This week on the MI&S Enterprise Apps Podcast, hosts Melody Brue and Robert Kramer discuss Salesforce, Microsoft, SAP, IBM, Active Directory and AI Agents ERP.
Their discussion covers:
- Salesforce has halted engineer hiring, sparking discussions about the impact of AI on software development jobs.
- Microsoft is boosting workplace productivity with its new AI-powered assistant, Microsoft 365 Copilot Chat.
- SAP and IBM are teaming up to help businesses transition to cloud-based ERP systems.
- Commvault is making it easier for organizations to recover from Active Directory disasters with their new cloud-based solution.
Watch the video here:
Listen to the audio here:
Disclaimer: This show is for information and entertainment purposes only. While we will discuss publicly traded companies on this show, its contents should not be taken as investment advice.
Transcripts:
Robert Kramer: Hello and welcome to this week’s edition of Moor Insights and Strategy, the Enterprise Apps. Actually, we’re on episode two. I’m Robert Kramer, joined by Melody Brue, both vice presidents and principal analysts of the company. I handle ERP and enterprise data. Mel handles modern work HCM CX, and we cover everything else under the sun that relates to data, the glue that holds everything together. So just for disclaimer purposes, this show is for information and entertainment purposes only. Why we will discuss publicly traded companies on the show. Its content should not be taken as investment advice. So let’s get started. Mel, we had really a busy week last week. The year’s been off to a huge start. We’re going to talk about some great things in the first one. We’re going to kick it off with really in your neck of the woods with Salesforce, and we’re going to cover a bunch of other things. We’ll kind of touch on those as we go through. But what do you think?
Melody Brue: Yes, so it has been like a whirlwind kickoff to the year. Everybody just went from having a quick break to boom. Everything’s happening all at once. So this one’s interesting and I think this is going to start a very interesting conversation throughout sort of the thread of what we’re going to talk about today, which is one, how AI is being adopted, how it’s being priced, and just how people are looking at it in terms of jobs. At Salesforce, Mark Benioff, CEO recently just announced a pause in hiring any software engineers suggesting that AI could automate a growing portion of development tasks. So this is really motivated by potential cost savings and the productivity gains with their Salesforce agent force AI tool. So I think this raises a lot of questions. There’s the evolving role of tech jobs and how companies might manage this AI augmented workforce.
And then also, is this too soon? Can AI really replace human engineers? It also brings up this really important key challenge, which is who’s going to manage this digital labor? Is it IT or is it HR? And Cisco just had their big AI summit and they had, I think it was actually the CEO of Box, Aaron Levie was talking about this challenge of it becoming sort of an HR role when it comes to these AI agents, which is they’re not only responsible for the procurement, the hiring, the hiring of these ag agentic ai, meaning the creation of them, but they’re also responsible for their outcomes. So that creates a really interesting responsibility beyond what HR is typically responsible for in terms of like, okay, if you run marketing and you say, I need somebody to run this campaign for me, the HR department is responsible for finding that person and placing that person in that role. They’re not responsible for the output of what that person, what they create, who that person reports to is. So who do these agents agentic AI report to? Is it IT HR who’s managing this digital labor? That’s another point.
My last point on this is Salesforce showing the example of their AI is so good, they’re using it internally and Microsoft is doing the same thing. It’s like eating your own dog food that they’re highlighting, basically promoting their own AI adoption, demonstrating their own ROI through internal cost savings. So you want to sell something, show how well it’s working for you, right? I mean, Microsoft’s doing the same thing. So while I do think it’s really early to start saying that AI is going to be able to replace developers, I think it’s a smart strategy to show that Salesforce is using its own agentic AI to write code to really boost their own productivity. But I still think that we’ve got this digital work, digital labor management problem to solve.
Robert Kramer: Well, we definitely have that. What’s the setup required for these companies to be able to take advantage of this to see success? And like you said, the pricing is a big deal. How is that done? And then what’s the success that they’re actually having so far at Salesforce with not hiring those types of people and letting the agentic AI take advantage of consuming those roles? So I think it’s not put together yet. It’s not able to see the success or failure. My guess is it’s a bold comment from Benioff and if he can back it up, we’d all love that because companies would like to take advantage of how the agents can, I think they’re doing strategically handling tasks, not replacing, and he’s making an assumption that they’re going to be replacing. I don’t think, like you said, who’s managing these people? How is human resources interacting with it? This is not played out. There’s no governance around it. So there has to be some guardrails to show us how it’s all going to work.
