Category Archives: Predictions

Kellblog Predictions for 2018

In continuing my tradition of offering predictions every year, let’s start with a review of my hits and misses on my 2017 predictions.

  1. The United States will see a level of divisiveness and social discord not seen since the 1960s.  HIT.
  2. Social media companies finally step up and do something about fake news. MISS, but ethical issues are starting to catch up with them.
  3. Gut feel makes a comeback. HIT, while I didn’t articulate it as such, I see this as the war on facts and expertise (e.g., it’s cold today ergo global warming isn’t real despite what “experts” say).
  4. Under a volatile leader, we can expect sharp reactions and knee-jerk decisions that rattle markets, drive a high rate of staff turnover in the Executive branch, and fuel an ongoing war with the media.  HIT.
  5. With the new administration’s promises of $1T in infrastructure spending, you can expect interest rates to raise and inflation to accelerate. MISS, turns out this program was never classical government investment in infrastructure, but a massive privatization plan that never happened.
  6. Huge emphasis on security and privacy. PARTIAL HIT, security remained a hot topic and despite numerous major breaches it’s still not really hit center stage.
  7. In 2017, we will see more bots for both good uses (e.g., customer service) and bad (e.g., trolling social media).  HIT.
  8. Artificial intelligence hits the peak of inflated expectations. HIT.
  9. The IPO market comes back. MISS, though according to some it “sucked less.”
  10. Megavendors mix up EPM and ERP or BI. PARTIAL HIT.  This prediction was really about Workday and was correct to the extent that they’ve seemingly not made much progress in EPM.

Kellblog’s Predictions for 2018

1.  We will again continue to see a level of divisiveness and social discord not seen since the 1960s. We have evolved from a state of having different opinions about policies based on common facts to a dangerous state based on different facts, even on easily disprovable claims, e.g., the White House nativity scene.  The media is advancing, not reducing, this divide.

2.  The war on facts and expertise will continue to escalate. Read The Death of Expertise for more.   This will extend to a war on college. While an attempted opening salvo on graduate student tuition waivers didn’t fire, in an environment where the President’s son says, “we’ll take $200,000 of your money; in exchange we’ll train your children to hate our country,” you can expect ongoing attacks on post-secondary education.  This spells trouble for Silicon Valley, where a large number of founders and entrepreneurs are former grad students as well as immigrants (which is a whole different area of potential trouble).

3.  Leading technology and social media companies finally step up to face ethical challenges. This means paying more attention to their own culture (e.g., sexual harassment, brogrammers).  This means taking responsibility for policing trolls, spreading fake news, building addictive content, and enabling foreign intelligence operations.  Thus far, they have tended to argue they are simply keepers of the town square, and not responsible for the content shared there.  This abdication of responsibility should start to stop in 2018, if only because people start to tune-out the services.  This leads to one of my favorite tweets of the year:

Capture

4.  AI will move from hype to action, meaning bigger budgets, more projects, and some high visibility failures. It will also mean more emphasis on voice and more conversational chatbots.  For finance departments, this means more of what Ventana’s Rob Kugel calls the age of robotic finance, which unites AI and machine learning, robotic process automation (RPA), natural language bots, and blockchain-based distributed ledgers.

5. AI will continue to generate lots of controversy about job displacement. While some remain optimistic, the consensus viewpoint seems to be that AI will suppress employment, most likely widening the wealth inequality gap.  A collapsing educational system combined with AI-driven pressure on low-skilled work seems a recipe for trouble.

6.  The bitcoin bubble bursts. As a reminder, at one point during the peak of tulip mania, the Dutch East India Company was worth more, on an inflated-adjusted basis, than twenty of today’s technology giants combined.

tulips

7.  The Internet of Things (IoT) will continue to build momentum.  IoT won’t hit in a massive horizontal way, instead B2B adoption will be lead by certain verticals such as healthcare, retail, and supply chain.

