Friday, July 20, 2018

10 reasons why Broadcom is buying CA

I wouldn’t normally comment on acquisition stories, but in this case, well. Back in the day, CA Inc. (the company formerly known as Computer Associates) was acquisition maestro, first knocking several enterprise management competitors off the board, then building out its portfolio to obfuscate its mainframe-centric business models (and, perhaps, its dodgy business practices).

And now, the company is being bought by Broadcom, the “diversified global semiconductor leader” (a.k.a. chip manufacturer), this hot on the heels of its attempted, and blocked, acquisition of the more eligible and compatible Qualcomm. Many are asking why, and not in a good way: ten billion dollars have been wiped off Broadcom’s stock price, which is over half of the acquisition cost.

Few are seeing this as a good idea, though some are seeing an upside. Given that nobody has a crystal ball, I thought it might be worth summarising some of the reasons why a chip company and an enterprise software company might be the perfect match.

1. There’s got to be something in that portfolio. CA has 1,500 patents across a portfolio of 200 products (alert: CA’s directory is A-Z, when all start with C — and that’s just the ones they are listing). Surely, in there, will be something directly related to Broadcom’s business?

2. CA has lots of smart people. OK, not convinced? The future, as we keep being told, lies in software, not hardware — areas such as machine learning, analytics and so on. Within CA’s products are some pretty smart capabilities, along with the people who built them, and who can turn their skills to Broadcom’s needs.

3. It’s all about the mainframe money. Bullet four on the press release mentions ‘recurring revenue’ — that is, for all CA’s efforts to say otherwise, much of its business still comes from cash cow mainframe software. At $1.4 billion per year, that’s quite an offset to the $18B.

4. It’s all about Broadcom having too much money. Conversely, you know how it feels, you were about to start a relationship then you find you can’t, you’re knocking around with a hundred billion in your pocket and feeling low, then who should walk round the corner but…

5. It means someone else can’t acquire CA. Stranger things have happened — like how EMC’s acquisition of Documentum was rumoured to have taken place just to stop IBM from getting it.

6. Broadcom genuinely wants to diversify. This is plausible, if a little scary. I’m not saying hardware companies never ‘get’ software, nor that chip manufacturers have only had limited success outside of their core business, nor that even software companies don’t tend to understand the enterprise, but, OK, yes, I’m saying all those things. And it suggests chips ain’t where it’s at.

7. It really is a great match and everyone is stupid. This is a perfectly reasonable suggestion. After all, Broadcom will have done its technological and accounting due diligence, and found clear areas of alignment. Won’t it? And we’ve never seen that going completely wrong before, no sir. I can say that with complete autonomy.

8. There’s something deeply sneaky going on. Hang on, wait. Non-US company looks to buy US company, the deal gets blocked. So then the same non-US company goes to buy another US company in a completely different sphere. It surely wouldn’t do that just to gain a longer term foothold onto the territory, would it? No, too far fetched.

9. Well, there was this bottle of wine. Or a bet. You know the story, it was a chance meeting, then a drink, one thing led to another and then, well, the next thing they knew they were grinning at each other and signing some thing… or indeed, they were in the locker room, being all alpha, and one said, “So, you don’t believe it would work? Watch this!” Or something.

10. The world is about to change in a completely unexpected way. Little do we all know, but the biggest enterprises are on the brink of some fundamental, singularity-scale transformation, where the entire software stack collapses down into a self-orchestrating, massive distributed micro-kernel architecture that runs directly on the chip.

At which point, Broadcom wins the Information Age, all technological problems in the world are solved, and we can all go home. Thoughts?

Wednesday, July 18, 2018

The App Store saved us from carriers. But who will save us now?

When Apple introduced the App Store ten years ago, it became apparent to anyone paying attention that it was going to eat the network carriers’ lunch. Up until then, the carriers ruled the mobile ecosystem, providing the pipes, content, and services consumers were looking for. Carriers offered their own stores to download ringtones, themes, apps, and games. But Apple didn’t work with carriers (save for the iPhone exclusivity deal) because it didn’t need to. Its revolutionary iPhone and app ecosystem were clearly the future, and carriers were playing Apple’s game now.