Melody Brue: And I haven’t really seen anything. I know the World Economic Forum is going on right now, Pat’s in Davos, there’s been so much going on there. There’s usually a lot of conversation around this type of forward thinking stuff that happens there. He made a lot of bold statements a couple years ago about this digital labor and digital workforce. So we’ll see how this goes on. But interestingly enough, I was on, you may have been on this too, they didn’t show other participants, but Microsoft had a briefing this morning and gave some public facing ROI from case studies from their customers, which we don’t always get to see. We get sort of more anecdotal ROI, but they gave some kind of concrete numbers about marketing teams time to reduce content by 67%, seven months of work completed in seven weeks. They had sellers increased outbound calls by 40% due to process efficiencies, 50 million in annual revenue gains. So these are various companies, various ROI reports from using copilot, Microsoft’s 365 copilot in the Fortune 500. I appreciate them giving those concrete numbers and ROI because we do hear like, oh, it’ll make you more protective and all of this. So good to see those. I’m sure a lot of it’s, but still if these companies are seeing the value from it, that’s good to see that it’s doing what’s as promised.
Robert Kramer: Well, I think that the copilot, Microsoft is really weighing a lot of cards on that and specifically within enterprise data like you just mentioned, but also within the ERP world. And they’re utilizing that to actually filter the AI and AI agents to go through the ERP operational transactions that it can help with. And so this is a big deal and it’s something that they’re very emphatic about that it’s going to be kind of a game changer for them to help out with some of these tasks. And obviously the data has to be set up, but it can help with transactions within the financial area, within the inventory area, within the supply chain area to automate certain things to give the person who’s used to doing things on a spreadsheet, get them out of the loop because that’s a hazard to be more of a transaction helping situation with the agents. 20 years ago, these ERP systems, and not to get on a tangent, but there’s always people or a person who is doing something outside of the system. And when that happens, then that person feels they’re more reliable or they’re going to hinder the system in some way when they’re not there or something happens to that person. But at the same time, it’s not a global real time system because of the fact that it’s not present tense. So these agents, if it’s present tense, actionable data, these agents can really make a difference for these type of systems because of the fact that they’re helping these with the strategy. At the same time the nuance transactions are being done. So I’m still worried about the quality of the data, but if that is in gear, these types of copilot systems and automation purposes should be a big deal.
Melody Brue: Yeah, I think what I heard from Microsoft this morning on the briefing is just the agent versioning and updates that it can manage the lifecycle of the agents and update them over time. So it is going to be, this isn’t like a set it and forget it thing. There is going to be a lot of work that needs to be done to maintain them. Probably eventually it will be like a self-cleaning oven where the agents will be able to maintain themselves with the right amount of guardrails and the provisions. But I do think that there is probably with the right training, less risk of the human error that we have just from people entering, think if you enter from one thing to another, even copy paste, you can miss something, things can get transposed. So I like the oversight of humans on agents and the agent oversight on humans, but it goes both ways. It can’t just be one way or the other.
Robert Kramer: Yeah, I agree. And I also like that the agents can continuously learn and analyzing these workflows to up their logic to help out more as they get familiar with what those are so that the humans can interact a little bit better and trust the agents.
Melody Brue: Yeah, So on that, both Microsoft and Google made announcements to changes in their pricing for their AI. Microsoft added the consumption-based pricing, which we’ve talked about on our last podcast. And I think that as we were talking about, it’s just going to become necessary and it’s certainly necessary for people who aren’t going to be the power users that are going to be using AI all the time every day, but to get them to start using AI and start trying it out, I didn’t really see it. I saw that they’re doing kind of these batch pricing, but it didn’t see, and I don’t know if there was an answer to this of what happens when that batch runs out, if it can be topped up or what happens next. But I do like the controls on that because as we talked about on the last podcast, there has to be with this consumption based pricing, there has to be the ability to plan for how much you’re going to be spending on AI.