8.  The freelance / gig economy continues to gain momentum with freelance workers poised to pass traditional employees by 2027. While the gig economy brings advantages to high-skilled knowledge workers (e.g., freedom of location, freedom of work projects), this same trend threatens low-skilled workers via the continual decomposition of full-time jobs in a series of temp shifts.  This means someone working 60 hours a week across three 20-hour shifts wouldn’t be considered to be a full-time employee and thus not eligible for full-time benefits, further increasing wealth inequality.

freelancers

9.  M&A heats up due to repatriation of overseas cash. Apple alone, for example, has $252B in overseas cash.  With the new tax rate dropping from 35% to 15.5%, it will now be ~$50B less expensive for Apple to repatriate that cash.  Overall, US companies hold trillions of dollars overseas and making it cheaper for them to repatriate that cash suggests that they will be flush with dollars to invest in many areas, including M&A

10.  2018 will be a good year for cloud EPM vendors. The dynamic macro environment, the opportunities posed by cash repatriation, and the strong fundamentals in the economy will increase demand for EPM software that helps companies explore how to best exploit the right set of opportunities facing them.  Oracle will fail in pushing PBCS into the NetSuite base, creating a nice third-party opportunity.  SAP, Microsoft, and IBM will continue to put resources into other strategic investment areas (e.g., IBM and Watson, SAP and Hana) leaving fallow the EPM market adjacent to ERP.  And the greenfield opportunity to replace Excel for financial planning, budgeting, and even consolidations will continue drive strong growth.

Let me wish everyone, particularly the customers, partners, and employees of Host Analytics, a Happy New Year in 2018.

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Disclaimer:  these predictions are offered in the spirit of fun.  See my FAQ for more on this and other usage terms.

Kellblog’s 2017 Predictions  

New Year’s means three things in my world:  (1) time to thank our customers and team at Host Analytics for another great year, (2) time to finish up all the 2017 planning items and approvals that we need to get done before the sales kickoff (including the one most important thing to do before kickoff), and time to make some predictions for the coming year.

Before looking at 2017, let’s see how I did with my 2016 predictions.

2016 Predictions Review

  1. The great reckoning begins. Correct/nailed.  As predicted, since most of the bubble was tied up in private companies owned by private funds, the unwind would happen in slow motion.  But it’s happening.
  2. Silicon Valley cools off a bit. Partial.  While IPOs were down, you couldn’t see the cooling in anecdotal data, like my favorite metric, traffic on highway101.
  3. Porter’s five forces analysis makes a comeback. Partial.  So-called “momentum investing” did cool off, implying more rational situation analysis, but you didn’t hear people talking about Porter per se.
  4. Cyber-cash makes a rise. CorrectBitcoin more doubled on the year (and Ethereum was up 8x) which perversely reinforced my view that these crypto-currencies are too volatile — people want the anonymity of cash without a highly variable exchange rate.  The underlying technology for Bitcoin, blockchain, took off big time.
  5. Internet of Things goes into trough of disillusionment. Partial.  I think I may have been a little early on this one.  Seems like it’s still hovering at the peak of inflated expectations.
  6. Data science rises as profession. Correct/easy.  This continues inexorably.
  7. SAP realizes they are a complex enterprise application company. Incorrect.  They’re still “running simple” and talking too much about enabling technology.  The stock was up 9% on the year in line with revenues up around 8% thus far.
  8. Oracle’s cloud strategy gets revealed – “we’ll sell you any deployment model you want as long as your annual bill goes up.”  Partial.  I should have said “we’ll sell you any deployment model you want as long as we can call it cloud to Wall St.”
  9. Accounting irregularities discovered at one or more unicorns. Correct/nailed.  During these bubbles the pattern always repeats itself – some people always start breaking the rules in order to stand out, get famous, or get rich.  Fortune just ran an amazing story that talks about the “fake it till you make it” culture of some diseased startups.
  10. Startup workers get disappointed on exits. Partial.  I’m not aware of any lawsuits here but workers at many high flyers have been disappointed and there is a new awareness that the “unicorn party” may be a good thing for founders and VCs, but maybe not such a good thing for rank-and-file employees (and executive management).
  11. The first cloud EPM S-1 gets filed. Incorrect.  Not yet, at least.  While it’s always possible someone did the private filing process with the SEC, I’m guessing that didn’t happen either.
  12. 2016 will be a great year for Host Analytics. Correct.  We had a strong finish to the year and emerged stronger than we started with over 600 great customers, great partners, and a great team.

Now, let’s move on to my predictions for 2017 which – as a sign of the times – will include more macro and political content than usual.

