Hi everyone. Thank you for joining this exciting discussion on Delivering Improved Customer-value to Accelerate out of the Pandemic. I'm Sunny Gupta, Co-founder and CEO of Apptio and I'm really excited to be sharing today with my guest Forester's Vice-President of Principal Analyst and CIOs Bobby Cameron. Hey Bobby, it's so good to see you.
How have you been and how have you been personally thriving during this COVID world? It's good to see you again too. Sunny. Good, good to speak to you and to see you, even if it's only virtual. So I've been- I've been lucky. I live in North Carolina and the golf courses have stayed open and while I'm not a great golfer by any means, I've been able to play a couple of times a week. And so it gives some exercise, socialization and be outside. It's been,
it's been a real godsend. That's great, Bobby. Yeah, you know, for me, it's been really interesting running a software company out of my house, but really from you know, I've been working a lot on just selling, setting daily goals, whether it's work or personal life, and really riding my Peloton. And I was fortunate enough to have one right before the pandemic hit, because I know it's going to be a little bit challenging to get in before. And you know, that also reminds me of a recent conversation I had at a Forbes event with the CIO of Peloton.
And both of us were discussing how this pandemic is forcing CIO is to accelerate the digital journeys, accelerate to the cloud and get more financial agility. So in the spirit of our customers becoming agile. I know you talk to a lot of CIOs, I would love to get your perspective on this.
And we hear about it daily in the news and all kinds of examples. I think what's very interesting about that shift in the job is that companies are discovering what they can work remotely and how to make it happen. And it's going to shift significantly how populations work. We estimate that about 30% of people who were working in office pre-pandemic will remain working remote, even post pandemic. It's so true, Bobby. I mean, that's kind of how certainly we're thinking about it, even from a Apptio return back to work perspective. And, you know,
I would really say the timing of our conversation couldn't be better both Apptio and Forester have a deep passion for helping companies, helping CIOs transform. You know, we provide actionable insights into making trusted technology decisions and you provide actionable advice and services for CIOs. And I know thriving in the post-pandemic world is top of mine.
All of it is really oriented towards driving better business outcomes for our customers. Yeah. I think that comments right on target and your, your earlier comment about the acceleration of digital is one of the characteristics. I'll share some, some of my data and insights with you here today that's new research that we're building out both based on pre-pandemic data and work we've been doing during the pandemic. So,
so let me share some of this with you. We started doing some very strong research during the pandemic to see what was going on. What's new? Companies are really trying to behave differently. You know, they're looking, they're looking for the ability to move faster as part of that acceleration of the digital. But it's also from a competitive standpoint, the pandemic has, has unleashed different behaviors. So a lot more e-commerce,
that's the logical choice, but a lot of our richer kinds of needs to do work differently movement to digital. Sure. But now we see companies taking advantage of, of the kinds of data and kind of interaction. They can work with people. And so have more opportunities to work in parallel.
So you can work with partners, say to push things forward that might've historically been a little slower if they were working only on their own. And, and that also means that they need to be able to change more easily to both with speed, but also to match shifting business needs. One piece of data we found in the recent work is that companies who are at the leading edge of doing things differently, even during the pandemic were growing three times, their industry average. So there's some really interesting work going on, and we've been trying to wrestle with that to get some real clarity around well.
Bobby that's great content yeah, you know that it's a great reminder of how much agility our customers and CIOs and CFOs really need during this time. So what are you really seeing related to the future and how are organizations getting ready to get out of this pandemic. This whole notion of greater agility is key and the data that we've gathered during the pandemic looking at how the companies are leading the chart if you're well to accelerate out of the pandemic. What we found is they're faster that they've they've got the more of an ability to, to drive change by working in parallel.
Some very interesting characteristics and part of that is that we find who are at the leading edge right now, right now meaning during the pandemic, this is August and September data that they are growing at 2.8 to three times industry average. Those are leading the chart. So they're doing something significant.
