I have been in Orlando for the Sapphire event and while I missed day 1 I did take in the full experience yesterday. With no particular narrative here is a summary of thoughts I collected.

Sapphire is huge, the main pavilion is easily 3-4x the size of Dreamforce and the energy is studious and focused. Walking the show floor revealed a lot of SAP people in every area demo’ing and talking about SAP products and technologies, and as @pgreenbe noted there wasn’t a lot of chaos and noise. It’s actually very pleasant to be on the show floor.

The morning keynote featured co-CEO Jim Hagermann Snabe and Lars Dalgaard, formerly the CEO of Successfactors, which was acquired by SAP about 3-4 months ago. Snabe is engaging and confident, I can see how he compliments Bill McDermott nicely, being able to go deep on any product or technology topic while also engaging customers at a business level.

There was a nice retrospective of SAP’s 40 years, paralleled to that of the technology industry in general. It became a little bit much when Snabe attempted to insert SAP into the narrative by joining unrelated technology advances, like NASA’s technology program and how SAP used hardware in the early days. The history is important but trying to use the trajectory of history to predict the future is a strategy fraught with peril and SAP should be mindful of the fact that history reveals a continuing series of disruptive developments that upend incumbents with increasing speed and violence.

Snabe laid out the major tech themes for SAP, which I will sum up as Data (Hana), Mobile, and Cloud. There were others but they roll up into these larger themes and for the most part represent long running investments that SAP has been making. Overall, it was logical and confidence inspiring to hear him walk through this.

Ron Dennis from McLaren Group came on stage for a fantastic one-on-one talk with Snabe and I really enjoyed the video that opened this as well as the conversation. McLaren connects the physical world with the digital world in a very interesting way, combining technology innovations and high performance computing to deliver the cutting edge that sets the direction for entire industries. McLaren is an SAP customer (the relationship is a lot deeper) and something Dennis said resonated with me, which is that for the scale of McLaren the investment in SAP was hard to justify.

This is the pivotal issue for SAP, the scaling of price-to-value for businesses of all sizes. The fact that McLaren called this out while on stage with Snabe should cause pause for everyone in SAP who is plotting the future of how applications are packaged and priced.

The focus on cloud computing has been impressive and Snabe made a good point when he commented that in the not too distant future people won’t talk about the cloud vs. on premise because it will be all cloud. And all mobile. The challenging part of this is squaring it with Snabe’s emphasis on “consolidating the core” because customers don’t want disruption; it’s hard to imagine anyone successfully delivering leapfrog innovations while insisting on an incremental path for customers.

Migration paths are a reality for SAP, as would be the case for any company with a large customer base, and it’s not just about on-premise to cloud but also a major factor in moving from relational databases to integrated OLTP+OLAP in memory systems and user experiences that meet users in a desktop and on a mobile device. Everything that SAP delivers must have a migration strategy attached to it, which means they will take longer to deliver products and the cost to develop will be higher.

Lars Dalgaard came to SAP through the Successfactors acquisition and in a very short period of time he has established himself as a disrupter as well as consolidator of power. Lars is solely responsible for overseeing some of the most critical deliverables in SAP’s application strategy, primarily in cloud apps Business By Design and Business One. In fact I was shocked to see Business One getting as much attention as it is getting this week (Business One is the result of an acquisition in 2002 of a company called TopManage).

Dalgaard presented an organizational model of applications around Customers, People, Money, and Suppliers. This is a great way to approach applications, far more appealing than the old acronym heavy approach of ERP, CRM, FICO, HCRM, PLM, etc. While enthusiastic about this approach I was disappointed that Lars spent about half of the talk on People and gave just brief mentions to the rest.

SAP has been self-conscious about user experience from my earliest days with the company, and in all fairness it is appropriate to highlight that SAP applications are often complex because the problem sets they are delivering on are complex… try to do production planning or order-to-cash without having some complexity. Having said that, SAP has failed to deliver compelling user experiences for people who are casual users of their systems (e.g. submitting expense reports) and I think SAP deliberately conflates the notion of UI and UX with less than optimal results. A new HTML5 UI will not by itself deliver a better user experience… full stop.