Carriers, then, were relegated to their worst fear: becoming “dumb pipes” that simply delivered content to its customers instead of controlling it all. At first, many didn’t see what a huge paradigm shift the Apple App Store was for the mobile industry. “Apple runs its App Store in a closed environment, not sharing the revenue with AT&T. Since the average monthly phone bill for an iPhone user is $95.34 and the average bill for other users is $59.59, AT&T probably isn’t too worried about this,” wrote James Quintana Pearce for GigaOm in 2009.

Those who underestimated the power of the App Store didn’t understand that not only did users need to go to the App Store to find apps and content, but Apple managed to turn the it into a destination that consumers wanted to visit. iPhone users constantly peruse the App Store to find apps that can unlock more potential for their smartphones. The simple, universal value proposition? Whatever you want your iPhone to do, there’s an app for that.

Even as the App Store accelerated into this brave new future, the carriers remained in neutral. While networks still wanted to dictate user experience by throttling access (an approach initially defeated by net neutrality), Apple saw the wisdom of instead focusing on the end products of content and apps, rather than the pipe. Today, carriers would love to be content makers as well as content distributors: T-Mobile bundles unlimited Netflix streaming into their service, and Sprint gives Hulu away. We’ve also seen former ISPs snap up media companies, like Verizon’s purchase of Yahoo and Comcast merging with NBC Universal.

But this wasn’t yet the case in 2012. “Customers at large only want one thing: a dumb pipe,” wrote Trevor Gilbert for Pando. “The argument is that carriers have a responsibility to carry data to and fro, with no interference, just like energy and water utilities.” The “connectivity as a basic service” mantra Gilbert refers to caught on, though the idea of mobility as a public utility has yet to take root in most parts of the world.

Either way, a wave of OTT content and services, in-app transactions, P2P payments, and mobile shopping soon began to eat away at carriers’ market territory. Just three years after the App Store launched, the global telecom industry was losing 4.5% ARPU per year to apps like Skype, WhatsApp, and Facebook Messenger, much to the benefit of consumers.

Still, the networks fought back by exploring new ways to work with their rivals. Both Apple and Google Play support carrier billing as an option. “Additionally, many top social, gaming, and security segment brands have started to use carrier billing,” wrote Gerri Kodres of Fortumo in an op-ed for LightReading.com.

Today, while the networks’ share of the mobile pie is growing from carrier billing, streaming services, mobile payments, and digital wallet top-ups, they still lag behind. As a result, the elimination of net neutrality is core to their strategy to take back control and remain relevant.

Even in the midst of the just-approved Time Warner merger, which will cement the company’s footprint in the crucial realm of mobile content, AT&T is reporting consolidated revenues of $38 billion, up 13x from when the App Store came to be. The Sprint and T-Mobile merger promises them fierce competition with Verizon digging in as well. Comparatively, in the same time frame, the App Store has run from zero in 2009 to about $7 billion in 2010 to about $60 billion in 2017 (about 2x Google Play).

That said, is it really fair to still apply the “dumb” label to networks today? Have the world’s largest carriers actually been reduced to the dumb pipes consumers wanted? Perhaps not—the argument is getting tougher to make from the consumer point of view. The combination of relaxed anti-competition regulation and the death of net neutrality has huge implications for the mobile ecosystem and beyond. With networks consolidating power via acquisitions of media companies and prioritizing their own services at will, consumers may soon be faced with a mobile industry that must bow to the power of carriers.

Companies like Alphabet (Google’s parent company) and Netflix are at risk of having their services throttled in the near future. Networks have proven time and time again that if they can bully companies into paying to play, they will. Alphabet likely saw this threat coming—it has created its own “dumb pipes”: Google Fiber and Project Fi, though they are still far from becoming a threat to US carriers.