And as we've worked three hour view of this, what we've tried to do is build out a picture of exactly what's happening. That's great, Bobby yeah, you know, it's so on point just really, I've had the privilege to talk to probably five or 600 CEOs, at least during this pandemic, it's easier to actually do have these conversations. Really it's dawned on me that we've divided a lot of the customers we speak to into three kind of broad buckets.
The first one is many enterprises are really in the classic enterprises, which is primarily on premise workloads and they are experimenting with the cloud. And then they are kind of primarily doing project world, the living in the project world. And they're starting to embark on some digital strategies and thirdly you know, they have some financial agility really to rapidly adapt and change in this world because in the pandemic, what taught us was that many CIOs because the top lines was so disrupted, they didn't really have the financial agility to replan reforecast because there was so much uncertainty really on the, on the top lines. Then in the middle, we really see, which is bulk of the companies we see are kind of really in the hybrid state, which is they still have a significant footprint on on premise infrastructure, but they are lifting and shifting workloads to the cloud.
They are starting to develop cloud native applications. They're also employing a new agile enterprise planning capability to help drive digital transformation right. To develop new capabilities in smaller discreet teams.
And they have more financial agility, they have costs and consumption leavers with the business. And then on the extreme right side companies, certainly like a Peloton, you know, they are digital first, right. They're born in the cloud and that's the only thing with the operate on. They have scale, working across multiple cloud providers, and then they're also, everything they're doing is from a digital perspective. So the there's really no separation between business and IT it's really one team and complete transparency, complete alignment around leavers and choice. So the technology teams and the business are really making decisions.
You get a chance to talk to a lot of customers, very curious in your perspective. Financial agility is a foundation. We heard a lot from customers like, you know, people who didn't have financial transparency planning in place or caught off guard, and they're saying, Hey, I'd never want to be in that situation again. I want transparency.
I want trusted decision-making. I want rapid ability to re-plan, re-forecast. So what is your perspective as you speak to your customers? Well, the, I think the, you're right on target and those three different modes we've seen as well. And we based our view of that on on revenue, impact on revenue. And we did a reconnect last year. So 2020 with about a 10th of a sample we had done in December of 19, January of 2020.
That sample was a little over 7,000 companies. We reconnected with 700 of them in the May, June of 2020. And quite interestingly enough, got some, there were some percentages of revenue impact. And what we found is that
roughly 23% were experiencing 10% or greater reduction in revenue versus the year before versus 2019. That third mode, you mentioned those who are sellers, who are healthy and accelerating, growing revenue, that was about 16%. And the balance were in that middle space, which we defined just using this data as either flat in revenue, relative to 19 or declining up to 10%. And what that did is create exactly the kinds of behaviors. Now, what we also found in that study, which I found just intriguing is that the business strategy did not change. Even for that first mode. You talked about where they, the revenue was declining over 10%, and they were unable to invest, had no money to spend. In fact, we're,
we're cutting cost aggressively just to stay a lot. And even in that group, they still have the same business objectives we look at is that, and we call it customer obsession, and the introduction is graphic for a minute. The, the three pieces in the circle, but leadership strategy and operations is to remind people that it's the overall enterprise behavior that matters not just the operational piece, those of us in IT. You can get stuck there. And a lot of my conversations start with, well, tell me how to transform IT. And I said, well, what's going on with the business? And so this picture is communicating two things. One is the four hour streams that flow around the circle: the customer led, insights driven, fast, and connected.
Those characterize the principles that firms are following. And we go back to that thinking of the mode, but also how companies are in fact successfully following acceleration than the pandemic. Those are the principles we find the leading edge, driving. Those who are adaptive and agile and enabled to, to do work more effectively.
They're designing from the outside-in. It's customer led using targeted data to make smarter decisions. That's insights driven fast, not only time to benefit, but testing and discovering what works. So not just, you know, IT is an order taker, but it as a partner or having even shared accountability results and then connected, and you see those three bars on the bottom, there, they lay out the percentages that we found, and this is now pre-pandemic data. Now 2019 data, the show, the percentage of the distribution of firms based on how mature they are at following those four principles. So 55% are just beginning their transformation. 29% are intermediate.