For Lars to say that it’s about time SAP delivers great UX was an insult to all the people who have been laboring to deliver better user experiences since the late 1990s. This is not trivial stuff and SAP deserves credit for investing in this area consistently over a long period of time and Lars on stage demoing his dream app, which is little more Flipboard, doesn’t reflect the considerable experience in how business applications work in the real world (e.g. would you really just discover you don’t have enough people in Europe and then move people from the U.S. over to fill the gap?). It’s also worth pointing out that Successfactors didn’t have a great UX either… 15.6m users and only 29m reviews doesn’t suggest a high degree of interaction.

The segmentation of solution sets according to customer size is logical but also illustrative of a problem that SAP continues to struggle with, which is how to serve millions of businesses instead of 10s of thousands. Business by Design is enterprise and large mid-market focused, Business One is SMB; this is an extension of how SAP has gone to market but the challenge is how do you serve millions of businesses versus 10s of thousands with this model? It’s not just SAP, all business software providers are challenged by packaging/pricing within the context of a business model.

I was very surprised to hear little about social technologies, especially when covering CRM topics, or in the new parlance of Customers. Surprised but not disappointed because I think a lot of vendors are reflexively reaching for social because it is necessary for the news cycle not because they have a clear strategy for delivering customer value. I have seen SAP CRM apps that have social capabilities so I know this is not out focus for them. I suspect the omission of social as a theme reflects a prevailing view that this is just expected to be part of your offering so why focus on it at the risk of diluting the primary messages you are delivering.

The Hana technology is a legitimate game changer technology and while I doubt Oracle is overly concerned they probably should be. What SAP has developed, over a long period, is substantial and the innovations that will be possible as a result of a single image column store database will lead to leapfrog benefits for customers and technology vendors alike. It’s important to recognize that SAP is not an interloper in the database world, the core development teams at SAP are steeped in database expertise and in terms of core database engineering SAP has had a foot in this world for many years, from the MaxDB open source database to the acquisition of Sybase. SAP knows databases.

Hana has clear performance benefits but it is not yet a utility grade service and has capacity limitations (albeit 100TB is pretty frickin big) but the capacity issue is probably less constraining because column store databases are much more efficient (you pack much more stuff into the same sized box) and over time the upper limit will increase. Evolving Hana the extent that it goes to market like Amazon DynamoDB is not clear to me, nor when the question was asked was the answer clear…

Lastly, SAP continues with a high degree of self-consciousness about appealing to startups, but to their credit they are reaching out to developers with free licenses and talking about a pricing model that is not solely based on data volumes (small companies can generate a lot of data). Time will tell but it’s always reassuring when SAP doesn’t just focus on the largest companies in the world as the core customer segment they are targeting.

Dan Gillmor is critical of the NYTimes decision to require Facebook login for verified identity, which brings with it greater access to services in their online offerings.

News organizations that use Facebook for login to comments and other features are unbelievably short-sighted. Which, of course, is absolutely nothing new.

Normally I would be at the front of the line when it comes to criticizing the NYTimes but in this case I think their decision is calculated and reasonable. What they are getting is a real name identity system without the substantial obstacles that would otherwise not be overcome… people won’t verify their identity en masse for websites but for reasons I cannot explain have few reservations about doing so when the convenience of Facebook’s identity system is presented to them.

Identity is an issue that enables and infects the web, we benefit from having relative anonymity yet few people would suggest that anonymity improves the quality of discourse online. Media site commenting systems reveal this to an absurd extreme… the things people say to each other online would not remotely be considered in the course of actual conversation in the physical world. Anonymity brings out the worst in people but that fact alone is not a reason to ban it from the web, which would be impractical to say the least.