So no, carriers are no longer the “dumb pipes” consumers hoped they would be. They’ve now begun morphing into the giant monopolies of old and if they continue going unchecked, it could lead to a dearth of innovation that will affect a multitude of industries for years to come.

“One sad note though is how much the world of video is increasingly closed to startups,” writes Danny Crichton for TechCrunch. “When companies like Netflix, which today closed with a market cap of almost $158 billion, can’t necessarily get enough negotiating power to ensure that consumers have direct access to them, no startup can ever hope to compete.”

While the App Store may have wrestled away control from carriers over the last decade, we’re at a point now where the carriers are more powerful than ever. And that’s not something Apple can save us from this time.


About Katie Jansen

Katie is Chief Marketing Officer at AppLovin, a comprehensive platform where app developers of all sizes can connect with their ideal consumers and get discovered. Business Insider named Katie one of the most powerful women in mobile advertising in 2014 and 2015.

Before joining AppLovin, Katie founded the boutique marketing agency Igniting Solutions and is a board member today while it continues operation. Prior to founding Igniting Solutions, Katie was VP of Marketing at PlayFirst, a mobile gaming publisher acquired by Glu in May of 2014.

In addition to her work at AppLovin, Katie is an advocate for women in tech and workplace equality. She serves as marketing adviser to organizations including Women 2.0 and Women in Wireless, and mentors other women in tech. Katie also works with organizations such as No Kid Hungry and Restoration Missions.

Friday, July 6, 2018

Five questions for: Mike Burrows of AgendaShift

My travels around the landscape of DevOps brought me to Mike Burrows, and the work he was doing around what he terms AgendaShift, an outcome-based approach to continuous transformation. While these words could be off-putting, I was more intrigued by the fact that Mike had set up a Slack site to articulate, test and improve his experience-based models – as he says, there’s 500 people on the site now, and as I have experienced, it’s very participative. So, what’s it all about – is there life beyond prescriptive lean and agile approaches? I sat down with Mike (in the virtual sense) to find out the background of, and hopes and dreams for, AgendaShift.

1. What led you to write a book about lean/agile/Kanban — what was being missed?

Good question! I’m one of those people that laments the rise of prescription Lean-Agile space, and though I found it easy to find people who were in sympathy with my view, I didn’t find a lot of constructive alternatives. I myself had developed a consistent approach, but calling it “non-prescriptive” only told people what it wasn’t, not what it was! Eventually, I (or perhaps I should say “we”, because I had collaborators and a growing community by this time) landed on “outcome-oriented”, and suddenly everything became a lot clearer.

2. How would you explain AgendaShift in terms a layperson might understand?

The central idea is principle #2 (of 5 – see agendashift.com/principles): Agree on outcomes. It seems kinda obvious that change will be vastly easier when you have agreement on outcomes, but most of us don’t have the tools to identify, explore, and agree on outcomes, so instead we jump to solutions, justify them, implement them over other people’s resistance, and so on. I believe that as an industry we need to move away from that 20th century model of change management, and that for Agile it is absolutely essential.

Around that central idea, we have 5 chapters modelled on the 5 sessions of our workshops, namely Discovery (establishing a sense of where we are and where we’d like to get to), Exploration (going down a level of detail, getting a better sense of the overall terrain and where the opportunities lie), Mapping (visualising it all), Elaboration (framing and developing our ideas), and Operation (treating change as real work). Everything from a corporate ambition to the potential impact of an experiment is an outcome, and we can connect the dots between them..

3. You went through an interesting development process, care to elucidate?

Two key ingredients for Agendashift are to be found in the last chapter of my first book, Kanban from the Inside (2014). The first is the idea of “keeping the agenda for change visible”, a clue to where the name “Agendashift” came from, and worthwhile to develop further how one might populate and visualise such a thing (and I took inspiration not just from Kanban, but also from Story Mapping). The second was the kind of bullet point checklist you see at the end of a lot of books.