They are in the middle of the change and, and the remaining are advanced. And the key thing there's a lot of those characteristics you've mentioned that are in fact, showing up in companies, accelerating the pandemic. Those are intermediate and advanced characteristics. Cloud first, platform based in the architectures, you know, shared accountability between IT and other business organizations and all of that, about being adaptive and being able to move fast. It's so true, Bobby. I mean, we really,
some of the points you mentioned really resonate we are heading over and over again. There's very little separation between business and IT and the speed of innovation really matters. IT is no longer a back-office function. Changing the tone or function, it's around fundamentally creating value. Every, every company is forced to become a technology company, right. And especially, I think the COVID world is gonna accelerate all of that.
And really, as I've been talking to a lot of the CIOs everybody's been telling us that the key to unlocking innovation is the ability to make informed data-driven decisions, where to invest, how to create new revenue streams, how to increase competitiveness, right, as new business models that are emerging. And the role of the CIO is changing fundamentally. It's not about just technology, right? It is really around the business innovation and fundamentally it's around making informed decisions much faster.
And you know, this is really goes, it reminds me back off our founding principles at Apptio, because this is what I had set out in 2007. And this was part of the founding vision, but how do we let CIO, CFOs make informed data-driven decisions around technology investments? And, you know, I think you've come up with something there that has intrigued me most fundamentally about financial management and how it's changing. And that is the ability to look at the value proposition.
We'll show you some of the characteristics and using that customer obsession, beginner, intermediate, and advanced staging, but look at the right-hand side and look how shared accountability for outcomes shows up and investment funding, paying attention to delivering the outcomes and, and focus on value streams, the end to end creation of value. All of those things take from, from a CIOs perspective. The traditional view of managing costs of the IT financial management and build on, you know, the Atum, the TBM taxonomy, that whole concept of taking the money I spend in linking it into the business capabilities where the organizations associated value, that is a key piece of being successful and this customer obsessed model. And it's it to me, I find it exciting too, when I've talked to firms like that.
I had a call earlier today with, with Hilti, the construction machine company, and, and intriguing to me is how this gargantuan, you know, very effective producer heavy-duty capital, like for drilling holes, especially holes that's shifted based on exactly what you were just saying, a good input from their customers and good understanding of the value they are shifting from renting and leasing heavy capital equipment to selling holes. And so they build the same machinery, but instead of leasing it or having the firm invest in the capital and the maintenance of it, Hilti comes in or comes in with partners, and they produce the holes, managing the equipment themselves, very interesting shift in business model. And the IT folks are right at the heart of it. Being able to drive the speed of change, which is so critical. We get it all the time that companies just can't innovate fast enough. You know during our almost 14 years of being in business, we've learned a big key to innovation is making informed decisions much faster.
Right? Customers want to be able to make data driven decisions in minutes, not days or hours or months. And many of the points you mentioned being reinforced was really what Apptio was created to do 14 years ago. Throughout my conversations, certainly in the last year, it seems like everybody's acceleration to the cloud has really accelerated.
Again, you have customers who are still in the classic category, who are starting to experiment with the cloud. Then majority of our customers, I find are in the hybrid state, they're struggling because there's more complexity and they want to be able to make data driven decisions of what workload should go into which cloud is it actually cheaper to move into the cloud. And we also have some customers who have started to move workloads back from the cloud into some of their own data centers. And obviously we have cloud native companies who are using these cloud hyperscalers at scale and optimization, governing the cloud, spend managing the cloud spend. Optimization is a very big challenge.
What is your perspective, Bobby, on the journey to the cloud? You know, the cloud, is to me, one of the key characteristics. Concept there of cloud is that it is a way for an IT shop to, if you will source through partners, a whole lot of the work that takes is done on-prem on their own. And if you think of the, you know, the seven layer OSI stack you know, it's, all those layers are covered in a cloud opportunity. So you end up with time to benefit, radically accelerate so that, you know, and you mentioned about the financial side of cloud.