Media sites are not public utilities, they are hosted conversations that have real cost as well as opportunity costs associated with them for the companies that host them. If the NYTimes decides that linking up with Facebook is a tradeoff that brings an increase in the quality of discourse while trading off information about people to Facebook then that is their choice and their subscribers, real or in the abstract, will take the offer or reject it like they have with other initiatives from the Grey Lady (e.g. TimesSelect).

If your issue is focused on Facebook and the increasing power that they are accumulating, then that is a different issue not related to what the NYTimes does with them or not.

Ideally the NYTimes would present multiple choices for identity to be connected to their online profiles, and give their readers the opportunity to opt-out of features like recommendations but truthfully I don’t know enough about what they are doing or not doing in this regard to comment. What I do like about their strategy is that they are giving you the choice to not use Facebook and in exchange for using Facebook they are increasing your access to features that you may find valuable, in other words they are giving you something in exchange for whatever you are giving Facebook… and while Gillmor and others will criticize this as having nothing in it for the NYTimes the fact remains that the NYTimes has a strategic interest in improving the quality of comments attached to content and that isn’t trivial.

I have had the need to contact 3 different companies today through their call center numbers and I’m done… I simply don’t have any more time to give these companies with all the other stuff I have to do.

• First there is the IVR system…
• Then there is the obligatory customer/account/confirmation number dance, I punch it in then I have to say it and then I have to confirm it…
• Then we go through the recital of problem/need and a repeating of that that for posterity….
• Then my issue gets solved after some back and forth, and “can I put you on hold” (as if I have a choice)…
• Then we are done and I get the closing statements along with, always, “is there anything else I can do for you?”…

Time is precious and I don’t have enough of it, which is probably the case with most people these days. If I could change anything about customer service it would be to ditch the IVR systems and have agents talk faster without all the reciting of facts back to me. In other words, can we just get to the point and get on with it so I can get on to the next thing I have to do?

“Fear defeats more people than any other one thing in the world.”
- Ralph Waldo Emerson

I have two experiences that have taught me more about the human condition than all other things in life combined, being a parent and being an integral part of a small company. What I have concluded is that fear is an unavoidable component in most of the decisions we make, whether conscious or not, and that the opposite of fear is not courage, it is love.

Not all fears are equal when it comes to the paths that people take in life. Some are ruled by fear of failure while others fear success, fear of losing something seems to rise in proportion to the number of things that one can lose, fear of unrealized ambition is distinct, fear of relationships and self-exposure seem to go hand in hand, there is a prominent fear of conflict in most people, and lastly, being ruled by a fear of being discovered as being in over one’s head leads to a range of very bad outcomes.

Fear itself is nothing more than a warning mechanism that exists within us, it is something that is constructive in our decision making process by slowing down our mental responses in order to capture more detail about the thing that fears us, and taken to an extreme fear crosses a line and become debilitating. People fail when they are unable to overcome the fear dimension they hold and become locked, and they give up fighting the thing they fear and shrink from it.

This opposite of fear is not courage, and people who are referred to as courageous in the face of fear are actually reacting to something that is fear itself, the failure that comes from letting down people who count on you, the mastering of fear that accepts it is still present. The opposite of fear is not courage, it is love… love that is expressed through a compelling desire to face any challenge not for the reward it brought me but because someone was counting on me to do it. Being a parent has taught me this more than any other lesson.

The fear of being discovered as incompetent is the most destructive of all fears when it comes to a leadership team because this fear leads to isolation and incompetent decisions as well as the inability to make a decision that is not unnecessarily restricted in the pursuit of risk mitigation.  Very bad things happen when people fear being discovered as an impostor, for the person at the center and all those around them.

Fear is part of the human condition and in order to understand the people who are close to us we have to first accept the things that we fear the most. I say accept not in the benign manner but rather in the context of facing and then overcoming fear in order to be a better person and to serve those close to us in the best possible way.

