prevailing opinion that enterprise software is dead, there are a few voices speaking out with a viewpoint that all is not lost for the software industry. One example is cited in the closing paragraph of the above Fast Company article:

“Not everyone deeply invested in AI agrees. Nvidia CEO Jensen Huang swatted away worries that AI would eat the traditional software industry after the stock bloodbath that began on Tuesday. ‘There’s this notion that the tool in the software industry is in decline, and will be replaced by AI,’ Huang said, emphasizing that relying on existing software tools makes more sense than reinventing the wheel. ‘It is the most illogical thing in the world, and time will prove itself.’ ”

Another skeptic is Steven Sinofsky, a former Microsoft exec who’s a board partner at Andreessen Horowitz (a16z). Here’s a (long) opinion piece he published this week: Death of Software. Nah. Additionally, an article in The Economist argued a bit against the prevailing dire view: Why software stocks are getting pummelled. Are investors overestimating the risk from AI? (May require a free subscription.)

And the Fox Business article cited above ends with this note: “Despite the stock market turbulence this week, the Dow Jones managed to cross the historic 50,000 level, underscoring the continued exuberance surrounding the AI race.”

For a fascinating, deep-dive analysis of the situation, Ignite Insights published this (very long) post on its Substack just days ago: The Great SaaS Unbundling. Where Software Value Actually Goes When Agents Arrive. (May require subscription.)

(Note: This post first appeared on the blog of my client Timmaron Group.)

#EnterpriseAI: General Mills Is ‘Transforming With the Power of Cloud and AI’

I attended an event yesterday at the headquarters of General Mills to hear how the company has partnered with Google Cloud over the past few years to transform itself in the age of cloud and AI. No doubt, hearing how any Fortune 500 could pull off something like this would be quite a story, I figured, let alone a company that’s been around for 155 years(!). Yes, we’ve been known to build ‘em to last here in Minnesota.

I pulled into Betty Crocker Drive in Golden Valley MN about 8:15 am and drove into the sprawling, grassy campus, with several gleaming buildings. I hear it’s not all that busy these days, however, what with remote work. But it may be the most impressive facility of any of our giant local companies for holding a big event like this. The crowd looked like it numbered 300 or more. Being that I’m a big fan of in-person events (but somewhat skeptical of AI hype), I had to check it out. Plus I felt an obligation to be there in light of my role as a board member of MinneAnalytics. (We love data and AI!)

So, what I thought I’d do is share my notes with you, along with some photos, plus stand-out quotes from the executive panel that followed the morning speakers.

Notes from the Opening Keynote by Rich Rubenstein, VP-Data & Analytics

Rich Rubenstein

Rich Rubenstein

– All General Mills data is now on the Google Cloud Platform today.
– The company uses Vertex AI.
– “This is not a science-fair project. We use AI every single day.”
– The focus is on innovation — “in products, in go-to-market, and in how we connect with consumers.”
– On the topic of AI hype: “There’s a tremendous amount of light and heat in this space. But we know we have a solid foundation. We’ve invested in someone [Google] that we know can take us a long way.”

 

Some Remarks from Jenny Hon, Senior Director, Strategy & Enterprise Architecture

– The cloud transformation journey is based on the company’s purpose: “To be the undisputed leader in food.”
– “All signs indicate that our ‘Accelerate Strategy’ is working.” accelerate strategy
– How we win is by doing four things: “Boldly building brands, relentlessly innovating, standing for good, and unleashing our scale.”
– She noted that General Mills has nine billion-dollar brands.
– The company used Cloudera for a long time, “but it wasn’t enough to take us where we wanted to go.”
– What is cloud for General Mills? They focus primarily on infrastructure as a service (IaaS).
– Developing a FinOps practice has been a major focus — “to ensure business unit cloud spends don’t blow their budgets.”

Some Remarks from Josh Moe, Senior Manager, Enterprise Architecture

– “Our aspiration is to lead CPG in data and analytics.”
– The company began in 2019 with a big bet in data analytics with Google Cloud.
– They had looked at two major vendors [the other was Microsoft Azure].
– “We moved SAP from on-prem to cloud. There was a lot of complexity in that.”
– “We did a major transformation and data migration in 24 months. Even Google doubted we could do that.”
– Specifically, the data lake migration took 15 months, and the data center migration took 18 months.
– “We did a full rebuild of how we do SAP.”
– The company’s “Analytics Enterprise Data Warehouse” is on BigQuery. “It’s the enabler of the work we’re doing in AI.”
– “We’re very intentional about our data. Do we own it? Or just subscribe to it?”
– The company has “Automated Self-Service Infrastructure Processes” that provide a simple and secure experience for its data scientists, product teams, and developers.

Some Remarks from Hanna Gordon, Director, Digital & Technology Data Science

– She started with General Mills in 2016, and has managed rapid growth of its AI/ML team.
– In 2019, the team began work with Google Cloud and Google AI.
– Forbes has called her AI team one of the fastest-growing in the country.
– “We have 6 million models in production today.” [Are you kidding me!?]
– Their first use case went live in 2020.
– In 2022, the company’s migration was complete and they began building a machine learning engineering team.
– In 2023, her team has been optimizing workflows, building MLops, and working with generative AI, “like everyone else.”
– The team now numbers 75 in the U.S. and India.
– They now have three core roles: data scientist, ML engineer, and MLops analyst (the most recent role).
– She showed a slide (see “Model Growth”) that listed their number of models per year, and the number of predictions per month — now 500 million(!) from the current 6 million models.