And that’s the real unknown when you have this consumption-based pricing. So I think the way that they’re pricing this allows for that planning, but it really, I think both with what Microsoft is doing and with what Google’s doing, either giving it for free, including it in certain level plans or consumption-based pricing is answering to two really big issues with AI adoption, which is one, adoption, getting it into the hands of people, and two, the cost barriers. So it’ll be really interesting to see how much usage we’ll see across enterprises and if those numbers on those case studies that they’ve shared, if those go up when you see it beyond just these test cases in particular lines of business.
Robert Kramer: I agree. I had a conversation about six months ago with John Case, he’s the CEO of Acumanica and he does consumption-based pricing for all of his customers. That’s all they do. And I asked him what was his method? They basically look and interview the teams that they work with at the customer and based upon what the use that they feel they’re going to get out of it and the users. And then they have a formula that they’re able to put together that has, this is what we are going to bill you and what you don’t use carries over. If you go over, we’ll bill you on that, but there’s expectations based upon those amounts that you gave us. If you over order, then you pay more. If you under order, you get it back. So the honesty helps the situation.
Melody Brue: So then each party knows what to expect. I mean, companies need to know what their billings are going to be too, and then the customer needs to know what their bill is going to be like. I think one last thing on this, and then we’ve got your Forbes article and big brainy stuff to talk about, Active Directory. I was like, wait, I need to study up on this before I can have an intelligent conversation with you on this. But I do also think on the pricing on this for both copilot and then Google’s workspace offerings is the parody of what’s available for the both free and consumption based versus a full subscriber plan in comparison, like Google is just throwing all of their AI offerings into their workspace offerings. I think that eventually what I would like to see is for customers to choose, do they want the full offering?
They want AI system all of it and be able to pay for it as they like and not have to have the full subscription? I like the flexibility of both plans, but I also think that Microsoft should allow for consumption-based pricing if they get people using it. Some of it is included in this consumption-based Microsoft Chat, copilot chat, but not all the full functionality is available to the new consumption based pricing. So I think eventually they might get to that point where they just say, okay, yeah, we can make all of it available because I think people are going to find that it’s really useful and they want it, but maybe not every single person in the organization needs that full subscription plan of 365.
Robert Kramer: So for your company, if you had to go one way or another, do you think consumption would be better for your company if you were the owner? You like the other-
Melody Brue: I think that most companies probably have different users in different groups of the business that are going to be kind of power users that you would say, yeah, give them the full, I want subscription. But these other ones, they may only have four or five tasks per month that they really need it for. So give them the consumption base, but they still want the full functionality. So that’s where I think there might be. The last thing I’ll say on this is I think in any scenario, giving people access, whether it’s the consumption based, subscription free, however they give it to them, having it in this controlled environment so people aren’t using their own ai, like using their own subscription to chat GPT or something that’s not controlled with their enterprise data is the best way to go. That is adding a security level beyond the security level that Microsoft already has, that Google already has to the enterprise so that they’re not having this bring your own AI to work because you know that employees are doing it. I mean, we saw it happen early on when companies were banning people using AI at work because information was getting leaked to outside models. So companies should be allowing, they should be turning this on immediately.
Robert Kramer: I agree.
Melody Brue: All right. That said, if you have nothing to add on that,
Robert Kramer: I’m good.
Melody Brue: Tell me about Active Directory.
Robert Kramer: Well, it’s a little technical, but at the same time it makes sense. So Active Directory is the core piece that really handles your authentications and your access to really your assets, your databases, your security, your apps, even the way that you walk through a door at the company that somebody works at. All those access controls are done through Active Directory. So this is a way that a lot of companies are getting breached because the attackers are getting in there at some point long time ago. I think that the Starwood hotels that breach with Marriott, they’re together a company now, but that whole was I think four or five years ago, but it started a dozen years ago. That was from an Active Directory breach. And Commvault has come with an announcement that introduces a backup and recovery for Active Directory. And this makes a lot of sense to actually put the pieces back together where it’s simplified, where it’s structured, where it’s not just a mayhem of day of time and confusion to put it together, which could take days. This is a automated process. So I wrote a Forbes article on it, and you can see that and the details around it, but I’m seeing a lot of activity within the data protection security industries because of the fact this is really a big problem. This is one of ’em. So that’s a really interesting subject, and I think a lot of the companies that are really involved in that are being innovative, and I think automation and AI is a big key in some of these companies in this field.