“.. almost everything – all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.”
- Steve Jobs

Last week I spoke at Dr. Natalie’s social business class at UCLA and one of the presenters who was on before me commented on the idea that people have a finite number of connections they can maintain, if I recall correctly he said 123 connections. What he is referring to is something called Dunbar’s Number, which asserts that the number of relationships a person can maintain is limited by the human brains cognitive abilities to between 100 and 230, with 150 being the commonly quoted number.

I have no reason to dispute this and would defer to Dunbar’s research in this area however it is vitally important to recognize a couple of facts about the human condition, which is that we are, as a species, amazingly adaptable and complex in our interactions with other people. This is where Dunbar’s Number falls short for me, which is that we do not have the same intensity of relationship with each person we have a relationship with.

Dunbar’s Number is unique among the various network laws which are often quoted, unique because it doesn’t deal with the economic utility of a network but rather our ability to scale a social graph. The other 3 laws which come up in these discussions build on prior work and take into account technological advances.

Sarnoff’s Law: This is named after television executive David Sarnoff who observed that broadcast networks have economic potential that is proportional to the number of participants. Simply put a broadcast network that can reach 100 people is 10x more valuable than one with 10 people.

Metcalfe’s Law: Along with Moore’s Law this is the most cited law in computer science and very clearly builds on Sarnoff’s Law. Where Sarnoff’s Law is proportional, Metcalfe’s is exponential. The utility of a network is equivalent to the square of the number of participants. Metcalfe’s Law is well covered so I’ll leave it at that.

Reed’s Law: Of all the network laws this one is the most interesting to me and it goes directly to the idea that Dunbar’s Number understates the capacity of people to maintain very large social graphs. What Reed’s Law stipulates is that the value of the network is increases exponentially, in proportion to 2ⁿ, rather than n² as Metcalfe states.

Beckstrom’s Law: This one is interesting because of the specific measure that Beckstrom has developed, which is that the value of a network is the net value added for each transaction multiplied by all the members of that network. Where it gets interesting is on two dimensions, the first being that the net value added is combinatorial, as in all the participants in a transaction derive value from the transaction, and that the network itself has a virtuous cycle in that the more participants it has the more value it has which then becomes an attractor for more people to join (think Facebook here).

What I find appealing about Reed’s Law is that it recognizes that people belong to multiple network groups and have a wide range of weak and strong connections online. Dunbar’s Number makes an implicit assumption that we have a finite number of maintainable connections and each connection requires an equal investment for maintenance, or that we have a finite amount of cognitive ability and each connection chips away at that total. Reed’s Law circumvents this by recognizing that we get value from the group as well as the individual connections contained within…. so in short I find that it is possible to maintain far more than 150 network connections.

Today is World Malaria Day and the global theme being promoted is sustaining gains made in recent years.

Malaria is something we can control and even though 90% of the infections occur in sub-Saharan Africa (60% of those are children) the consequences for the entire world are significant given the massive numbers of people at risk. Malaria infections result in lost productivity which affects economic progress and in children the loss of education days as well as the social and economic consequences of care are significant.

We are making progress and in just a few short years the number of malaria deaths worldwide has dropped by over 150,000. This progress is a result of a comprehensive approach to controlling the cause of malaria as a primary strategy. By distributing pesticide treated bed netting and working with regional authorities to treat standing water in order to eradicate mosquito populations, the infection rate has dropped to 225 million cases, a decline of 20% in the last decade.

The United States has been a standout in terms of supporting this cause. Beginning with President Bush the USAID program tripled funding for malaria prevention and treatment and under President Obama this funding has continued. This is one foreign aid program that is clearly working and economic gains as a result of malaria prevention and treatment efforts promote stability and economic progress in a part of the world that has been sorely lacking in both respects.

Q: Why would there have been no scandal in Columbia if the GSA accompanied the Secret Service?

A: The GSA would have never haggled over $47 for a hooker. 

Like most Americans I am outraged but not surprised by what is going on in government when it comes to stewardship of taxpayer (and borrowed from China) dollars. Not surprised because this is our expectation of government, wasteful and inefficient with few controls that amount to more than window dressing, and every administration comes in, Republican and Democrat, promising there is a new sheriff in town and things are going to change, but it doesn’t.