Following the above talks, after a break, there was an executive panel moderated by Saher Asad, Director of Engineering for Google Cloud. The participants were:
– Jeff Young, Chief Data Officer, Prime Therapeutics
– Jason Staloch, VP-Digital Core, General Mills
– Mark Langanki, CTO, C1 (ConvergeOne)

A few highlights:
– Staloch: “Gen AI is the third big thing [transformational technology], after the Internet and the iPhone, that really started on the consumer side.”
– Young: “The first thing we look at with gen AI: is it safe and secure?… We have to be able to wall off our data.”
– Staloch: “There’s a closer relationship now between business and IT. We can tell the story better now.”
– Asad: “Gen AI has taken a lot of the complexity out” [of the AI journey].
– Langanki: “One use case we found, when a conversational chat answer is ‘I don’t know’, we feed that chat into gen AI to find out what the real question was.”
– Young: “Building internal literacy is important for us.”
– Staloch: “The focus should not be on finding a use case but, rather, what is the problem?”
– Langanki: “The conversation on a bot must stay private.”
– Asad: “There’s a big rush now in gen AI, but it’s not the answer to every problem.”
– Staloch: “We’re introducing a private LLM for employees.”
– Young: “The biggest challenge now is how to deploy AI at scale.” His advice: “Start slow. Make sure your data is as high quality as possible,”

One final point cited by Asad, the moderator: Gartner has found over time that only 60% of IT pilots make it into production. The firm also reported recently that it predicts 91% of future IT projects will involve AI. You do the math.

Thanks to General Mills and Google Cloud for putting on this event!

By the way, there were several more technical and hands-on sessions in the afternoon, but I wasn’t able to stay for those. I’ll be interested to hear from colleagues about those sessions.

My Live Blog of the 10th Annual Defrag Conference…

defragx-logodates

Once again, I live-blogged the Defrag Conference in Denver. This is the tenth year of this great annual tech event, and I’ve attended them all. The original idea was to get together to defrag our brains and stop to think about where technology is headed — what’s coming next. I’ve met and interviewed so many great people at this event over the years: Brad Feld, Seth Levine, Fred Wilson, David Cohen, T.A. McCann, and tons of other tech leaders, investors, authors, and more.  Not to speak of many fellow tech observers, analysts, writers, bloggers, PR people, and notable geeks who’ve come to be frequent collaborators and friends. I’ve also connected with old buddies, like the authors of The Cluetrain Manifesto, and shared some huge laughs. Attending this conference is almost like going to camp each year. I just wouldn’t miss it! (Especially when I was one of only three guys who had perfect 10-year attendance records.) Eric and Kim Norlin and their team do such a great job putting on Defrag.

So, what was on tap for discussion at the 10th annual? Lots of topics: AWS Lambda, microservices, blockchain, APIs, machine learning, AI, insights about developer marketing, bare-metal cloud, and other geeky stuff — presented by an impressive band of speakers… founders, CTOs, rock-star developers, tech evangelists, and other crazy folks. Always a fun event. And what you don’t learn in the big room, well, you can learn in the Tap Room each night till the wee hours. (Oh, and we talk a lot about sports, too!)

I posted my play-by-play updates from Wednesday morning November 16 through Thursday afternoon November 17, 2016 — live, in real-time from the Omni Interlocken Resort, in beautiful (warm and sunny!) Colorado… well, until it snowed in the final hours.

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NOTE: Unfortunately, updates to WordPress software since I originally published this post caused the live blog plugin to break. I got no warning. Nice going, WordPress! So, my content appears to be lost forever… 🙁  

I guess you just had to be there! Trust me, it was good.

Raising Money You Don’t Need: MN Startup Trend?

I Dont Want Your Money[UPDATE 9/28/15: At the bottom of this post, I include some great comments I got from a leading VC over the weekend.]

This thing about profitable startups raising money they don’t need is getting deafening around here. A few years ago, Code42 shocked us by taking their first VC money (a huge $52M round), which confused people because they knew they were doing fine without it. [UPDATE: days after I wrote this post, it announced an $85M Series B.] Then LeadPages raises a surprise A round in late 2013 that it soon was openly bragging it hadn’t touched — didn’t need it. Only months later, it takes yet more — another $27M. It’s growing crazy fast, so we wonder… do they not need that either?  How about SportNgin, raising something close to $40M over four rounds going back to 2011? With the continuous growth they’re experiencing, why do they need all that cash and can they even spend it?

Now we learn about another rapidly growing Minnesota startup, Field Nation, which began as a young college grad’s idea more than a decade ago and now claims a $100M gross revenue run-rate, grabbing a huge (for this town, FieldNation-logo-horizanyway) Series A round of $30M. Reading the recent news in the StarTribune and the MSP Business Journal, you had to be impressed. Another homegrown startup raises a huge initial round. Wow, yes, we say to ourselves, beaming with pride, the Minnesota startup community really is rockin’! But what’s going on here with this latest winner in the local VC stakes?  Continue reading

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