Melody Brue: So would you say that AI is hurting or helping companies in terms of their cyber risks?
Robert Kramer: I think AI is helping them because of the fact of what we talked about with the task and automating certain components and able to bring information quicker to the company and anomalies that are being pointed out at the time. Yeah, at the same time, I do think it’s all the technology in the world has its pros and cons. I mean, we didn’t have phones 30 years ago and it was probably an easier life, but the cyber attacks weren’t as prevalent, and AI is definitely pointing out those problems and correcting them a lot easier. The agents are pointing a role. The companies that are on the forefront are bringing automation, AI, and agents into the picture to bring things together quicker and more efficient just because of the bad actors are everywhere and they’re able to bring companies down to their knees pretty quickly. So Active Directories where a lot of it can start.
Melody Brue: Don’t you think it’s kind of just crazy when you see how quickly, and even just things like deep fakes, how quickly AI has evolved to be able to fool people. And I mean, you can upload a picture of somebody and the AI can make their mouth move and it looks like they’re saying something,
Robert Kramer: You don’t know if it’s real or not.
Melody Brue: Yeah. It’s actually kind of creepy how quickly that’s evolved from being used to be the little JibJabs where you could see it’s so clearly fake and now it almost looks real. I mean, it was, I don’t know, 30 minutes after the chiefs game the other night, and there were memes of, it was really bad, but memes of Mahomes making out with the refs, they were saying they were just favoring him so much with his flops and all the roughing, the quarterback calls and everything. But I mean, it’s crazy how I just feel like you’re not safe from anything with this.
Robert Kramer: No, they can really change the way things look very quick. I am a Kansas City Chiefs fan, just for the record, but I do like Buffalo a lot and would love to see Buffalo win, but Mahomes is a winner. I mean, you can’t be jealous of a winner, even though the refs might’ve been slightly in his favor, but I would say the same for Tom Brady. What’s the difference?
Melody Brue: Yeah, there was some meme about this with a dog talking about Patrick Mahomes, and he was like, he’s my homie too. He’s my homie too. I like him. But there was some, we can talk about this on a game time tech conversation, but those are the calls that are very, AI is not going to fix that for you, right? When a player people were accusing him of flopping and all of that, AI’s not going to fix that and say, oh, yeah, that was a flop, or was he really pushed hard enough or it was reffing the quarterback. But yeah. Anyway, we digress.
Robert Kramer: So AI is making a big influence on ERP and supply chain as well. And the reason why it is is because the companies that, and I’ll talk about SAP and IBM continuing their longstanding 50 year relationship with the new partnership, but companies need to modernize off of these on-premise. As I’ve talked about for a long time, ERP and IBM and SAP are solidified a new partnership to shift SAP S/4 HANA from on-premise to the cloud. So to facilitate this migration, the two of them are partnering on a way to move. There’s about 10,000 SAP customers that are on IBM power servers. So they’re collaborating. How do we get and modernize these customers to the SAP cloud S/4 HANA? But this is all to take advantage of what we just were talking about, which is AI and agents and automation. You can’t take advantage of that fully by being on premise because you’re on an older system, which is antiquated, which is not going to be set up for the modernization. And IBM is also, sorry to cut you off, but they’re also gearing up their consulting practice even more by purchasing, it’s called AST Application Software Technology, which is an Oracle Cloud House to help with all the migrations that deal with Oracle’s ERP. So you’re seeing this kind of a shift that these companies need to modernize to take advantage of this great technology that all the companies are talking about.
Melody Brue: What do you think? So we’ve seen SAP kind of deliver on a lot of the promises that they made more than a year ago. And I think actually it’s worth probably going back to the article that we co-wrote together along with Jason Anderson about all of Rise and Grow with SAP to kind of see where they were then, where they are now. Some of the things we brought up about continuing to support the on-prem customers, and there has been a bit of talk around about people staying on-prem or returning repatriating and why they would do that. And with Edge Computing becoming more powerful, why would they not? I mean, I understand the advantages to being in the cloud, but for say a smaller to midsize company, that’s a really expensive and long journey for them. Why would they not stay if they can and it’s still being supported and they can still have those same capabilities edge. Is there any reason why they really just should not?