Here are the major issues every candidate and incumbent should address this election season, and not just the Presidential election but at every level down to city councils:

1) Start with the default position that there is enormous waste. Start cutting across the board with an expectation that the bureaucracy itself will eliminate waste as a result of scarce resources.

2) Fire and forget government employees who demonstrate incompetence and poor ethical behaviors. All too often an innocent-until-proven-guilty argument is put forward as if working for the government is different than at-will employment in any other industry. It is not, and if people act with disregard to ethics and resources, fire them… don’t remediate, fire.

3) The idea that workers in the public sector are poorly compensated than the private sector is factually inaccurate as well as laughable on it’s face. Study after study documents in frightening detail how public sector employment is a path to prosperity when total compensation is considered, yet without the risk that private sector employment carries.

4) Congressional benefactors padding legislative acts with unrelated funding for pet projects, aka pork, has declined but not nearly enough. The Porkbusters movement is the precursor to the Tea Party and has successfully decreased the number earmarks attached to bills, but it’s not nearly enough and Republicans in particular are at risk of going back to old habits. Fiscal discipline starts with Congressional appropriations and then flows down to the agencies that consume taxpayer resources.

If you know me you know I am somewhat obsessive about food and go to great lengths and expense to source the food I feed my family. I do this because it matters to me as a core value, it’s about connecting with something primordial in the human existence.

What I do not believe, broadly speaking, is that the individual food items that I purchase are more or less healthy than grocery store bought alternatives. What makes the food I serve my family healthy is diversity of our menu, portion size, an emphasis on vegetables and lean proteins, fewer fats, and a lower volume of grains than the typical American or European diet consists of. In other words, what is served and how it is prepared delivers more punching power than where it comes from or what label it has on it (the organic industry industry is disgraceful in how they have subverted grocery aisles with high priced products that are not demonstrably better than non-organic labeled options).

With this prelude you might find it surprising that in the debate about processed meat treated with anhydrous ammonia (aka Pink Slime) I come down on the side of pink. This product has been defamed by a hysteria driven media campaign that presupposes this food product (and that’s what it is, a product) is unsafe in the absence of evidence suggesting safety issues, and fails to address the substantive issues of how society provides a food supply to a large population.

This is a core problem with fashionable foodies and other well-intentioned people who on even days declare we should let science be a defining force while on odd days rejecting science because it can’t prove the negative. The science is overwhelming, pink slime is nutrient providing but critics are demanding the impossible, which is to prove that it is not unsafe.

The meat products industry is pretty remarkable in a couple of respects, the first being that they are able to deliver to the retail supply chain an uninterrupted supply of safe meat products that are highly perishable and subject considerable bacterial contamination risk. In addition to that they let no animal product go to waste, which is an insult to the animal aside from being bad for the bottom line; literally every part of the animal gets processed into a food, consumer, pet, and agriculture feed and fertilizer products. Pink slime recovers 12-15 lbs of beef from every animal slaughtered and the recovery of this meat product means that 1.5 million fewer animals are slaughtered each year to meet the needs of American and export consumers of beef.

This is where pink slime is derived from, the remnant pieces of butchered beef are collected and trimmed before being processed with heat to remove excess fat and then pushed through a large die where the ground meat product is produced. The risk here is that ground meat has a high contamination risk potential. All store bought ground meats have a high contamination risk relative to whole cuts because bacteria grows on the surface of meat and when ground becomes distributed through the product. This is why you should cook a hamburger patty to medium but you can get away with a steak served rare… unless you grind your own meats, which is what I do at home.

The bacterias in question are particularly onerous for elderly and children, e.coli among others, so mitigate this risk the processors subject the meat to anhydrous ammonia, which is gaseous ammonia absent of water. Ammonia is a powerful antiseptic and this process effectively reduces the bacteria load in the meat product to safe levels.