I and a few others independently around the world (Matt Phillip most notably) realised that we had the basis for an interesting kind of assessment tool here, organised by the values of transparency, balance, collaboration and so on (the values model that was the basis for my book). In collaboration with Dragan Jojic we went through several significant iterations, broadening the assessment’s scope, removing jargon, eliminating any sense of prescription, and so on. We found that the more we did that, the more accessible it became (we now have experience using it outside of IT), and yet also more thought-provoking. Interesting!

Other collaborators – most notably Karl Scotland and Andrea Chiou – helped move Agendashift upstream into what we call Discovery, making sure than when we come to debriefing the assessment that we’re already well grounded in business context and objectives. The unexpected special ingredients there has been Clean Language (new to me at the time, and a great way to explore outcomes) and Cynefin (already very familiar to me as model, but now also very practical once we had the means to create lots of fragments of narrative, outcomes in Agendashift’s case).

4. Who is the AgendaShift book aimed at, is it appropriate for newcomers, journeymen or masters?

I do aim in my writing for “something for everyone”. I accept though that the complete newcomer to Lean-Agile or to coaching and facilitation may find that it assumes just a bit too much knowledge on the part of the reader. My third book (working title “Right to Left: The digital leader’s guide to Lean-Agile”, due 2019) will I think have the broadest possible appeal for books in this space. We’ll see!

5. How do you see things progressing – is nirvana round the corner or is that the wrong way to think about it?

We’re coming up to the 2 year anniversary of the public launch of the Agendashift partner programme, 2 years into what I’m told is likely a 3-year bootstrap process (I have some fantastic collaborators but no external investment). General interest is definitely growing – more than 500 people in the Agendashift Slack for example – and I’m seeing a significant uptick in demand for private workshops, either directly from corporates or via partner companies. Its potential as a component of leadership development and strategy deployment is gaining recognition too, so we’re not dependent only on Agile transformation opportunities. I believe that there is potential for Agendashift in the digital and DevOps spaces too.

There is a lot of vested interest in imposed Agile, and in all honesty I don’t see that changing overnight – in fact I tell people that I can see the rest of my career (I’m 53) being devoted to outcomes. Over time though, I believe that we will see more success for transformations that are based on genuine engagement, which can only be good for the likes of Agendashift, OpenSpace Agility, and so on. Eventually, the incongruity of imposed Agile will be exposed, and nirvana will be achieved :-)

 

My take: Not the weapon, but the hand

I’m all for methodologies. Of course, I would say that – I used to run a methodology group, I trained people in better software delivery and so on. From an early stage in my career however, I learned that it is not enough to follow any set of practices verbatim: sooner or later (as I did), edge cases or a changing world will cause you to come unstuck, which goes a long way to explain why best practices seem to be in a repeated state of reinvention.

I was also lucky enough to have some fantastic mentors. Notably Barry McGibbon, who had written books about OO, and Robin Bloor, whose background was in data. Both taught me, in different ways, that all important lesson we can get from Monty Python’s Holy Grail: “It’s only a model.”

Models exist to provide a facade of simplicity, which can be an enormous boon in this complex, constantly changing age. At the same time however, they are not a thing in themselves; rather, they offer a representation. As such, it is important to understand where and when they are most suited, but also how they were created, because, quite simply, sometimes it may be quicker to create a new one than use something ill-suited for the job.

And so it is for approaches and methods, steps we work through to get a job done. Often they are right, sometimes less so. A while back, myself, Barry and others worked with Adam and Tim at DevelopmentProcess to devise a dashboard tool for developers. So many options existed, the thought of creating something generic seemed insurmountable…

… until the epiphany came, that is: while all processes require the same types of steps, their exact form, and how they were strung together, could vary. This was more than just a, “Aha! That’s how they look!” as it also put the onus onto the process creator to decide which types of step were required, in which order.

Because of this, among many other reasons, I think Mike is on to something. In another recent conversation, Tony Christensen, DevOps lead at RBS, said the goal had become to create a learning organisation, rather then transforming into some nirvanic state. True Nirvana, in this context at least, is about understanding the mechanisms available, and having the wherewithal to choose between them.

 

Image: AgendaShift