  1. The United States will see a level of divisiveness and social discord not seen since the 1960s. Social media echo chambers will reinforce divisions.  To combat this, I encourage everyone to sign up for two publications/blogs they agree with and two they don’t lest they never again hear both sides of an issue. (See map below, coutesy of Ninja Economics, for help in choosing.)  On an optimistic note, per UCSD professor Lane Kenworthy people aren’t getting more polarized, political parties are.

news

  1. Social media companies finally step up and do something about fake news. While per a former Facebook designer, “it turns out that bullshit is highly engaging,” these sites will need to do something to filter, rate, or classify fake news (let alone stopping to recommend it).  Otherwise they will both lose credibility and readership – as well as fail to act in a responsible way commensurate with their information dissemination power.
  1. Gut feel makes a comeback. After a decade of Google-inspired heavily data-driven and A/B-tested management, the new US administration will increasingly be less data-driven and more gut-feel-driven in making decisions.  Riding against both common sense and the big data / analytics / data science trends, people will be increasingly skeptical of purely data-driven decisions and anti-data people will publicize data-driven failures to popularize their arguments.  This “war on data” will build during the year, fueled by Trump, and some of it will spill over into business.  Morale in the Intelligence Community will plummet.
  1. Under a volatile leader, who seems to exhibit all nine of the symptoms of narcissistic personality disorder, we can expect sharp reactions and knee-jerk decisions that rattle markets, drive a high rate of staff turnover in the Executive branch, and fuel an ongoing war with the media.  Whether you like his policies or not, Trump will bring a high level of volatility the country, to business, and to the markets.
  1. With the new administration’s promises of $1T in infrastructure spending, you can expect interest rates to raise and inflation to accelerate. Providing such a stimulus to already strong economy might well overheat it.  One smart move could be buying a house to lock in historic low interest rates for the next 30 years.  (See my FAQ for disclaimers, including that I am not a financial advisor.)
  1. Huge emphasis on security and privacy. Election-related hacking, including the spearfishing attack on John Podesta’s email, will serve as a major wake-up call to both government and the private sector to get their security act together.  Leaks will fuel major concerns about privacy.  Two-factor authentication using verification codes (e.g., Google Authenticator) will continue to take off as will encrypted communications.  Fear of leaks will also change how people use email and other written electronic communications; more people will follow the sage advice in this quip:

Dance like no one’s watching; E-mail like it will be read in a deposition

  1. In 2015, if you were flirting on Ashley Madison you were more likely talking to a fembot than a person.  In 2016, the same could be said of troll bots.  Bots are now capable of passing the Turing Test.  In 2017, we will see more bots for both good uses (e.g., customer service) and bad (e.g., trolling social media).  Left unchecked by the social media powerhouses, bots could damage social media usage.
  1. Artificial intelligence hits the peak of inflated expectations. If you view Salesforce as the bellwether for hyped enterprise technology (e.g., cloud, social), then the next few years are going to be dominated by artificial intelligence.  I’ve always believed that advanced analytics is not a standalone category, but instead fodder that vendors will build into smart applications.  They key is typically not the technology, but the problem to which to apply it.  As Infer founder Vik Singh said of Jim Gray, “he was really good at finding great problems,” the key is figuring out the best problems to solve with a given technology or modeling engine.  Application by application we will see people searching for the best problems to solve using AI technology.
  1. The IPO market comes back. After a year in which we saw only 13 VC-backed technology IPOs, I believe the window will open and 2017 will be a strong year for technology IPOs.  The usual big-name suspects include firms like Snap, Uber, AirBnB, and SpotifyCB Insights has identified 369 companies as strong 2017 IPO prospects.
  1. Megavendors mix up EPM and ERP or BI. Workday, which has had a confused history when it comes to planning, acquired struggling big data analytics vendor Platfora in July 2016, and seems to have combined analytics and EPM/planning into a single unit.  This is a mistake for several reasons:  (1) EPM and BI are sold to different buyers with different value propositions, (2) EPM is an applications sale, BI is a platform sale, and (3) Platfora’s technology stack, while appropriate for big data applications is not ideal for EPM/planning (ask Tidemark).  Combining the two together puts planning at risk.  Oracle combined their EPM and ERP go-to-market organizations and lost focus on EPM as a result.  While they will argue that they now have more EPM feet on the street, those feet know much less about EPM, leaving them exposed to specialist vendors who maintain a focus on EPM.  ERP is sold to the backward-looking part of finance; EPM is sold to the forward-looking part.  EPM is about 1/10th the market size of ERP.  ERP and EPM have different buyers and use different technologies.  In combining them, expect EPM to lose out.

And, as usual, I must add the bonus prediction that 2017 proves to be a strong year for Host Analytics.  We are entering the year with positive momentum, the category is strong, cloud adoption in finance continues to increase, and the megavendors generally lack sufficient focus on the category.  We continue to be the most customer-focused vendor in EPM, our new Modeling product gained strong momentum in 2016, and our strategy has worked very well for both our company and the customers who have chosen to put their faith in us.

I thank our customers, our partners, and our team and wish everyone a great 2017.

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