Media reports have succeeded in freaking consumers out about the meat being pushed through a die… despite the fact that this is how all ground meat is prepared. It’s how I prepare ground meat at home, albeit on a much smaller scale, by using a meat grinder attachment on my KitchenAid stand mixer (ask me about how I make freakishly good salmon cakes with this).

The entire pink slime debate is manufactured and pits food snobs, who would do away with industrialized food with reckless disregard for the consequences to the economy and food supply, against average Americans who are struggling to afford proteins of all kinds in this economy (food inflation is very real and it impacts middle and low income families as much as high gas prices). The media has been, no surprise, irresponsible by not shining a light on dubious claims about the hazards of antibacterial treatments (remember all the coverage of how immunizations were linked to autism, and then when thoroughly debunked there was scant coverage to be found?).

The solution should not have been a knee jerk demonization about a food product that is responsible and safe, but rather a push for labeling requirements to let people decide for themselves what they want to serve to their family. And for the record, I would have no problem eating pink slime or serving it to my family… it’s food, get over it.

UPDATE: Here is the download link, courtesy of Credit Suisse.

I’ve been reading a research paper put out by Credit Suisse called The Apps Revolution Manifesto – Volume 1: The Technologies.

It’s a fascinating read, if you can get a copy I would encourage you to get a copy (I don’t believe I have distribution rights otherwise I would like a download copy myself). As I read it I am struck by 3 thoughts:

1) Credit Suisse’s thesis is, to paraphrase, that predictions of big on-premise app vendors deaths are premature. I tend to agree with this view… but with some important caveats.

2) We are upon yet another great app modernization cycle, but for me the question revolves around the winners and those that don’t win as much. The last upgrade cycle was CAPEX centric, this one is going to have it’s own healthy dose of CAPEX but not nearly as much as the last cycle, while OPEX spending will be greater and spread across a far more diverse market. This is the first caveat on my point #1, existing big application vendors are not well suited to thrive in this environment and it is unlikely to believe they will undergo a radical transformation to achieve these competencies.

3) The forcing event for the last cycle was Y2K, this one is being driven by mobile, social, and cloud-based big data. The last cycle easily translated into product sales cycle, this one does not. Mobile, social, and big data have product componentry but are more accurately described as a transformative business strategy rather than technology strategy.

I have made it through half of the document but one thing is eminently clear, a lot of old world acronyms are being swapped out with new terminology, vendor names, and market forces which are thrusting them into a central position for companies looking at the decade ahead and how they achieve and sustain competitive advantage.

Like a lot of people I have been fascinated by the explosive growth that Pinterest has experienced. At first curiosity, Pinterest is now a full blown phenomena that has jumped from women planning their weddings, or wishing they were planning a wedding, and foodies to mainstream consciousness.

Businesses are openly embracing Pinterest and media organizations are figuring out how to use it, much like they did with Tumblr last year. Get Satisfaction is now on Pinterest with a grassroots effort that caught fire a few weeks ago and I am continually amazed by the innovative uses for presenting visual material in the context of a business objective.

I love the fact that Pinterest exploded in popularity outside of the echo chamber that is Silicon Valley. Prominent SV angel investors passed on the deal, few people wrote about it, and it took 2 years from it’s founding (2008) to get a Crunchbase entry, much less any significant press coverage. This is the classic Silicon Valley bootstrap-to-riches story (well OMGPOP clearly has that title this week) and Silicon Valley was largely lacking in invites to the service while middle mainstream America fueled it’s early growth.

Perhaps the most bone jarring thing to consider is how Yahoo let Flickr die on the vine while Pinterest blossomed. Flickr should, by any measure, be what Pinterest is today yet lack of imagination, the constraints of a rigid business model, and a product effort that can be kindly described as anemic all conspired to kill Flickr (and it is) while Pinterest created, potentially, billions of dollars in shareholder value.

How can anyone at Yahoo escape the question “how did you let this happen and what are you doing to fix it?”. The Pinterest logo should be pinned on every executive at that company to wear as a red pin of shame.