A lot of our models don't show cloud, ultimately saves money in a, in the sense of comparing compute to compute because of all the associated challenges of cloud. But what it does allow is this time to benefit this speed and support change with minimum investment by the IT shop. So whether it's software as a service or infrastructure or platform as a service, those mechanisms, the cloud providers is putting forth a whole lot of the staff and the capability. And we've seen that the hybrid multi-cloud persisting nearly 80% of companies in a very recent survey identified themselves as hybrid multi-cloud. And we find nearly two thirds of companies have already five or more cloud stacks. And so that's the world they're in. And again, they need the data.
What's the cost, what's my performance characteristics. And how do I integrate all that into decisions about what I do where, and of course, a lot of that is driven by where I'm doing analytics, where my data resides, etc. It's a big piece of this acceleration is that cloud linkage and the ability to understand what is an increasingly complex compute environment. Yeah. And Bobby,
this was one of the prime reasons why Apptio acquired Cloudability couple of years ago, which is really was, was kind of innovating in the new FinOps model to govern the cloud spend. So we have hundreds and thousands of customers leveraging that capability, finding kind of massive ROI in a very short period of time. Also Apptio recently introducing the Cloudability Shift product line, which is really helping customers make, again, informed decisions between whether workload placement it's easier or cheaper to do it on-premise or the cloud, and being able to make these migration decisions faster. And again, I think it's kind of really interesting that the key theeme again, we've been talking about is going on data-driven informed decisions, right. And kind of providing the agility to make these decisions faster. So Bobby, the other topic, which frequently comes up in my conversation with our customers is a shift from a project world to a product world.
Now, as you know, software companies have always delivered product, they've organized it on small teams, they incrementally deliver a minimum viable products. And it's quite amazing to me how fast the CIO's are adopting agile practices and product teams, but that's also kind of creating new sets of challenges. Like how do I manage business value of my new innovation, OKRs, value stream management? How do I do the resourcing? How do I do funding models for agile? What are you seeing in this space? I think, I think you've, you've got a good list there of what's going on that, and it goes back to that question of maturity of the IT shop as to what the balance is across the various capabilities that you're, that you're talking about.
And we see that the more advanced firms are in fact shifting from traditional, just traditional it metrics into OKR, which goes into that shared accountability and having the business outcomes be the focus of what IT does and the ability the need to track IT costs in the context of that is a way to then have a conversation that's across the enterprise for the most advanced firms that looks at, you know, what it is that the business is trying to do. And the OKR is the, the objectives and key results. And what are the specific KPIs? I've got a measure and the core way IT demonstrates that is being able to leak specific costs into that value proposition.
And most companies are doing it through business capabilities, services delivered in support of specific capabilities. And that gives them the ability to have a true cost benefit analysis, but in not just in some generic, you know, what's my ROI or capital return or whatever, but looking also at strategic objectives, where's the company trying to go and what business capabilities did they need to change? And that whole linkage is impacting how IT initiative gets funded in these more mature companies and the course how they deliver on that customer obsession promise that customer led, insights driven, fast, and connected set of principles. Yeah. You know,
just talking to one of our very large fortune 100 customers the other day, I mean, they have literally 5,000 developers and they've organized it on hundreds of agile teams abandoned pretty much all project based principles. This was one of the prime drivers, Bobby of us acquiring Targetprocess earlier in the year, which is a leader in agile enterprise planning, allowing our customers to link the work back to business value, value streams, capacity management, and really interestingly enough, we are bringing the Apptio financial management combined with now managing the work and the portfolio level for agile, and then kind of tying the cloud resources to it. But Bobby, thank you so much for spending time with me today and sharing your insights. Your perspective on the industry is amazing. And by the way, it also reminds me of next time I'm in North Carolina, we got to go golfing and I gotta take you on a Peloton. Sounds good. You have to order me one early though, because like you say,
there's such high demand. We'll figure out a way. And we really appreciate the partnership we have with you and the Forrester team.
I want to thank the audience for joining us today, and we really hope you found this discussion helpful and actionable, and see you soon.
2021-07-24