Robert Kramer: I don’t think they’re, well, I don’t think it’s black and white. I think the companies are going to stay on premise. They have proprietary customizations that they’ve made, they will lose and they think they’re difference makers. I think that the companies that do move take advantage of modern technology, which is a big deal for long-term success. The companies do have an option, which is a hybrid approach where you can kind of keep some of those modules and then hybrid IT with the cloud modules and then have the best of both worlds. And the RISE program is a structured approach to the migration. I think it is a successful program, it’s just a matter of the companies getting on board. Like I said in the past, the companies that are on the SAP system are the complex ones, not necessarily SAP. So the companies have to be supported internally and externally because I believe SA going to cut the support off at some point. They talked about 2027, they’ve moved it out a little bit, but at the same time, lots of companies don’t want change and the change involves a gigantic approach of transformation. Your question was more or less, why would they modernize?
Melody Brue: No. Is there any reason why they wouldn’t?
Robert Kramer: The customizations are huge and they have their workflows and their processes and their proprietary ways that has to all go away. And the reason that the success of these companies like Infor or an SAP or an Oracle or Microsoft, they’ve made their systems industry specific. So for example, SAP might have a couple thousand chemical manufacturers on there. All those forms, all those workflows, all the ways that they’re doing business are inherently already in that system from the other ones. So you’re gaining knowledge by going to the new system, but you’re going to have to give up what you were on before. So if it’s proprietary, you might not want to do that, but unless it’s patented, I’d say, Hey, go. Because at the same time that you have to modernize, you’re stuck in time. And I think in 20 years ago, companies felt this was the way to do business.
Now you’re being passed up because you don’t have any of these new features and functionality. And I think it just starts with what we’re talking about. There’s enormous amount of capabilities within the supply chain within sustainability that we’ve talked about with iot getting this data from all over the place and be able to use that real time as I think it’s a huge difference maker. And I don’t know why you wouldn’t do it unless you didn’t have the resources internally to gear up and get it done. So there’s major benefits and they outweigh the ones that not staying on-prem, but you can go hybrid first to get there initially.
Melody Brue: Yeah. Alright,
Robert Kramer: Well no answer.
Melody Brue: We’re going almost at 30 minutes now, so we probably should wrap it up, but I think you’ve got a couple of trips coming up. I’m forgetting I saw some things on the calendar. I’m going to definitely see you at Zoho Day. What do you have before then?
Robert Kramer: So I’m going to Acumanica next week and Microsoft has an AI tour. Then after that I’ll be at Zoho and then going to NetSuite the same week. And then the following week I’ll be at SAP. So it’ll be a great time for us to revisit the discussion on SAP and then to write something new, but some great trips ahead and I’m excited. What about you? Where are you going besides Zoho?
Melody Brue: Right after Zoho, I actually don’t have my calendar in front of me, so I have to do this by memory. But I will be at, RingCentral is having their analyst event. Adobe Summit is coming up, enterprise Connect is coming up. There’s a bunch of other things that I’m not looking at, but a lot of travel and some good stuff. But I’m looking forward to Zoho Day, having some conversations with some customers and some executives there doing a couple of videos and looking at some new products. So we will have more on that after that trip. But for everybody who has joined us, thank you so much for joining us. This was great, great show. Lots of good information and thank you for everybody who joined us. If there’s anything that you’d like to hear us talk about in future episodes, please hit us up on X or LinkedIn. Let us know what you want to hear about. Also give us some comments. We really love feedback. We want to hear what you liked, what you didn’t like. And if you did like it, please hit that subscribe button and please join us for next time.
Robert Kramer: Thank you.
Melody Brue: Thanks so much.
Mel Brue is vice president and principal analyst covering modern work and financial services. Mel has more than 25 years of real tech industry experience in marketing, business development, and communications across various disciplines, both in-house and at agencies, with companies ranging from start-ups to global brands. She has built a unique specialty working in technology and highly regulated spaces, such as mobile payments and finance, gaming, automotive, wine and spirits, and mobile content, ensuring initiatives address the needs of customers, employees, lobbyists and legislators, as well as shareholders.
Robert Kramer is vice president and principal analyst covering enterprise data, including data management, databases, data lakes, data observability, data analytics, and data protection. Robert has over 30 years of proven experience with startups, IT companies, global marketing, detailed strategies, business modeling, and planning, working with enterprise companies, GTM assets, management, and execution.
Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights) in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.
